Commercial arbitration is a formal and private dispute resolution process pursuant to the Commercial Arbitration Act 2010 NSW (or the equivalent in other states). The dispute is referred to an independent ‘umpire’ (the arbitrator) for determination. Unlike litigation, and providing that the arbitration is to be conducted according to the principles of natural justice, the arbitration process may be adjusted to suit the complexity of their dispute. Smaller cases may be heard on the basis of documentary submissions alone, while more complex cases are likely to be exposed to a judicial-style hearing in which formal claims and defences are lodged, evidence is put forward by each participant and tested by cross-examination. The result of the arbitration is enforceable in the same manner as a Court judgement.
Most people are familiar with the concept of litigation, with civil matters normally determined in a Court by a judge. If a matter gets to court, the deliberations of the Court, including details of the evidence adduced, will become public information.
Arbitration is itself a form of Alternative Dispute Resolution (ADR), however the duration and cost comparison between arbitration and litigation has blurred.
Other forms of ADR are available that offer specific advantages. One or more of these alternatives should be considered when establishing a contract, or alternatively be agreed to be entered by the parties if and when a dispute arises.