Arbitrator: Overview, definition, and example
What is an arbitrator?
An arbitrator is a neutral third party appointed to resolve disputes between two or more parties outside of court. Arbitrators hear evidence, review arguments, and make legally binding or advisory decisions, depending on the arbitration agreement.
For example, if two businesses have a contract dispute and their agreement includes an arbitration clause, they must present their case to an arbitrator instead of filing a lawsuit in court.
Why is an arbitrator important?
Arbitrators play a crucial role in alternative dispute resolution (ADR) by providing a faster, private, and often less expensive way to resolve conflicts compared to traditional litigation. Many businesses prefer arbitration because it keeps disputes confidential and allows them to choose a decision-maker with industry-specific expertise.
For businesses, using an arbitrator can help avoid lengthy court battles, reduce legal costs, and ensure disputes are resolved by someone with relevant knowledge. However, arbitration decisions can sometimes be difficult to challenge, making it essential to carefully select arbitrators and understand the process.
Understanding an arbitrator through an example
Imagine a technology company enters a partnership with a software developer. A dispute arises over project deadlines, and their contract requires arbitration instead of court litigation. Both parties agree on a qualified arbitrator with experience in tech disputes. The arbitrator reviews the contract, hears both sides, and issues a decision on how the dispute should be resolved.
In another example, a professional athlete has a contract dispute with their sports team. Instead of going to court, the league appoints an arbitrator to decide on the issue. The arbitrator listens to both sides and makes a ruling that both the player and team must follow.
An example of an arbitrator clause
Here’s how an arbitrator clause might appear in a contract:
“Any dispute arising under this Agreement shall be resolved through binding arbitration before a neutral arbitrator selected by mutual agreement of the Parties. The arbitrator’s decision shall be final and enforceable in accordance with applicable laws.”
Conclusion
An arbitrator is a neutral third party who helps resolve disputes outside of court, offering businesses a faster, private, and cost-effective alternative to litigation.
For businesses, arbitration can provide a more efficient resolution process, especially when working with specialized arbitrators who understand industry-specific disputes. However, since arbitration decisions are often final, choosing the right arbitrator and process is essential to ensuring a fair outcome.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.