Non-Binding Arbitration

Arbitration is a dispute resolution method that occurs out of court. It involves the participation of a both parties, who will discuss their issues with one another. This will all occur in the present of a third party arbitrator, which is an expert who is appointed to regulate the discussion between the parties.

Non-binding arbitration means that the results of the discussions do not carry any legal precedence, and the parties are not bound by law to follow the results. Instead, they are simply guidelines that can help the parties avoid conflicts in their future conduct. Non-binding arbitration is common for less complex disputes or for when parties simply need guidance and counseling.

What’s the Purpose of Arbitration If It’s Non-Binding?

Advantages: There are many benefits to non-binding arbitration. For instance, arbitrations are usually speedier and more efficient than litigation. Also, non-binding arbitration can help create guidelines for the parties to follow. It also helps to encourage and preserve a working relationship between the parties. In many cases, business partnerships or other relationships can be negatively affected by an all-out lawsuit. In comparison, one of the purposes of non-binding arbitration is to encourage the parties to remain cooperative with one another.

In some cases, the parties may wish to have the results of non-binding arbitration formalized into a new agreement or a new working policy between them. Again, these are often informal guidelines that exist for the mutual benefit of the parties.

Disadvantages: Parties cannot appeal the final decisions. If the parties were able to reach an agreement and generate a valid contract as a result of arbitration efforts, that contract would be binding and legally enforceable. Of course, the contract document would need to meet all the requirements for a valid contract. Similarly, any other formal agreements that are signed and in writing during arbitration can become legally binding.

The only way that a decisions can be set aside is if the parties both agree that the arbitrator was biased and unfair and that the decision violated public policy.

Should I Hire a Lawyer for Help with Non-Binding Arbitration Sessions?

Undergoing arbitration can involve many different legal concepts and requires much preparation for all parties involved. It’s in your best interests to hire a business lawyer for advice and representation if you’re going to be part of an arbitration session. Your lawyer can discuss your rights with you and can help you understand how the process can benefit you.