What is Arbitration

Arbitration is a time honoured practice of resolving disputes privately now governed by legislation in every Australian state.

An arbitration process is where parties agree to have their dispute determined in a legally binding manner by an independent person, the arbitrator, who has expertise in the subject matter of the dispute or the process of arbitration.  The arbitrator is jointly chosen and appointed by the parties and required to act fairly and judicially in determining their dispute. The parties agree to be bound by the decision of the arbitrator so that on the delivery of the arbitrators award, the dispute is usually finalised.

Arbitration is available as an alternative to litigation as a process for resolving commercial/business disputes.  The arbitrator is required to act judicially, including delivering reasons for the award (determination). More importantly, arbitrators are usually expert in the subject matter, as well as being legally trained, and they have greater powers than judges in exploring the subject matter of the dispute. They can:

  • call for more evidence,
  • personally investigate or
  • appoint their own technical experts (e.g. a forensic accountant) to properly evaluate the evidence obtained.

The arbitration process has a greater ability, when properly managed, to provide a just, quick, less expensive and legally binding resolution to party’s commercial disputes.

In Australia, state and territories have enacted the Commercial Arbitration Act, a uniform legislation that provides control and assistance to the arbitration process and protection of the arbitrator’s award.  These Acts (recently revised in 2010) are based on the internationally accepted UNCITRAL Model Law for the regulation of international trade which also underlies Australian’s International Arbitration Act.

[UNCITRAL is the United Nations Commission on International Trade Law.}