Arbitration vs Adjudication
For a person well-versed in the field of law, identifying the difference between arbitration and adjudication is a simple task. It is, unfortunately, not so simple for those of us unfamiliar with their precise meaning. Indeed, it probably does not help that the two terms not only sound similar but seemingly appear to convey the same meaning. The latter is true in that the terms arbitration and adjudication both refer to a legal process of resolving disputes. However, there is a difference, and it is necessary to understand this distinction. Perhaps, a very basic way of separating the two terms would be to think of Adjudication as a process that unfolds in a courtroom while Arbitration is a process that unfolds outside a courtroom in a less formal setting. Let’s take a closer look.
What is Adjudication?
Traditionally, the term Adjudication has been defined as the legal process of resolving a dispute or controversy. Informally, it is referred to as the process by which a court hears and settles a case between two or more parties. Disputes that can be resolved through Adjudication include disputes between private parties such as individuals or corporations, disputes between private parties and public officials and disputes between public officials and public bodies. The process of Adjudication commences by first giving notice to all parties interested in the dispute, namely, those who have a legal interest in the dispute or a legal right affected by the said dispute. Once the notice has been given to all parties, the parties will appear in court on a selected date and present their case by way of arguments and evidence. Thereafter, the court will take into consideration all the facts of the case, review the evidence, apply the relevant law to the facts and finally come to a decision. This decision represents a final judgement that determines and specifically settles the rights and obligations of the parties to the dispute. The purpose of the Adjudication process is to ensure that the parties reach a settlement that is agreeable, reasonable and, most importantly, one that is in accordance with the law. Further, this process is governed by procedural rules as well as rules of evidence.
Adjudication takes place in a courtroom
What is Arbitration?
Arbitration, as mentioned above, also represents a legal process of resolving disputes. However, the key feature of this process is that it serves as an alternative to Adjudication. Arbitration represents one of the various methods of Alternative Dispute Resolution (ADR), a mechanism that offers parties other alternatives or avenues through which their disputes can be resolved. Thus, parties can choose to settle disputes through either one of the ADR methods as opposed to litigation or going to court. As mentioned before, Arbitration does not take place within a courtroom setting unlike Adjudication. Traditionally, the term is defined as the submission of a dispute to an informal, unbiased third party, chosen by the parties to the dispute, who agree to comply with the decision or award made by the third party. Arbitration can take place either voluntarily or as required by law. Typically, parties to a dispute will opt for Arbitration and in turn select a neutral person to hear both sides. Aside from this, another way in which Arbitration is selected is if the contractual agreement between parties includes an Arbitration clause that provides for the submission of a dispute for Arbitration as opposed to a court trial. This is the more common situation. The persons selected to hear and settle the dispute are called Arbitrators. An Arbitrator or a panel of Arbitrators can be selected by the parties themselves, or appointed by a court, or appointed by the Arbitration body in the relevant jurisdiction. In most jurisdictions, awards by an Arbitrator or a panel of Arbitrators are considered binding and parties are bound to satisfy the award. Further, courts in most jurisdictions enforce such Arbitration awards and rarely dismiss them.
Arbitration is a process that is preferred as it saves time, avoids unnecessary delay and expense. In an Arbitration proceeding, the parties present their case through evidence and arguments. Rules of procedure in Arbitration are typically governed by a country’s Arbitration laws or as per the requirements given in the contract between parties. Matters that are submitted for Arbitration generally include labour-related disputes, business disputes, and commercial disputes.
An 1896 cartoon from an American newspaper, following Britain’s agreement to go to arbitration
What is the difference between Arbitration and Adjudication?
• Adjudication takes place before a judge and/or jury while an Arbitration proceeding is heard by an informal third party such as an Arbitrator or a panel of Arbitrators.
• Adjudication is a process that unfolds in court and therefore represents a court trial.
• Arbitration, in contrast, is mostly voluntary, and does not take place within a courtroom setting. It is an alternative to litigation.
Images Courtesy:
- High Court of Australia by Bidgee (CC BY-SA 3.0 au)
- Arbitration cartoon via Wikicommons (Public Domain)
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