Arbitration is a form of binding dispute resolution based on a contract. To find out more about this arbitration, you can read the following article. And don't forget to follow GIC's Instagram for promo information and more!

Definition of Arbitration

Arbitration is a form of binding dispute resolution based on a contract. In other words, a party's right to submit a dispute to arbitration is contingent on the existence of an agreement ("arbitration agreement") between them and the disputing parties that the dispute may be referred to arbitration. Commercial contracts will usually include provisions on how disputes relating to that contract should be resolved. If the parties choose arbitration, the arbitration agreement will generally be part of the document that records the terms of the commercial transaction. The parties may also enter into an arbitration agreement after a dispute has arisen. In entering into an arbitration agreement, the parties agree to submit their dispute to a neutral court to decide their rights and obligations. Although it is sometimes described as an alternative form of dispute resolution, arbitration is not the same as mediation or conciliation. A mediator or conciliator can only recommend the outcome and the parties can choose whether or not to accept the recommendation. In contrast, arbitral tribunals have the power to make decisions that are binding on the parties. One of the appeals of arbitration is that it is usually easier to enforce a judgment in another country than it is to enforce a court award. That said, enforcement regimes vary and it's crucial to take into account enforcement prospects in deciding whether, and if so, how, to mediate disputes before spending too much time and money. This is especially the case if cash in the bank is one of the important factors in arbitration.

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Main Characteristics

  • Arbitration is consensual
Arbitration can only be conducted if both parties have agreed to it. In the case of future disputes arising under the contract, the parties include an arbitration clause in the relevant contract. Existing disputes may be referred to arbitration through a submission agreement between the parties. In contrast to mediation, a party cannot unilaterally withdraw from arbitration.
  • The parties choose an arbitrator
Under the WIPO Arbitration Rules, the parties can elect a sole arbitrator together. If they choose to have a three-member arbitral tribunal, each party appoints one of the arbitrators; The two men then agreed on the chief arbitrator. Alternatively, the Centre may advise a prospective arbitrator with relevant expertise or directly appoint a member of the arbitral tribunal. The Center has an extensive list of arbitrators ranging from experienced dispute resolution generalists to highly specialized practitioners and experts covering the entire legal and technical spectrum of intellectual property.
  • Arbitration is neutral
In addition to the neutral selection of the appropriate nationality, the parties may choose important elements such as the applicable law, language and venue of arbitration. This allows them to ensure that no party enjoys the benefits of home court.
  • Arbitration is a confidential procedure
WIPO rules specifically protect the confidentiality of the existence of arbitration, any disclosures made during that procedure, and its decisions. In certain circumstances, the WIPO Rules allow either party to restrict access to trade secrets or other confidential information submitted to the arbitral tribunal or to the court's confidentiality counsel.
  • The arbitral tribunal's decision is final and enforceable
Under the WIPO Rules, the parties agree to implement the arbitral tribunal's decision without delay. International awards are enforced by national courts under the New York Convention, which allows them to be set aside only in very limited circumstances. More than 165 States are parties to this Convention.

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Arbitration Procedure

The parties must agree that disputes between them must be resolved through arbitration. If a dispute arises, the claimant must notify the defendant by registered mail, telegram, telex, facsimile, e-mail or personal mail that the dispute will be submitted to arbitration (Article 8, Arbitration Law). This notice must clearly state:
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  • The names and addresses of the parties.
  • References to applicable arbitration clauses or agreements.
  • Agreements or matters in dispute.
  • The basis of the claim and the amount claimed, if any.
  • Desired method of completion.
  • An agreement made by the parties on the number of arbitrators. If there is no agreement, the informing can propose the desired number of arbitrators, as long as the number is odd.
An arbitration agreement may also be enforced after a dispute has arisen. The parties must appoint an arbitrator or ask the chairman of the district court to appoint an arbitrator for the dispute). The parties can:
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  • Approve the procedural rules themselves, as long as they do not conflict with the rules of the Arbitration Law.
  • Use the default rules of the Arbitration Law.
  • Use the rules of national or international arbitral tribunals.
If the parties have agreed on their own rules, the time limit and venue of arbitration contained in the agreement must be agreed upon by the parties. If the time limit and venue of the arbitration are not agreed, the arbitrator or arbitral tribunal will determine it.

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Difference Between Mediation and Arbitration

Mediation and arbitration are both forms of alternative dispute resolution (ADR), which means an alternative to costly and time-consuming litigation from lengthy court battles. Mediation and arbitration are similar in that they bring conflicting parties together to resolve an issue outside of the courtroom, but each has its own unique way of doing so.

Mediation Brings Parties Together to Find Voluntary Solutions

Mediation is an alternative process of conflict resolution that provides a number of advantages compared to taking the court route. The parties, with or without counsel, engage a neutral third-party Mediator to facilitate productive conversations between them and help each party clarify its interests and concerns. The parties are in control of the entire process, including the format of the process, who can attend mediation, and how to resolve the dispute. Mediation is cheaper and much faster than court proceedings, and it can happen at any time as long as the dispute is suspended. Mediation is a secret process that takes place in an environment that is less intimidating than a courtroom. Solutions can be creative and more in line with the needs of the parties than what the court might order. The mediator does not make decisions or decisions. Instead, they help the parties make their own voluntary agreements in a confidential setting. An agreement, when signed by each party, is a binding contract. If a settlement cannot be reached in mediation, the parties have all their options to pursue another form of ADR or take their matter to court.

Arbitration Relies on Neutral Third Parties to Determine Outcomes

As with mediation, arbitration uses a neutral third party, called an Arbitrator, to resolve conflicts between the parties outside the courtroom. However, unlike mediation, Arbitrators serve as private judges to hear evidence and make decisions to determine the outcome of the dispute. Thus, in arbitration, the private judge holds control over the process and outcome, whereas in mediation, the disputing parties retain control. Most Arbitrators will be flexible and work around the parties' schedules and needs. And while arbitration is typically less formal than a courtroom hearing, there will be a set of procedures that will apply to both parties as they prepare for the hearing. In most cases, the Arbitrator's award is final and binding on both parties. The opportunity to appeal after a binding arbitration is very limited. Sekilas Tentang Arbitrase

Advantages of Arbitration

There are many advantages to arbitration, such as:
  1. The parties usually agree on the arbitrator, so that both parties have confidence that the process will be impartial.
  2. Disputes are often resolved faster because, in Virginia, the trial date takes about twelve months from the date the lawsuit is filed.
  3. Arbitration is often cheaper of expert witnesses for the conference. Plus, the parties usually split the arbitrator's fees, which is usually cheaper than preparing for the hearing.
  4. Arbitration is essentially a private procedure, So if the parties want privacy, the details will be kept private.
  5. Very limited opportunities for appeal means that the arbitration will be the end of the dispute, giving finality.

Disadvantages of Arbitration

Nevertheless, there are also some disadvantages of arbitration as a method of dispute resolution.
  1. Both sides waiving their right to appeal, which means one party can feel underestimated.
  2. If the problem is complicated but the amount of money involved is not much , arbitrator fees may make the arbitration uneconomical.
  3. Strict court rules can prevent some evidence from being considered by a judge or jury , but the arbitrator may consider the evidence.
  4. If certain information from a witness is presented, it is still There has been no opportunity to cross-test the witness's statement.
  5. Discovery may be more limited by arbitration. In litigation, discovery is the process of requiring the opposing party to provide certain information.
  6. Mandatory arbitration allows one party to compel the other party to use arbitration . In situations where arbitrators rely on one party for recurring business, then the potential for abuse is present and the benefits of impartiality are lost.
  7. The standard used by an arbitrator is unclear, Because sometimes, arbitrators may consider the "real fairness" of each party's position instead of strictly following the law. This will result in an unfavorable outcome for the party favored by the strict reading of the law.

Examples of Arbitration Cases

Since arbitration became a popular method of resolving disputes while avoiding an overly crowded court calendar in the 1970s, many cases large and small have been resolved by professional arbitrators. Many such cases involving large corporations or large settlements have been highlighted in the news.

Midwest Airlines Flight Attendant Contract Dispute

After the 2009 purchase of Midwest Airlines by Republic Airways Holdings, more than 400 Midwest Airlines flight attendants complained of breach of contract, as hundreds of people were laid off in favor of non-Midwest employees who were paid 70 percent less. As it turns out, Midwest tour attendant union contracts contain specific provisions that protect their jobs if the airline is purchased by another company. Since this provision had been breached, the Flight Attendants Association (AFA) filed a complaint accusing Republic Airways of breaching their contract. AFA won a major victory in a March 2011 arbitration award that required a settlement to be negotiated between Republic Airways and the union in the best interests of former Midwest flight attendants.

2012 NFL Bounty Scandal

In 2012, several players for the New Orleans Saints were accused of involvement in a 2009-2011 rewards program in which Saints players allegedly received bonus payments for intentionally causing end-of-game injuries to players for opposing teams. Since no punch that caused injury was ever punished by an official during a match, questions arose about how high the conspiracy was, earning the name "Bountygate" from news media and fans. After the controversy, NFL Commissioner Roger Goodell handed out the heaviest sanction in NFL history. After the sanction, a federal judge in New Orleans ruled that Commissioner Goodell exceeded his authority in sanctioning the players involved, and then all suspensions were overturned. At this point, the issue is whether the NFL Commissioner has the authority to take disciplinary action in what the players' association declares to be a salary cap issue. The arbitrator decided, on June 12, 2012, that the players' actions constituted "adverse conduct," which made them subject to a collectively negotiated discipline and, therefore, constituted the authority of Commissioner Goodell. This arbitration decision not only provides strong support to the NFL and its Commissioners, but also sets a precedent for similar cases that may arise in the future. After knowing how arbitration is along with its main characteristics, procedures, differences with mediation, advantages, disadvantages, and examples, you can read articles, trivia, other educational classes through the GIC Journal. In addition to reading the GIC Journal, you can also trade together with GIC. GIC also provides various other products such as NFTs on GIC Verse, GIC Academy, GIC Signal, GIC Social Trade, GIC Affiliate, GIC Trade, and GIC Bridge. To be able to trade on GIC with capital starting from 150,000 Rupiah, you can register in advance and enjoy all the benefits! GIC