Arbitration is a means of settling a dispute, where the parties appoint an arbitral panel to make a decision based on fact and law. The arbitral panel typically has one or three arbitrators. The arbitrators will hear evidence and submissions from each side and make an award.
The process is very similar to litigation. There is increasing concern that arbitration is becoming the new litigation. This is caused by the introduction of extensive rules of evidence and procedure into the arbitration process.
There are still some key differences between arbitration and litigation. Parties select their own arbitrator. Much as parties may want to choose their own judge this is not how the courts work. For arbitration, the parties can consider the arbitrators’ background and expertise to select the person they think will be best placed to make a wise decision.Some arbitrators may have expertise in a particular area for example, finance or medicine. Their subject matter expertise may make parties want to chose them as they will understand the technical aspects of the dispute.
Arbitrations typically take place under the rules of an organisation such as the HKIAC or the ICC or UNCITRAL depending on the choice of the parties either pre-dispute (e.g. arbitration clause in their contract) or post-dispute. Arbitrations may either be administered by the organisation meaning that they will make arrangements for scheduling, rooms, etc. or they may be ad hoc in which case the arbitrators will typically make the practical arrangements.