Aribitration
Aribitration
Aribitration
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ARBITRATION
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Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one
or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the
parties opt for a private dispute resolution procedure instead of going to court.
Characteristics of arbitration
Arbitration is consensual
Arbitration can only take place if both parties have agreed to it. In the case of future disputes
arising under a contract, the parties insert an arbitration clause in the relevant contract. An
existing dispute can be referred to arbitration by means of a submission agreement between
the parties. In contrast to mediation, a party cannot unilaterally withdraw from arbitration.
Under the WIPO Arbitration Rules, the parties can select a sole arbitrator together. If they
choose to have a three-member arbitral tribunal, each party appoints one of the arbitrators;
those two persons then agree on the presiding arbitrator. Alternatively, the Center can suggest
potential arbitrators with relevant expertise or directly appoint members of the arbitral
tribunal. The Center maintains an extensive roster of arbitrators ranging from seasoned
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 their selection of neutrals of appropriate nationality, parties are able to choose
such important elements as the applicable law, language and venue of the arbitration. This
allows them to ensure that no party enjoys a home court advantage.
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Arbitration is a confidential procedure
The WIPO Rules specifically protect the confidentiality of the existence of the arbitration,
any disclosures made during that procedure, and the award. In certain circumstances, the
WIPO Rules allow a party to restrict access to trade secrets or other confidential information
that is submitted to the arbitral tribunal or to a confidentiality advisor to the tribunal.
Under the WIPO Rules, the parties agree to carry out the decision of the arbitral tribunal
without delay. International awards are enforced by national courts under the New York
Convention, which permits them to be set aside only in very limited circumstances. More
than 140 States are party to this Convention.
At its core, arbitration is a form of dispute resolution. Arbitration is the private, judicial
determination of a dispute, by an independent third party. An arbitration hearing may involve
the use of an individual arbitrator or a tribunal. A tribunal may consist of any number of
arbitrators though some legal systems insist on an odd number for obvious reasons of wishing
to avoid a tie. One and three are the most common numbers of arbitrators. The disputing
parties hand over their power to decide the dispute to the arbitrator(s). Arbitration is an
alternative to court action (litigation), and generally, just as final and binding (unlike
mediation, negotiation and conciliation which are non-binding).
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Appointment of Arbitrators
Directly by the disputing parties (by mutual agreement, or by each party appointing
one arbitrator)
By existing tribunal members (For example, each side appoints one arbitrator and
then the arbitrators appoint a third)
By an external party (For example, the court or an individual or institution nominated
by the parties)
Classifications of Arbitration.
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Rights Arbitration
Rights Arbitration (a.k.a. Grievance Arbitration) deals with the allegation that an existing
collective agreement has been violated or misinterpreted. Various legislatures require that the
parties who enter into a collective agreement set out a procedure for the handling of disputes
and differences. The idea is that parties should be obliged to meet at different steps in their
own specific grievance procedure to review and discuss the grievance. However, the fact is
that the parties themselves cannot resolve many disputes and for this reason arbitration is
necessary so that the matter may be determined. Typical arbitration awards deal with a
complaint that a specific item in collective agreement has been violated.
Interest Arbitration
The kinds of labor disputes taken to an arbitrator are as many and as different as the wide
range of decisions and actions that effect employers, employees and trade unions. Liability
can span from cents to millions, and there can be a solitary griever or a union of grievers.
It is also worthy to note that some labor disputes employ ‘med/arb’ to resolve their
differences as opposed to straight arbitration. Med/arb takes place when disputants agree
from the start that if mediation fails to result in agreement the mediator, or another neutral
third party, will act as arbitrator and be empowered to reach a binding decision for disputants.
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Advantages of Arbitration
Supporters of arbitration hold that it has a multitude of advantages over court action.
The following are a sample of these advantages.
Choice of Decision Maker – For example, parties can choose a technical person as
arbitrator if the dispute is of a technical nature so that the evidence will be more
readily understood.
Efficiency – Arbitration can usually be heard sooner than it takes for court
proceedings to be heard. As well, the arbitration hearing should be shorter in length,
and the preparation work less demanding.
Privacy – Arbitration hearings are confidential, private meetings in which the media
and members of the public are not able to attend. As well, final decisions are not
published, nor are they directly accessible. This is particularly useful to the employer
who does not want his ‘dirty laundry’ being aired.
Convenience – Hearings are arranged at times and places to suit the parties, arbitrators
and witnesses.
Drawbacks of arbitration.
Cost - One or both of the parties will pay for the arbitrator’s services, while the court
system provides an adjudicator who does not charge a fee. The fees for an arbitrator
can be hefty. To give an example, for an amount of claims up to $100,000, the
minimum fee for a single arbitrator is $2,000. The maximum fee can reach ten percent
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of the claim. However, supporters of arbitration argue that this should be more than
compensated for by the potential for the increase in the efficiency of arbitration to
reduce the other costs involved.
‘Splitting the Baby’ – Thomas Crowley states that because of the relaxation of rules
of evidence in arbitration, and the power of the arbitrator to ‘do equity’ (make
decisions based on fairness), the arbitrator may render an award that, rather than
granting complete relief to one side, splits the baby by giving each side part of what
they requested. Thus both parties are leave the table feeling that justice was not
served.
Narcotic/Chilling Effects – The chilling and narcotic effects are two related concepts,
which many theorists, including David Lipsky, believe to be inadequacies of interest
arbitration. Chilling occurs when neither party is willing to compromise during
negotiations in anticipation of an arbitrated settlement. Two measures most
commonly used to weigh this effect are: the number of issues settled during
negotiations versus the amount of issues left for arbitration, and a comparison with the
management’s and union’s initial offers (chilling takes place when the two parties
take extreme positions and are not willing to budge). The narcotic effect refers to an
increasing dependence of the parties on arbitration, resulting in a loss of ability to
negotiate. Common methods of assessing the narcotic effect are: the proportion of
units going to arbitration over time and, perhaps more importantly, the number of
times an individual unit returns to arbitration over a series of negotiations.
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