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Overview
Disputes
often arise after parties contract for the delivery of products or services.
When disputes occur, the parties can be faced with expensive and time
consuming court litigation before justice is done. Multiple parties
to the contract generally complicate and lengthen the dispute resolution
process. If the underlying contract provides for dispute resolution
by arbitration, litigation in court generally can be avoided entirely.
In its place, arbitration before an impartial arbitrator resolves the
dispute with substantially less expenditure of time and money. In
an arbitration, the arbitrator conducts a hearing. Documentary evidence
and witness testimony is presented. Witnesses may be cross
examined as in a court trial. After presentation of evidence, the
arbitrator applies the law to the facts and makes a ruling. The
ruling is the Award.
Privacy & Confidentiality
A major benefit that arbitration
has over litigation in court is that the dispute resolution process and
Award can remain private and confidential. Most court resolved disputes
are open to the public.
During the arbitral process, the
powers of the arbitrator are limited to that conferred by the parties
and law. In many cases, the powers are specified in the underlying
contract. If the parties initially executed their contract without
providing for arbitration, the parties may still be able to resolve their
dispute with the arbitral process. After a dispute occurs and if
all parties agree, the dispute may still be submitted to an impartial
arbitrator. An agreement to arbitrate usually is reached when each
party realizes the cost and time savings of arbitration compared to litigation
in court.
In technology and IP disputes, as
in many controversies, there usually is confidential proprietary information
to protect. Each party may want to avoid disclosing company proprietary
information to other parties or third persons. Because the desire
to maintain confidentiality is frequently common to all parties to a dispute,
they may agree to a protective order to be issued by the arbitrator.
The protective order generally requires each party to not use or disclose
confidential information exchanged or discovered during the arbitration
process for any purpose other than that needed to resolve the dispute.
Binding vs. Non-Binding
An arbitrator's Award may be binding
or non-binding. Oftentimes if a dispute is first brought in court,
the court may order the dispute submitted to non-binding arbitration.
In non-binding arbitration, the losing party may get 'two bites of the
apple' by forcing a later court trial on the merits. In the subsequent
trial, the party that first won may ultimately lose its case. In
controversies where the parties have agreed to binding arbitration for
resolution of their disputes, the arbitrator's Award is final, may be
filed in court, and converted to an enforceable judgment. Converting
an Award to judgment typically does not require a court trial. The
parties have already tried their case before the arbitrator. The
judgment is simply used to enforce the terms and conditions of the Award
with all the power of the law behind it.
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