Arbitration in Disputes

Definition arbitration: When disputes and disagreements are referred to an independent arbitration panel who consider the evidence and then make a binding decision on both parties.

Arbitration is used in

  • Industrial disputes
  • Commercial disputes
  • International disputes over legal and trade issues

Pendulum Arbitration

This is when an arbitration panel looks at both sides of the debate and decides which side has the most reasonable position. It is not able to split the verdict but most come down on one side or the other. This was used in the baseball dispute between players (wanting higher wages) and owners who wanted to keep salary cap.

Advantages of Arbitration

  1. Saves time and protracted disputes.
  2. Saves lost time due to strikes
  3. Saves the cost of negotiating
  4. Provides a way for people to back down without losing face.

Disadvantages of Arbitration

  1. The arbitration panel may be biased and make the wrong decision
  2. Parties need to pay for the dispute to be seen
  3. Enforcement of the decision may not always be so easy.

Not all arbitration disputes have to be binding.

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