Aristotle (384-322 BC) wrote:
"It bids us remember ... to settle a dispute by negotiation and not by force; to prefer arbitration to litigation -- for an arbitrator goes by the equity of a case, a judge by the strict law, and arbitration was invented with the express purpose of securing full power for equity."
Halsbury's Laws of England, 5th Edition (2008), Book 2, "Arbitration", at ¶1201 defines arbitration as follows:
"Arbitration is a process used by agreement of the parties to resolve disputes. In arbitration, disputes are resolved, with binding effect, by a person or persons acting in a judicial manner in private, rather than by a national court of law that would have jurisdiction but for the agreement of the parties to exclude it. The decision of the arbitral tribunal is usually called an award."
In a 1858 case Collins v Collins, the Court wrote:
"An arbitration is a reference to the decision of one or more persons, either with or without an umpire, of some matter or matters in difference between the parties."
In General Motors, Justice Dennis of the United States Court of Appeals wrote;
"Arbitration is the reference of a particular dispute to an impartial third person chosen by the parties to a dispute who agree, in advance, to abide by the arbitrator's award issued after a hearing at which both parties have an opportunity to be heard.
"Parties may agree to the submission to arbitration of existing controversies without any previous contract to do so."
In Precision Drilling, Justice Mason of the Alberta Court of Queen's Bench defined arbitration as follows (relying on the lengthy multi-jurisdictional exposé of Justice L'Heureux‑Dubé in Sport Maska):
"... the following criteria must exist for the process to be arbitration: a formulated or defined dispute must exist between the parties, not just an unresolved problem or matter about which they disagree; the parties must intend to make submissions of their respective arguments about the existing dispute to a decision-maker whom they, by the terms of their agreement, have entrusted to make a decision; (and) the decision-maker must be a third party neutral, i.e., a person or persons who are impartial and who base the decision on the submissions (including evidence or not)."
Although the courts are quick to remark that the agreement to submit and be bound by the third-party's decision (the arbitrator) is the salient feature of arbitration, that is no longer accurate. Increasingly, arbitration is imposed by statute (for example, in residential tenancy disputes) and so is not necessarily always the result of contractual choice.
Many jurisdictions encourage arbitration as an alternative to the traditional court process by issuing a statute which contains general terms and procedures for arbitration, which are easily referenced by persons seeking to resolve a dispute (eg. Alberta's Arbitration Act or the Arbitration Act of Ontario).
Arbitration is one of the two traditional variants of ADR, the other being mediation, the major distinction between the two is that arbitration produces a binding result; mediation, not necessarily (see also conciliation).
As with mediation, the parties choose their own presiding officer; in the case of arbitration, called an arbitrator.
In law, formalized arbitration has been around since 1697, when the British Parliament enacted An Act for determining Differences by Arbitration.
Shakespeare, as early as 1602, used the word in Troilus, remarking with good judicial sense, that "time" was the ultimate "old common arbitrator".
The United Nations has adopted a Model Law on International Commercial Arbitration to foster international trade disputes.
In an attempt at alleviating an inefficient Court system, some jurisdictions impose mandatory arbitration in some fields, now rampant, for example, throughout Canadian labour law.
Note the words of Justice Dea in Warren:
"Arbitration is a process of dispute resolution adopted consensually by the parties in preference to what is sometimes perceived as the slower more expensive civil litigation process available at law."
REFERENCES:
- Arbitration Act, Revised Statutes of Alberta 2000, Chapter A-43
- Arbitration Act 1991, Statutes of Ontario 1991, Chapter 17
- Aristotle, The Rhetoric of Aristotle, Book I, Chapter 13.
- Collins v Collins 26 Beav 306; also at 53 ER 916
- Commercial Arbitration Act, Revised Statutes of British Columbia 1996, Chapter 55
- Duhaime, Lloyd, ADR: A Glossary of Terms
- Duhaime, Lloyd, Legal Definition of Alternate Dispute Resolution
- Duhaime, Lloyd, Legal Definition of Med/Arb
- General Motors Corporation v Pamela Equities Corporation 146 F. 3d 242, at page 246.
- Precision Drilling Corporation v Matthews Equipment Limited 2000 ABQB 499
- Sport Maska Inc. v. Zittrer 1988 1 SCR 564
- Sutton, D., and Gill, J., Russell on Arbitration 23rd Ed. (London: Sweet & Maxwell, 2003)
- Warren v Lawyers' Public Protection Association 56 Alberta Law Reports 3d 52 (1997)