At times when an issue or dispute cannot be solved by the parties involved and participation of a court is not desired, engaging the services of an arbitrator can be the best option. Arbitration is when a neutral outside party is called in to pass judgment on a dispute. While not a part of the courts the decision passed by the arbitrator can be considered to be legally binding and final on both the parties involved.

Arbitration can be much cheaper than going through the legal system which is why a number of people prefer this method. Provisions for taking an issue or a contract to an arbitrator usually have to be built into the contract with a dispute resolution cause. Both parties generally have to agree to go into arbitration. There are many advantages along with disadvantages of the arbitration process which should be carefully reviewed and evaluated before starting.

The process of arbitration can be much faster than going to a court. Other benefits of arbitration include:

Proceeding can be kept confidential
Decision can be final since long, drawn out appeals are not possible
The costs are lower and the proceedings can be flexible as compared to a structured court case

Drawbacks of arbitration can include but are not limited to the following:

If the arbitrator is not neutral the proceedings are not fair
The limited ability to file an appeal means that you are out of luck if the decision does not go in your favor
Depending on the dispute the process of arbitration can get extremely complex and hard to follow.

Things to consider

Before you consider hiring an arbitrator, it is very important to consider the following questions:

How will an arbitrator be chosen and how will their impartiality be decided?
What does the contract or agreement state about arbitration - is it allowed?
What are the consequences and risks you'll undertake in case the arbitration does not go in your favor?
Is the arbitrator linked with associations like the Institute of Arbitrators and Mediators - Australia to ensure impartial service?
What experience do arbitrators have in this field and are they aware of all applicable laws and regulations?