Binding and Non Binding Arbitration

Binding and Non Binding Arbitration

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Published by TOP4 Team

Arbitration is the alternative choice available to resolve disputes without going to litigation or trial. Both the parties have to agree that a third party arbitrator will act as both judge and jury. Arbitration can be binding or non-binding but quite often it ends in a settlement. In a non-binding arbitration no arbitration award what so ever is issued. In a binding arbitration, the arbitrators' decision is final and cannot be disputed or appealed.

It is well known that litigations can last for a very long period of time and often takes years for a case to settle. Unlike in litigation, during arbitration, the rules of evidence and related procedures become quite relaxed. One can generalise and expect the following benefits during arbitration.

• Less expensive than litigation

• Faster process

• Lesser involvement with lawyers

• Binding and non-binding arbitrations possible

• Arbitrator's fees is lesser than that of a lawyer

• Helps sooner settlement in non-binding arbitration

• As the arbitrator is not bound by the procedure rules he is more practical

• No appeals can be filed on a binding arbitration

Before deciding on arbitration it is essential for the client to reflect and see if arbitration has to be preferred over litigation. This should be done considering all that is at stake, including time and the money involved. The arbitration clause has to be well reviewed preferably with the help of a lawyer.

With non-binding arbitration, the arbitrator makes a determination of the rights of the parties to the dispute but this determination is not binding on them. The award given is just an advisory opinion. Thus here the role of an arbitrator is similar to that of a mediator in a mediation. However, unlike in mediation, the arbitrator remains totally away from the actual settlement process though he might give suggestions. What happens after a non-binding arbitration? Well subsequent to a non-binding arbitration, it is up to the parties involved; they are free to pursue their claims either via the courts or by a binding arbitration.

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