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In this article, we answer the ten most frequently asked questions about arbitration.
The ten most frequently asked questions about arbitration.
1. What is arbitration?
Arbitration is a form of alternative dispute resolution in which parties do not submit their dispute to a state court, but to one or more independent arbitrators. The arbitrators render a decision in an arbitral award. In principle, this award is binding on the parties.
In our article Arbitration: an interesting alternative for your company, we discuss this question in more detail.
2. When can a dispute be resolved through arbitration?
Arbitration is only possible if the parties have agreed to it. This is usually done by including an arbitration clause in an agreement. In such a clause, the parties agree that any disputes arising out of the agreement will be resolved through arbitration.
In certain cases, it is not possible to agree on arbitration. This is for example the case with:
- family law matters (e.g. disputes regarding alimony);
- bankruptcy proceedings;
- criminal matters.
In our article How do I opt for arbitration?, we explain what can be agreed upon in an arbitration agreement.
3. What is the difference between arbitration and court litigation?
The main difference is that arbitration takes place outside the state court system. In addition, in arbitration it is possible to agree that the proceedings will be confidential, whereas court proceedings are, in principle, public. Parties to an arbitration also have influence over the composition of the arbitral tribunal that decides the dispute, as they may appoint the arbitrators themselves, as well as over the design of the arbitral procedure.
4. Is arbitration faster than court proceedings?
Arbitration can be faster than court proceedings, especially in complex commercial disputes. However, that is not a given. The duration of an arbitration depends, among other things, on the agreements between the parties, the complexity of the case and the number of arbitrators. In some cases, arbitration may actually take longer.
5. Is arbitration cheaper than litigation?
Arbitration is not necessarily cheaper. In addition to the costs of legal assistance, parties must also bear the costs of the arbitrators and the arbitration institution. On the other hand, arbitration may be conducted more efficiently, which can result in cost savings. Whether arbitration is ultimately cheaper depends on the circumstances of the case.
6. Who are the arbitrators?
Arbitrators are independent and impartial experts appointed by the parties or by an arbitration institution. They often have specialist knowledge of the area of law or the sector in which the dispute arises, such as construction, energy or international trade.
It is also possible to choose an arbitration institution with a specific area of expertise, such as the London Maritime Arbitrators Association (LMAA) for maritime disputes or the Arbitration Board for the Building Industry (Raad van Arbitrage, RvA) for construction disputes.
7. What is the difference between ad hoc arbitration and institutional arbitration?
The key difference between ad hoc arbitration and institutional arbitration lies in the degree of organization and procedural support.
In ad hoc arbitration, the parties organize the arbitration entirely themselves. They agree on matters such as the appointment of arbitrators, the applicable procedural rules, the seat of arbitration and the timetable. Parties often choose to apply existing arbitration rules, such as the UNCITRAL Arbitration Rules.
In institutional arbitration, the procedure is conducted under the administration of an arbitration institution, such as the Netherlands Arbitration Institute (NAI) or the International Chamber of Commerce (ICC). These institutions have established arbitration rules and provide administrative support throughout the proceedings. For example, they may play a role in the appointment of arbitrators, monitoring deadlines and collecting fees. Institutional arbitration therefore offers more structure, but generally involves higher costs.
8. Is it possible to appeal an arbitral award?
In principle, no appeal can be lodged against an arbitral award, unless the parties have agreed otherwise, or unless the procedural law of the arbitral seat provides for an exception. This contributes to the final resolution of the dispute. Under certain circumstances, however, it is possible to apply to the court for the setting aside of an arbitral award. These grounds are extremely limited.
9. Is an arbitral award enforceable?
Yes. In most cases, recognition and enforcement of an arbitral award take place on the basis of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. To date, 172 states are parties to this convention, making arbitration particularly suitable for international disputes.
In our article A positive arbitral award: how do I get paid?, we discuss the enforcement of an arbitral award in more detail.
10. When is arbitration suitable for my business?
Arbitration is particularly suitable for commercial disputes where expertise, confidentiality and international enforceability play a crucial role. Whether arbitration is the best choice in your specific situation depends on various factors, such as the nature of the agreement, the counterparty and the potential disputes. In our article Arbitration: an interesting alternative for your company, we elaborate further on this.
Meer informatie
Do you have more arbitration-related questions? Contact our specialist Céline Goedhart (cg@kneppelhout.nl).
