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What is Arbitration Law?

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  • Written By: H. Terry
  • Edited By: Jenn Walker
  • Last Modified Date: 25 November 2016
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Arbitration is when a decision-making tribunal is appointed to help resolve a dispute. An arbitral tribunal can consist of one person or a group of individuals. Tribunal members are known as arbiters or arbitrators. Arbitration law determines how this kind of alternative dispute resolution — a resolution formed outside of court systems — is legally carried out.

A difference exists between voluntary and mandatory arbitration. Voluntary arbitration occurs when both parties agree to select an arbiter to settle their dispute. The term mandatory can be misleading. Arbitration law deems the practice mandatory only when there is a pre-existing agreement between the parties to use arbitration to resolve any conflicts that arise.

There also is a further distinction between non-binding and binding arbitration law. Non-binding arbitration is more of a consultative practice. The arbitral tribunal equips both parties with a better understanding of their positions by giving its opinion on the merits of their claims, but it does not dictate the outcome of a case as happens in some other forms of alternative dispute resolution, such as mediation. In mediation, a third party not only provides an opinion, but also offers recommendations on how the disputing parties might come to an agreement. In binding arbitration, the parties involved agree to adhere to an arbitral tribunal's decision which, in arbitration law, is not referred to as a judgment but instead as an arbitration award.

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When an arbitration award is given, it can be in the form of a payment, an order or a declaration. In some jurisdictions, a tribunal may have the power to order an injunction, forcing a party to do or refrain from something or to rectify a contract or other document. Arbitration law, and the extent of the power of arbitral tribunals, can vary depending on the jurisdiction. There are differences between countries and, within many countries, between national arbitration law and provincial or regional arbitration law.

At the international level, there are several conventions for the recognition of arbitration awards. The most widely accepted is a United Nations convention known as the 1958 New York Convention, which has been ratified by more than 140 countries. These countries have agreed to treat arbitration awards originating in other signatory countries as if they were rulings issued in their own domestic courts. International arbitration law can thus help to circumvent differing formalities between judicial systems and also sometimes be more easily enforceable, and applicable, than judgments given in just one jurisdiction.

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