Arbitration is a cheaper, private and usually quicker way of resolving disputes without the need to go to court. The two sides in dispute will agree to have their dispute heard by an arbitrator or panel of arbitrators, who are independent and impartial.

The proceedings can be similar to court proceedings in that both sides will argue their case and can be represented by lawyers, but the proceedings are usually less formal and take place in a venue of the two sides’ choosing. The decision (called an “award”) of the arbitrator is binding, that is, both sides agree to it unconditionally. Arbitration is very useful in business disputes, principally because the outcome is kept private and confidential. This is different to mediation, which is not binding.

There are different types of commercial arbitration, including:

  • Commercial arbitration. This is the most common type of arbitration, between two commercial organisations.

  • International commercial arbitration. Where companies in different countries are in dispute and opt for arbitration to resolve their dispute, such as before the Singapore International Arbitration Centre.

  • International state/investor arbitration. Disputes between states and business investors are heard by the International Centre for the Settlement of Investment Disputes (ICSID).

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