What Is Arbitration

Arbitration refers to a dispute resolution method in which both parties agrees to submit a dispute to the third party (with a recognized status) to judge and give an arbitration award to the dispute. Arbitration, which is different from litigation and trial, requires both parties to be voluntary. As a voluntary means of jurisdiction, it can be referred to as a special mediation different from mandatory mediation.

Arbitration is a system in which both parties voluntarily submit their disputes to an arbitral tribunal formed by non-judicial arbitrators in accordance with the arbitration agreement, and are subject to the tribunal. Arbitration activities are one of means to resolve civil disputes, like trial activities in courts, are related to the substantive rights of both parties. 

Commercial arbitration refers to a dispute resolution method when a buyer or seller voluntarily submit the dispute to a neutral third party to have an arbitration award provided with a written agreement. There are two forms of arbitration agreement: one is made before the dispute occurs usually as an arbitration clause in the contract; the other one is made after the dispute, which is to submit the dispute that has already occurred to the arbitrators. These two forms of arbitration agreement have the same legal effect.

An arbitration institution is different from a court. The latter exercises its judicial power conferred by the state. It is not necessary for both parties to reach an agreement before the litigation. As long as one party files a lawsuit in a court with jurisdiction, the other party must respond after the court accepts the case. Arbitration institutions are usually civil organizations, and their jurisdiction to accept cases comes from mutual agreement from both parties. Without an agreement, they have no right to accept any case.