Submission to arbitration: Overview, definition, and example
What is submission to arbitration?
Submission to arbitration refers to the process by which parties involved in a dispute agree to resolve their issues outside of court by submitting the matter to an arbitrator or a panel of arbitrators. Arbitration is a form of alternative dispute resolution (ADR) where an impartial third party (the arbitrator) listens to both sides of the dispute and makes a binding decision. The submission to arbitration often happens voluntarily or as outlined in a contract that includes an arbitration clause, which specifies that disputes must be resolved through arbitration rather than through litigation in court.
In many cases, contracts between businesses or individuals may include a "submission to arbitration" clause, which obligates the parties to resolve any disputes via arbitration instead of pursuing a lawsuit.
Why is submission to arbitration important?
Submission to arbitration is important because it offers an efficient and cost-effective alternative to traditional litigation. Arbitration can be faster and more flexible than going through the court system, and it often results in less formal procedures. Many businesses and individuals prefer arbitration because it can provide privacy, especially in cases involving sensitive information.
For businesses, submitting disputes to arbitration can save time, reduce legal costs, and avoid the unpredictability of a court trial. For individuals, arbitration offers a way to resolve disputes more quickly and potentially with less financial strain.
Understanding submission to arbitration through an example
Imagine a small business that enters into a contract with a supplier. The contract includes a provision that any disputes between the parties will be submitted to arbitration. A dispute arises over the quality of goods delivered, and the business submits the matter to arbitration as per the contract terms. Both parties present their cases before the arbitrator, who then makes a binding decision regarding the quality of the goods and any associated damages or remedies.
In another example, a company and an employee have a disagreement over a non-compete agreement. The employment contract specifies that any disputes will be submitted to arbitration rather than court. Both the company and the employee submit the issue to arbitration, and the arbitrator issues a final decision that resolves the matter.
An example of a submission to arbitration clause
Here’s how a submission to arbitration clause might appear in a contract:
"Any dispute or claim arising out of or relating to this Agreement shall be resolved through arbitration, and the Parties hereby submit to the jurisdiction of arbitration in accordance with the rules of [arbitration organization]. The arbitrator’s decision shall be final and binding on both Parties, and judgment on the award may be entered in any court of competent jurisdiction."
Conclusion
Submission to arbitration is an alternative dispute resolution method that allows parties to resolve disputes outside of court, offering a faster, more cost-effective, and often more private way to address conflicts. For businesses, this can reduce the risk and expense associated with litigation, while providing a final and binding resolution through an impartial third party. Understanding and including a submission to arbitration clause in contracts can help ensure that potential disputes are handled efficiently and fairly.
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.