What is arbitration?

Arbitration is a formal dispute resolution process governed by the Commercial Arbitration Act 1990 Qld (or the equivalent in other states) in which two or more parties refer their dispute to an independent third person (the arbitrator) for determination. Providing that the arbitration is conducted according to the principles of natural justice its procedures may be varied by the parties to suit the size and complexity of their dispute. A small case, for example, may be heard on the basis of documentary submissions alone which can reduce its costs significantly. Other more complex cases may benefit from a more judicial style of hearing in which formal claims and defences are lodged, evidence is put forward by each party and tested by cross-examination etc. The result of the arbitration, known as the Award, is enforceable in the same manner as a Court judgment.

Commercial arbitration in Australia has become the preferred procedure for parties seeking a binding determination of their dispute and an alternative to Court based litigation. Under the direction of a qualified arbitrator, it is an expedient, private and efficient method of dispute resolution.

When should arbitration be considered?

Arbitration should be selected as the preferred process for dispute resolution when parties require defined procedures that are a subset of those available in court but without the delays, public access or formality. Arbitration also enables the dispute to be adjudicated upon by a tribunal familiar with the professional or technical background of the matters in dispute.

When using arbitration as the process for resolving a dispute, parties are able to select an arbitrator with particular expertise and commercial experience in the subject matter of the dispute. The nominee arbitrator will then typically call a preliminary conference with the parties to agree procedural guidelines for that arbitration. This process thus provides a customised, specialist tribunal which facilitates a more efficient, effective and acceptable outcome.

The selection of arbitration as a dispute resolution procedure is a question which parties (and their legal representatives) should address at the time of entering into commercial contracts, so that an appropriate agreement can be included in the terms of the contract (an “arbitration clause”). Alternatively, an agreement to submit disputes to arbitration can be made by the parties after a dispute has arisen.

Arbitration should always be considered by parties to commercial contracts to enable their disputes and differences to be resolved

• efficiently and quickly,

• with privacy and confidentiality,

• in a final and enforceable way, and

• in accordance with the law and each party's rights.

Subject to contractual provisions, the parties can agree on a person to be appointed as arbitrator or (if they cannot agree) ask the President of the Institute of Arbitrators and Mediators (IAMA) to appoint an arbitrator.

Rowena McNally is a Fellow and Grade 2 Arbitrator of the Institute of Arbitrators & Mediators Australia (now Resolution Institute).

Please click on the Link below for Fast Track Arbitration Rules:

The IAMA Arbitration Rules (Incorporating the IAMA Fast Track Arbitration Rules)

Rowena McNally 2017