Selection of arbitrator: Overview, definition, and example
What is selection of arbitrator?
Selection of an arbitrator refers to the process of choosing a neutral third party to resolve disputes between parties through arbitration instead of litigation. The arbitrator is responsible for reviewing evidence, interpreting the contract, and issuing a binding or non-binding decision based on the arbitration agreement.
For example, in a commercial contract, the parties may agree that if a dispute arises, they will each propose an arbitrator, and a neutral third-party institution will select the final arbitrator.
Why is selection of arbitrator important?
The selection of an arbitrator is important because it directly impacts the fairness and effectiveness of the arbitration process. A well-qualified and impartial arbitrator ensures that disputes are resolved fairly, efficiently, and in accordance with applicable laws and contract terms.
For businesses, pre-defining the arbitrator selection process in contracts helps prevent delays and conflicts over the arbitration process itself. It also ensures that the arbitrator has the necessary expertise in the subject matter of the dispute, whether it's commercial law, intellectual property, or construction contracts.
Understanding selection of arbitrator through an example
Imagine two companies enter into a technology licensing agreement that includes an arbitration clause. The clause states that if a dispute arises, the arbitrator must be selected from a list of qualified intellectual property law experts provided by an arbitration institution such as the American Arbitration Association (AAA). This ensures that the arbitrator has experience in relevant legal matters.
In another scenario, a construction contract between a developer and a contractor requires that any disputes be resolved by an arbitrator mutually agreed upon by both parties within 30 days. If they cannot agree, a neutral arbitration institution will appoint an arbitrator to ensure an unbiased decision-making process.
Example of a selection of arbitrator clause
Here’s how a selection of arbitrator clause might appear in a contract:
"In the event of a dispute arising under this Agreement, the Parties shall select an arbitrator by mutual agreement within [X] days. If the Parties are unable to agree, the arbitrator shall be appointed by [Arbitration Institution] in accordance with its rules. The arbitrator shall have expertise in [subject matter] and shall conduct the arbitration in [specified location]."
Conclusion
The selection of an arbitrator ensures a fair and efficient dispute resolution process outside of court. By clearly outlining the selection process in contracts, businesses can prevent conflicts, ensure that arbitrators have the right expertise, and streamline arbitration proceedings for faster and more predictable outcomes.
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.