If you are considering putting a compromise clause in a contract, or if you are faced with signing a contract with a compromise clause, you take these advantages and disadvantages into account when deciding whether or not you are able to negotiate. The parties should decide to resort to arbitration long before a dispute arises. The best time to decide on arbitration is when you draw a contract. Employment contracts and other types of commercial contracts may include arbitration clauses. Arbitration clauses require contracting parties to settle their disputes through arbitration. Some contracts may explicitly indicate where the arbitration will take place, although this is not necessary for the compromise clause to be applicable. Courts are likely to find valid arbitration clauses as long as the contract is valid and the clause does not mention a biased arbitrator vis-à-vis a party. · Less time-consuming: the delay in civil litigation in the United States is well documented. Arbitration is often much faster and allows the parties to pursue a definitive solution to their dispute. The National Arbitration Forum estimates the time between the filing of an arbitration procedure and its outcome at 4-6 months, compared to 15-20 months for civil proceedings. Finally, the fact that arbitration is not public may disadvantage a party. · More advantageous: registration fees and arbitration-related legal fees are often significantly lower than litigation costs.
In the event of a dispute between an employee and his employer, each party can take legal action to resolve the problem. However, court proceedings are costly and time-consuming. Arbitration is another method of dispute resolution. Traditionally, collective agreements and contracts negotiated between management and unionized work are found. Increasingly, individual contracts contain arbitration clauses. Both parties to the arbitration have control over the selection of the arbitrator, in relation to a judicial procedure in which the judge and jury selection are in the hands of both parties. Something to note is that with arbitration, the majority of agreements are binding and you cannot go to court to resolve the dispute just because you didn`t like the result. In summary, the arbitration procedure is a very useful tool for resolving disputes, but it is important to carefully consider whether it is applicable or preferable to a particular dispute. Your lawyer will advise you if this is appropriate in your case. Arbitration is a popular form of out-of-court dispute resolution (ADR) and rightly so.
The benefits described above provide parties with a simpler, faster and less costly way to resolve their disputes and pursue their business objectives.