ar·bi·tra·tion (ärbətrāSH(ə)n) noun The use of an arbitrator to settle a dispute.
When arbitration is found in a contract, it sounds like all future problems between parties involved will be easily solved with a decision of the arbitrator. The truth is; it depends. When applied to international trading, arbitration is usually a good thing. If one is unable to verify the jurisdiction of a case, or the case is complicated and needs to be judged by a specialist or expert, use of an arbitrator is preferred. But… with a simple contract it will almost always cause a big problem when there is a dispute. When the parties involved in a contract (such as a house construction contract, a land purchase contract, or a lease contract) are in the same country and same jurisdiction, arbitration rarely works.
There are a few main reasons why this is so:
• The arbitration process is longer (at least two times the legal process which wastes time). • The cost of arbitration is at least two times higher than the legal process.
• The loser of the case never accepts the decision of the arbitrator.
• The dispute will inevitably return to the courts. If you see an arbitration clause in any draft contract, ask your lawyer to have it removed. This advice in this article has been provided as an opinion by local lawyer Jatupon Cherbangkaew, Executive Partner / Lawyer, www.actahuahin.com.