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When you run your business, you interact with other commercial entities as part of your day-to-day business activities. Sometimes, you will enter into commercial contracts with them, which is a legally binding agreement. This will detail your roles and responsibilities in your business relationship. However, sometimes, relationships with other companies will not go smoothly, and issues can arise. When they do, you may find yourself in a business dispute. One way to resolve this is with arbitration, which is a form of alternative dispute resolution. When you do, you will use an arbitrator. This article will explain what an arbitrator is and some key points about their role in commercial disputes.
What is Commercial Arbitration?
Commercial arbitration is an alternative dispute resolution (ADR) method of resolving a dispute. When businesses have a conflict, they can use arbitration to determine what to do by presenting evidence and arguments about the issue.
Although arbitration is a legal method of resolving a dispute, it is distinct from the court system. However, an arbitration award is a binding decision an arbitration tribunal makes, meaning the parties to the dispute must follow it. A neutral third party, an arbitrator, will decide on the dispute rather than a judge in court. Overall, arbitration is a quicker and less costly method of resolving a dispute than going to court.
Arbitration is not the only ADR method. You should consult your commercial contract to see what kind of dispute resolution process you have agreed to. You can proceed with arbitration if you have an arbitration clause in your contract. Otherwise, you may need to undergo negotiation or mediation.
What is an Arbitrator?
An arbitrator is a neutral party appointed to resolve a commercial dispute through arbitration. This may be a single person or a group of people who sit on an arbitration board. An arbitration board will usually be a total of three people. Commonly, where there are three arbitrators, each party to the dispute will select one arbitrator they wish to have. These two arbitrators will then choose a chairperson for the arbitration panel.
A commercial arbitrator will have expert knowledge about the issue in dispute and have skills in acting fairly. They should also be entirely impartial to the dispute and parties involved. Impartiality ensures both parties have a fair and equal hearing. Also, an arbitrator typically has good legal skills to interpret and apply relevant law to the commercial dispute.
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What is an Arbitrator’s Role?
A commercial arbitration role is to consider the evidence of the dispute and come to a decision about it. As part of this role, they can:
- ask you and the other business to produce evidence;
- request a third party to give evidence; and
- enforce either of the above using a subpoena.
A commercial arbitrator has the power to proceed with the arbitration proceedings even if you or the other party fail to turn up. They can even grant an award to the other side if you have no legitimate reason for your absence. Therefore, you must attend your arbitration proceedings to ensure your side of the dispute is included in the arbitrator’s decision.
What Does an Arbitrator Do in a Dispute?
During arbitration, an arbitrator has specific actions to take to ensure the procedure runs smoothly. These tasks can include:
- writing the arbitration notice, which explains the expectations of the two commercial entities and what the issues are in the commercial dispute;
- gathering evidence;
- organising and holding the meeting and hearing for you and the other party to show your evidence;
- writing a summary of your and the other business’ position;
- making a decision or award; and
- following up on the decision as needed.
This guide outlines how to resolve commercial disputes.
Key Takeaways
If your business finds itself in a business dispute, you may decide to try to resolve this with arbitration. Arbitration is when you and the other party appoint an arbitrator to decide on the conflict through arbitration proceedings. The arbitrator is a neutral third party with expertise in the area in dispute. This can be one person or three making an arbitration panel.
If you need help resolving a commercial dispute, our experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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