Arbitration

Question 1

What is arbitration?

Answer 1

• One of the most formal alternate methods of dispute resolution outside of courts
• Involves an independent third party called an arbitrator
  
  • This person will listen to both sides and then make a legally bounding decision on both parties, known as an arbitration award

Question 2

Features of arbitration

Answer 2

• Arbitration is conducted in private, can be less formal and more cost effective than attending courts
• Commonly used by parties involved in disputes involving large commercial transactions
• Not bound by rules of evidence
• Often involves legal representation
• The resolution is decided by the arbitrator and is legally binding

Question 3

When is arbitration used?

Answer 3

• In private:
  
  • Can be arranged by the parties themselves, and usually involves commercial transactions such as contracts
  • Takes place at the Dispute Resolution Centre
• In court:
  
  • When a claim below $10,000 is filed in the Magistrates Court, it is obliged to be referred to arbitration
  • It can also be referred to arbitration in the Magistrates, County and Supreme Court with consent
• In tribunals:
  
  • VCAT can refer parties to arbitration before the final hearing, but does not conduct it itself

Question 4

When is arbitration appropriate?

Answer 4

• When the parties consent or agree to attend arbitration, or it is included as part of their contractual agreement
• When the matter is below ten thousand dollars and filed in the Magistrates Court
• When parties want to benefit from a legally binding decision
• When parties will benefit from the matter being resolved in a private, confidential manner
• When parties want to benefit from a more formal procedure, whereby a independent third party will view the evidence and facts presented

Question 5

When is arbitration inappropriate?

Answer 5

• If the parties are unwilling to arbitrate and want to have their matter heard in court
• If parties would like to maintain an ongoing relationship, which would be impossible because arbitration is a win lose
• If parties wish to publicise the poor conduct of the other
• If the parties are uncomfortable and uninformed about rules of procedure, meaning mediation or conciliation is more appropriate