Board of arbitration: Overview, definition, and example
What is a board of arbitration?
A board of arbitration is a panel or group of neutral, third-party individuals appointed to resolve disputes between parties, typically in a formal setting outside of court. Arbitration is a form of alternative dispute resolution (ADR) where the parties involved in a dispute agree to submit their case to the board of arbitration rather than a traditional court of law. The board listens to the arguments, reviews evidence, and then makes a binding or non-binding decision based on the information presented. The board is usually made up of experts in the field related to the dispute or professionals with legal or business expertise.
For example, in a business contract dispute, the board of arbitration may be composed of legal experts or industry professionals who hear the case and issue a decision that both parties must abide by.
Why is a board of arbitration important?
A board of arbitration is important because it offers a quicker, less formal, and often less expensive alternative to going to court. It provides a private, confidential process for resolving disputes without involving the judicial system. Arbitration can be particularly valuable in business, commercial, and labor disputes, where specialized knowledge is needed to resolve the issues.
For businesses, using a board of arbitration can save time and money compared to the lengthy and costly process of litigation. For individuals, arbitration can offer a fair and impartial resolution process for disputes that is faster than traditional court cases.
Understanding board of arbitration through an example
Imagine a manufacturing company has a disagreement with a supplier over the terms of a contract. Instead of taking the matter to court, the two parties agree to submit the dispute to a board of arbitration. The arbitration board, made up of professionals with expertise in contract law and manufacturing, reviews the evidence, hears arguments from both sides, and issues a decision that resolves the dispute. The decision is legally binding, and both parties are required to follow it.
In another example, two employees in a unionized workplace might have a dispute with management over a grievance. Instead of going through a court case, the union and the employer agree to send the matter to a board of arbitration, which is responsible for deciding the outcome based on the union contract and workplace rules.
Example of board of arbitration clause
Here’s how a board of arbitration clause might look in a contract or agreement:
“Any disputes arising out of or related to this Agreement shall be submitted to binding arbitration before a Board of Arbitration composed of three arbitrators. The arbitrators shall be selected by mutual agreement of both parties or, if no agreement can be reached, appointed by an arbitration organization. The decision of the Board of Arbitration shall be final and binding upon both parties.”
Conclusion
A board of arbitration is a panel of neutral third parties that resolves disputes outside of the court system, offering a more efficient, cost-effective, and private method for settling conflicts. It’s commonly used in business, commercial, and labor disputes and provides a fair, impartial resolution process. Arbitration can help businesses and individuals avoid lengthy legal proceedings while ensuring that disputes are resolved by experts.
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.