FAQs about Arbitration (in general)

What is arbitration and how is it different from litigation?

Arbitration is a form of private dispute resolution where the parties present their case to a neutral third-party arbitrator (or panel of arbitrators) instead of going to court[1]. The arbitrator acts like a private judge, reviewing evidence and arguments from both sides, and then issues a decision (an award) that is usually final and binding. Unlike litigation, arbitration is based on an agreement between the parties – often a clause in a commercial contract – to resolve disputes outside the court system[2]. There’s no public courtroom, judge, or jury involved; instead, the process is more informal and flexible, though it follows established rules.

Key differences between arbitration and court litigation include:

Forum and Decision-Maker: In arbitration, the dispute is resolved in a private setting by an arbitrator chosen by the parties, whereas litigation occurs in a public court with a judge (and sometimes a jury) assigned by the state[3][4]. This means in arbitration you have a say in who will decide your case (often someone with relevant expertise), in contrast to court where you cannot choose your judge.
Time to Resolution: Arbitration is generally faster. Cases can often be resolved in a matter of months, whereas court lawsuits may take years due to crowded dockets and appeals[5][6]. For example, one study found the average arbitration case took about 7 months, versus 23–30 months for litigation in court[7]. This speed can be crucial for businesses looking to resolve disputes efficiently.
Cost: Because of the streamlined process, limited discovery (i.e. narrower evidence exchange), and no prolonged trial or appeals, arbitration can reduce legal fees and overall costs[8]. Litigation, on the other hand, often involves extensive discovery, multiple hearings, and lengthy trials, making it expensive with high attorney fees and court costs[9]. (Do note that arbitration isn’t free – parties must pay arbitrators and any administering institution, so the cost advantage can vary with the case’s complexity.)[10]
Privacy and Confidentiality: Arbitration hearings are private. Unlike a court case, which is typically part of the public record, arbitration happens behind closed doors – no public or press attendance and no public filing of sensitive business information[11]. This privacy helps companies keep trade secrets and reputational issues out of the spotlight[12]. In litigation, by contrast, filings and trials are generally public. (It’s worth noting that while arbitration proceedings are private, full confidentiality is not automatically guaranteed; it depends on the arbitral rules or a confidentiality agreement between the parties[12].)
Procedural Flexibility: The arbitration process is more flexible and informal. Procedural rules can be tailored to the parties’ needs – for instance, limited evidence exchange or simplified rules of evidence – so long as the proceedings remain fair[13]. Court litigation is more formal and follows strict procedural rules and statutes, leaving less room to customize the process.
Finality and Recourse: An arbitrator’s decision is typically final and binding, with extremely limited grounds to challenge it[14]. In other words, there is usually no appeal on the merits in arbitration – the award is meant to conclude the dispute. Litigation offers the possibility of appeals; a court judgment can be appealed to higher courts, potentially prolonging the dispute[15]. For businesses, arbitration’s finality can be a double-edged sword: it provides quick closure, but also means you generally have to live with the result (barring egregious circumstances like fraud by the arbitrator).

In summary, arbitration is a private, faster, and more flexible process compared to litigation[16]. It trades off some of the safeguards of court (like broad discovery and multiple appeals) for efficiency, expertise, and confidentiality. This can be a great advantage for corporate legal teams, especially when a speedy and discrete resolution is desired.

When should a company consider arbitration?

Companies should consider arbitration at the contract-drafting stage and whenever a significant dispute arises, weighing whether arbitration aligns with their goals for resolving that dispute. Here are common scenarios and factors where choosing arbitration makes sense:

Cross-Border and International Deals: If your agreement is between parties in different countries, arbitration is often the preferred route. Without an arbitration clause, a lawsuit might have to be filed in a foreign court (possibly in a foreign language), and a judgment from one country can be difficult to enforce in another[17]. By using arbitration, you ensure any eventual award can be enforced globally (thanks to treaties like the New York Convention) and avoid the risk of “home court” bias by choosing a neutral location for the proceedings[18]. For example, if a U.S. company and a European company have a dispute, they might agree to arbitrate in a neutral venue like Singapore or Geneva, so neither side has to litigate in the other’s national courts.
Need for Confidentiality: If a dispute involves sensitive information – such as trade secrets, proprietary technology, or matters that could affect a company’s reputation – arbitration provides a private forum to keep those issues out of the public eye[19]. There’s no public docket or media access during arbitration, which is ideal for resolving matters discretely. Corporate counsel often favor arbitration for high-profile companies to avoid airing dirty laundry in court.
Desire for Speedy Resolution: When a quick outcome is important (for instance, to minimize business disruption or to meet financial/reporting timelines), arbitration can be advantageous. It avoids the lengthy timelines of court litigation and multiple appeals[5][20]. Companies facing time-sensitive disputes – say a supply chain issue holding up production – might use arbitration to get a decision in months rather than waiting years for a court verdict.
Enforcing Existing Contract Clauses: Quite simply, if your contract already contains an arbitration clause, you will likely be required to arbitrate if a dispute covered by that contract arises. Many commercial contracts pre-specify arbitration for any disputes, so corporate counsel should always check the dispute resolution clause. Enforcing a valid arbitration agreement is generally favored by courts, meaning if one party tries to sue in court, the other can usually get the case compelled into arbitration as agreed[21]. So, when such a clause exists, your strategy should center on arbitration from the outset.
Neutral Forum & Ongoing Relationships: Arbitration is worth considering when you need a neutral forum – for example, if you don’t want to litigate in the other side’s home country or state. By selecting arbitration and specifying an impartial location (the “seat” of arbitration), you avoid any local court bias and ensure neither side has the home advantage[22]. Also, if maintaining a good business relationship with the other party is a goal (perhaps it’s a key supplier or joint venture partner you’ll continue working with), arbitration’s more private and less adversarial atmosphere can help. The process encourages cooperation and tends to be less hostile than open court fights, making it easier for the parties to continue doing business together after the dispute[23].
Complex or Technical Disputes: If a dispute is highly technical or industry-specific (for example, a software licensing disagreement or an engineering failure), arbitration lets you choose an arbitrator with the right expertise. In court you get a randomly assigned judge (or jury) who may not be familiar with the subject matter. In arbitration, you could pick, say, a retired software engineer or someone with a deep background in your industry to serve as arbitrator, leading to a more informed decision. This is a strategic reason to opt for arbitration when specialized knowledge is crucial to fairly resolving the case[24].

In summary, corporate counsel should consider arbitration when it offers a strategic advantage: international enforceability, confidentiality, speed, expertise, or neutrality that you might not get in court. It’s often a case-by-case decision. In practice, many companies make this choice upfront by including arbitration clauses in their contracts as a proactive measure to manage risk. When a dispute does arise, review the circumstances – if the above factors are priorities, arbitration is likely a smart path to pursue.

What are the key benefits of arbitration for commercial disputes?

Arbitration offers several important benefits to companies compared to going through courtroom litigation. The main advantages include:

Speed and Efficiency: Arbitration is typically faster than litigation. Once a dispute is submitted to arbitration, it can often be resolved in a matter of months, not years[5]. For example, research cited by the American Bar Association found an average arbitration lasted about 7 months versus 23–30 months for a court case[7]. Faster resolution means less time spent embroiled in disputes and more time focusing on business. It also can lower overall legal expenses – with a shorter timeline and streamlined procedures, companies often spend less on attorneys and evidence gathering than they would in protracted court battles[8]. (Do note that while legal fees may be lower, arbitration does involve arbitrator fees and administrative costs, which need to be weighed[10].)
Privacy and Confidentiality: Privacy is a key benefit. Arbitration hearings are held in private conference rooms or online, not open court, and there is no public record of the proceedings[11]. This keeps sensitive business information – financial data, trade secrets, allegations of wrongdoing – out of the public eye. Competitors, customers, and the media cannot attend or access what is discussed. For example, if a dispute concerns a proprietary technology or a company’s internal practices, arbitration prevents those details from becoming public. Most arbitration rules or agreements also impose confidentiality obligations on the parties, meaning the documents and award can be kept confidential (though, as mentioned, confidentiality is ultimately subject to what the law or the arbitration agreement provides)[12]. In short, arbitration lets corporate counsel manage disputes with discretion, protecting the company’s reputation and intellectual property.
Enforceability Worldwide (and Neutral Forums): Arbitral awards are widely enforceable internationally, which is a huge benefit for global business. Over 170 countries are signatories to the New York Convention, a treaty that obliges courts to recognize and enforce foreign arbitration awards in most cases[25]. This means if you win an arbitration, you can turn that award into a judgment in almost any major country – a level of global enforceability that a court judgment from one country simply doesn’t have. Additionally, because parties can choose a neutral “seat” (location) for the arbitration, neither side has to fight in the other’s local courts. You can select a neutral country or city with an arbitration-friendly law to host the proceeding, avoiding any perceived home-court advantage[26]. The combination of a neutral forum and internationally enforceable decisions makes arbitration especially attractive for cross-border commerce.
Choice of Decision-Maker and Expertise: In arbitration, the parties have a say in who will decide the dispute. You can select arbitrators with specific expertise or industry knowledge relevant to your case[27]. For example, in a complex construction dispute, you might choose an arbitrator who is an expert in construction law or engineering. This often leads to a more informed and technically sound decision. In contrast, in litigation you get a random judge (or jury) who may not have any background in your business sector. The ability to hand-pick a qualified, impartial decision-maker is a significant advantage – it builds confidence that the outcome will be based on an understanding of the commercial context. Many companies also prefer a panel of three arbitrators for high-stakes cases, to ensure a diversity of perspectives (each party chooses one arbitrator and a third is agreed upon as chair)[27][28]. This flexibility in choosing the tribunal can increase both the fairness and quality of the decision for complex commercial matters.
Flexibility and Control over Process: Arbitration procedures are more flexible and can be tailored to the parties’ needs. The rigid rules of court can be avoided or adjusted – for instance, parties can agree to simplified rules of evidence, set their own timelines, or limit the scope of discovery (exchange of documents) to what’s truly necessary[13][29]. This can save time and money. The scheduling of hearings is also more under the parties’ control; sessions can be set around business calendars, and because arbitrations aren’t bound by a court’s congested schedule, you can often avoid long delays. Essentially, arbitration lets you customize the dispute resolution process in a way litigation cannot. As long as both sides are treated fairly, you have leeway to make the procedure efficient and business-friendly. This flexibility extends even to things like the format of hearings (in-person vs. virtual), and the ability to submit written witness statements instead of lengthy direct testimony, among other procedural choices.
Finality and Certainty: An often-cited benefit of arbitration is the finality of the award. Because there is usually no appeal, the result is the end of the dispute (save for rare challenges on narrow grounds). For businesses, this provides certainty – you won’t spend additional years tied up in appellate litigation after the decision[30]. Once the arbitrator rules, the matter is done except for implementing the award. This can be reassuring when you want a definitive outcome and to move on. However, it’s a benefit that cuts both ways (you’d feel differently about finality if you’re on the losing end), so it’s something counsel weighs carefully. Overall, though, knowing that the arbitration will bring closure can be a positive if the goal is to resolve the issue completely and conclusively.

These benefits explain why arbitration is a popular choice in commercial contracts. It offers speed, privacy, global enforceability, expert decision-makers, and a flexible process, culminating in a binding result. For corporate legal teams, these advantages can translate into lower risk and cost, and greater control over how disputes are resolved, compared to rolling the dice in court litigation.

What makes an arbitration decision binding?

An arbitration decision (the award) is binding because the parties agree in advance that it will be. In commercial arbitration, typically the parties have signed a contract or arbitration agreement saying that any disputes between them will be resolved by arbitration and that the arbitrator’s decision will be final. This mutual promise gives arbitration its binding force[2]. Courts uphold such agreements through national arbitration laws. For example, in the United States, the Federal Arbitration Act (FAA) ensures that written arbitration clauses in contracts are legally enforceable – a court will compel parties to arbitrate if one tries to back out of that commitment. Likewise, many countries have adopted laws (often based on the UNCITRAL Model Law) that recognize arbitration agreements and awards as binding.

Once the arbitrator issues an award, it’s not merely a suggestion or recommendation; it is a decision that can be confirmed by a court and converted into an official judgment if needed. In fact, an arbitrator’s decision can generally be enforced in court just like a court verdict[31]. If one party refuses to comply with the award (for instance, to pay damages), the other party can file a motion with a court to confirm the award, and that judgment will have the force of law, allowing collection efforts, liens on assets, etc., as if it were a court judgment[31]. Internationally, the binding nature is reinforced by treaties – the most important being the New York Convention of 1958 – which require courts in over 170 countries to recognize and enforce arbitral awards, subject to very limited exceptions[25]. This means a binding arbitration award isn’t just a piece of paper; it has teeth virtually worldwide.

It’s worth noting that arbitration is by default binding in the commercial context. There is a concept of “non-binding arbitration,” but that is typically used in specialized contexts (like non-binding recommendations in some consumer or employment dispute programs, or court-mandated arbitration where parties can reject the award). In mainstream business practice, when we say “arbitration,” we almost always mean a binding arbitration – the parties have agreed to be bound by the result and give up their usual right to sue in court. This commitment is why arbitration can substitute for litigation entirely.

In summary, an arbitration is binding because the parties chose to make it binding by agreement, and the legal framework both domestically and internationally supports that choice. The arbitrator’s award carries legal force: courts will generally honor it and refuse to re-litigate the dispute. Other than in exceptional circumstances (e.g., if one party can prove a fundamental problem like arbitrator fraud or serious misconduct), both sides are stuck with the arbitrator’s decision – that’s the deal they made when they opted for arbitration[31].

How do choice of law and venue work in arbitration?

In arbitration, the parties have the freedom to decide key aspects of the legal framework governing their dispute: the choice of law and the venue, often referred to as the “seat” of arbitration. These decisions are usually made when drafting the arbitration agreement in a contract, but they can also be agreed upon after a dispute arises.

Choice of Law (Governing Law): This refers to the substantive law that will govern the contract and the dispute’s merits. For example, a U.S. company and a German company might agree that their contract is governed by New York law or English law. In an arbitration, the arbitrator will apply this chosen law to decide the case (just as a court would apply the law designated in a contract’s choice-of-law clause). Choosing a neutral and well-developed legal system’s law (like New York, English, or Swiss law, etc.) is common in international contracts to ensure predictability and fairness. It’s important for corporate counsel to specify governing law in contracts, because it removes uncertainty about what rules will determine the parties’ rights and obligations.
Choice of Venue (Seat of Arbitration): The “seat” or legal place of the arbitration is basically the jurisdiction whose laws will oversee the arbitration procedure and where the award is formally issued. This is not necessarily where hearings physically take place (hearings could be anywhere or even virtual), but it’s the legal home of the arbitration. The arbitration law of the seat will apply to procedural matters and any court involvement (like challenges to the award). For instance, parties might choose Singapore as the seat of arbitration even though neither party is based there, because Singapore has a respected, arbitration-friendly legal framework. By selecting a neutral venue, the parties ensure that no one’s local court has an inherent advantage[26]. The courts of the seat have limited supervisory roles – for example, if a party later tries to challenge (annul) the award, it usually must do so in the courts of the seat. So the choice of seat is important: it determines which country’s arbitration law applies and which courts could intervene if something goes awry[22]. Businesses typically pick a seat known for neutrality and effective arbitration laws (such as London, Paris, Singapore, Geneva, Hong Kong, New York, etc., in international cases).

In practice, an arbitration clause will often read like: “Any dispute arising under this contract shall be settled by arbitration under [specified rules] in [City/Country] (the seat of arbitration), and the contract shall be governed by [Country] law.” This way, the substantive law (e.g., French law) is clear, and the procedural law/seat* (e.g., Stockholm, Sweden) is also clear.

It’s also possible to let the arbitral institution’s rules fill in some gaps. For example, if parties don’t specify a seat, some arbitration rules allow the institution or arbitrators to determine an appropriate seat. But it’s usually better for the parties to agree in advance to avoid uncertainty.

Why do these choices matter? The governing law can affect the outcome of the case (different laws may yield different results on the same facts), and the seat affects how smoothly the arbitration will run and how easily the award will be enforced. If the seat’s courts are hostile to arbitration, that could pose problems (thankfully, most commercial hubs are pro-arbitration). Corporate counsel should thus negotiate choice-of-law and seat provisions carefully in contracts. Picking a widely accepted neutral law and seat can make the arbitration more balanced – for instance, two Asia-Pacific companies might choose English law and Hong Kong as the seat for neutrality and convenience, even if neither is from Hong Kong.

In summary, choice of law determines what rules apply to the dispute itself, and choice of venue/seat determines the legal environment for the arbitration process. Parties usually have autonomy to decide both, and making thoughtful choices ensures a fair and effective arbitration. Always specify them in your arbitration clauses to avoid later confusion or fighting over these issues.

How are arbitrators selected in commercial arbitration?

The process of selecting an arbitrator (or a panel of arbitrators) is flexible and party-driven, which is one of arbitration’s advantages. The exact method can depend on what the arbitration clause says and which arbitration rules you’re using (e.g., ICC, AAA/ICDR, LCIA, etc.), but here’s how it typically works:

Number of Arbitrators: First, the parties determine if the case will have a single arbitrator or a panel of three (which is common for larger, complex disputes). Many arbitration clauses specify this. If the clause is silent, institutional rules often provide a default (for example, a sole arbitrator unless the case is above a certain dollar amount). A sole arbitrator is cheaper and simpler; a three-arbitrator tribunal provides more perspectives (and is often chosen for high-stakes matters).
Agreement on an Arbitrator: If a sole arbitrator is to be used, the ideal scenario is both parties agree on a neutral arbitrator. For example, the parties might jointly pick someone from a list of experienced arbitrators. Many institutions will ask the parties for input or give a list of candidates to choose from. Agreement on a single name is the simplest route – it ensures the arbitrator is acceptable to both sides.
Party-Appointed Arbitrators (for panels of three): In a three-arbitrator panel, the common method is: each side appoints one arbitrator, and then those two arbitrators select the third (the presiding arbitrator or chair)[32]. This way, each party has a hand in choosing one decision-maker, and the two chosen arbitrators (presumably one from each side’s shortlist) together agree on a neutral chairperson. For instance, in an ICC arbitration, each party would nominate their arbitrator (often someone from their country or someone they trust to be fair), and the two party-nominated arbitrators would then pick a third arbitrator who ideally is neutral and often of a different nationality than the parties. This method balances influence and neutrality in the tribunal’s formation.
Institutional Appointment and Lists: If the parties cannot agree on an arbitrator, or if one party refuses to participate, then the default is that the arbitration institution or an appointing authority will step in to appoint the arbitrator(s). Institutions maintain panels of vetted arbitrators and have procedures to do this fairly. A common approach used by institutions is the “list procedure” (also known as ranking or strike-out method)[33]. For example, the administrator might send both parties a list of potential arbitrators with relevant expertise. Each party can strike names they find unacceptable and rank the remaining. The institution then appoints an arbitrator from the top-ranked names that weren’t struck off by either side. This process gives the parties a voice, even when they don’t directly agree, and results in a mutually unobjectionable arbitrator. If it’s a three-member panel and, say, one side fails to appoint their arbitrator, the institution will appoint on that side’s behalf to keep the process moving.
Qualifications and Expertise: In all cases, parties will look for arbitrators who are independent and impartial (no conflicts of interest in the dispute) and who have appropriate qualifications. Often for a technical dispute, you’d seek someone with industry expertise or a legal specialist in that field. For an international case, you might seek arbitrators who speak the contract’s language fluently or are familiar with the law governing the contract. Major arbitration institutions allow parties to specify certain qualifications (e.g., “experience in M&A disputes” or “fluent in Spanish”) when appointing arbitrators. There are also databases and CVs of arbitrators that counsel can review. Essentially, corporate counsel should treat arbitrator selection as a crucial task – the “decider” can significantly affect the process and outcome, so you want someone competent, fair, and ideally efficient in managing a case[4][34].
Examples: For a bit of context, imagine a large construction dispute between a company and a contractor. The contract says arbitration with three arbitrators under ICC Rules. Company A might appoint a construction law expert from the U.S., Company B appoints an engineer-arbitrator from Europe; those two then agree on a retired judge from a neutral country to chair the panel. Alternatively, in a smaller contract dispute with a sole arbitrator, the parties might simply agree on a single arbitrator who is a seasoned commercial lawyer to handle the case. If they can’t agree, the administering institution (say, the AAA/ICDR) will nominate someone with the right background.

Throughout the selection, impartiality is key: arbitrators must disclose any connections to the parties and remain neutral. Institutional rules and ethics guidelines (like the IBA Guidelines on Conflicts of Interest) are in place to help ensure the chosen arbitrators are unbiased and independent[27]. If a party believes an appointed arbitrator is conflicted, they can usually challenge that appointment through the institution.

In summary, arbitrator selection involves either mutual agreement or a structured appointment process facilitated by an arbitral institution. Corporate counsel play a big role in this – you can propose candidates, negotiate with the other side on a choice, or strike names from a list. The goal is to end up with a qualified, neutral tribunal that all sides trust to fairly resolve the dispute. The flexibility here is a benefit of arbitration: you have more control over who will judge your case than you ever would in court.

How long does arbitration usually take, and how much does it cost?

Duration: In general, arbitration is faster than court litigation, but the exact timeline can vary with the complexity of the case and the cooperation of the parties. A straightforward commercial arbitration might be resolved in as little as 6-12 months, whereas a very complex arbitration (involving many witnesses or technical issues) might take a bit longer, say 12-18 months. These timeframes are still typically shorter than litigating a comparable case through trial and appeals, which can take multiple years in many jurisdictions[5]. For example, an American Bar Association study found an average commercial arbitration lasted about 7 months, in contrast to 2–3 years for the average court case in the U.S.[7]. Arbitration saves time by streamlining procedures: limited discovery, flexible scheduling, and usually no appeals. Also, arbitrators often push to keep the case moving on a tighter timeline than a busy court would. Many arbitral institutions even have expedited procedures for smaller cases or if parties agree, which can resolve disputes in a few months by using simplified processes (e.g. documents-only arbitration or shorter hearings).

That said, not every arbitration is lightning-fast. If parties engage in a lot of procedural fighting, or if one side tries to stall, an arbitration can bog down. Unlike a judge, an arbitrator doesn’t have contempt powers, but they do have authority to set schedules and sanction dilatory tactics to keep things efficient. On balance, corporate counsel can expect a typical arbitration to reach a final award much sooner than a lawsuit would get to a final judgment. The absence of appeals also means the first award is the end of the road, rather than potentially another few years of appellate litigation[35].

Cost: The cost of arbitration can vary widely based on the amount in dispute, number of arbitrators, and complexity of the case. There are a few main components of cost:

Arbitrators’ Fees: Unlike judges (who are paid by the state), arbitrators are private and charge fees for their time. This is often the largest direct cost of arbitration. Arbitrator fees can be hourly or a flat fee, and a three-arbitrator panel will naturally cost three times as much as a sole arbitrator. High-profile arbitrators may charge substantial hourly rates. For example, an experienced arbitrator might charge several hundred dollars per hour for their work on the case. These fees are typically split by the parties (or as agreed), though the final allocation of costs can be decided by the arbitrator in the award.
Administrative Fees: If you use an arbitration institution (like the ICC, AAA, LCIA, SIAC, etc.), the institution charges administrative fees to cover filing, case management, etc. These can be fixed based on the claim amount or scaled. For instance, the ICC and AAA have fee schedules – a $10 million dispute will incur a higher admin fee than a $100,000 dispute. Administrative fees can range from a few thousand dollars into the tens of thousands (or more for very large cases). These are also usually split between parties initially.
Legal Fees and Expenses: You will likely still engage attorneys to represent you in arbitration (we’ll discuss counsel below). You save some costs in arbitration because procedures like discovery are more limited – for example, there are usually no sprawling depositions or endless motions practice as in U.S. litigation, which cuts down billable hours[10]. This can make legal fees in arbitration lower than litigation. However, if the dispute is complex, you might still have significant attorney work preparing briefs, witness statements, and the hearing. Other expenses like expert witness fees (if you need technical experts) would apply in either forum. There’s also hearing costs – e.g., renting a hearing room if not provided by the institution, transcription services, etc. In international cases, add translation costs if documents/testimony need translation, and travel costs if in-person hearings occur.

So is arbitration cheaper? Often, yes, but not always. It eliminates many court costs (lengthy discovery, court fees are usually smaller than arbitral admin fees though, and no appeals). For example, you won’t typically have months of discovery battles or multiple pre-trial motions that rack up legal bills. However, arbitration adds its own costs (arbitrator and institution fees) that you wouldn’t pay in court. A 2025 law firm study aptly noted that arbitration can be a “double-edged sword” on cost – fewer billable hours on procedure, but notable up-front fees to initiate and carry out the arbitration[10]. In big-stakes disputes, arbitration might actually cost comparable to litigation once you total everything, but you often get a faster result, which has its own value. In smaller disputes, arbitration (especially expedited or documents-only arbitration) can be far more cost-effective than a lawsuit.

Bottom line: For corporate legal teams, arbitration generally provides better cost predictability. Many arbitrations proceed on a tighter scope, meaning fewer surprises in legal bills. And because the timeline is shorter, you’re paying lawyers for fewer months/years. You should budget not just for your own legal fees, but also half of the arbitrator and administrative fees. Some contracts specify a cap on discovery or even on total hearing days – these measures control costs. In the end, while you shouldn’t assume arbitration will always be cheap, it is often cost-effective relative to multi-year litigation, particularly when you factor in the business cost of a prolonged dispute. And remember, the arbitrator can also award costs and attorneys’ fees depending on the contract and applicable law – sometimes the winning party can recover a portion of their costs, which isn’t always the case in U.S. litigation.

Can arbitration be done online or through virtual hearings?

Yes. Modern arbitration readily accommodates online and virtual proceedings, and this has become increasingly common (and accepted) in recent years. Even before 2020, arbitrations would occasionally use videoconferencing for witnesses in another country or hold procedural conferences by phone. The COVID-19 pandemic greatly accelerated the use of fully virtual hearings, and now conducting an arbitration online is often seen as a practical option rather than a novelty.

Most arbitration institutions and arbitrators are equipped to handle virtual hearings using secure video conferencing platforms. During the pandemic, arbitral institutions like the ICC, LCIA, AAA/ICDR, and others issued guidelines to facilitate remote hearings, and many arbitrations proceeded entirely via Zoom, WebEx, or specialized platforms, with participants in multiple locations. A 2021 international survey found that the use of videoconferencing and “virtual hearing rooms” had become widespread as arbitration adapted to the pandemic era[36]. This trend has continued, as parties and arbitrators saw that even complex cases could be managed effectively online. In fact, virtual formats often save time and travel costs, which is appealing to corporate counsel and witnesses who would otherwise fly in from around the world.

What can be done online? Essentially every step of an arbitration can be done electronically now:

Filing and document exchange: Parties can file their claims digitally and share evidence through secure online platforms. Many institutions have online case management systems (for example, the ICC’s new “Case Connect” platform) to allow electronic submission of all documents, real-time access to filings, and even electronic signing of arbitral awards[37][38]. This eliminates the old need for shipping binders of documents around the globe.
Conferences and procedural meetings: Preliminary meetings between the tribunal and parties (to schedule timelines, etc.) are routinely held via teleconference or videoconference. This was common even pre-pandemic for international cases.
Hearings: Evidentiary hearings, where witnesses give testimony and lawyers make arguments, can be conducted by videoconference. Each arbitrator, counsel, and witness might log in from their respective office or home. Platforms allow for breakout rooms (so lawyers can confer privately, or arbitrators can deliberate), screen-sharing of exhibits, and real-time transcript streaming. Protocols are put in place to ensure fairness – for example, to verify that witnesses aren’t being coached off-camera and that the technology is stable. Virtual hearings have worked well for many cases; however, for very large or complex matters with lots of physical evidence or where assessing witness credibility in person is crucial, parties sometimes prefer at least a hybrid approach (some people in person, some virtual). Still, the default assumption now is that an arbitration hearing can be done remotely if needed, and many are.
Advantages: Online arbitration brings flexibility. It can dramatically cut travel and lodging costs, which is significant when arbitrators and counsel are often international. Scheduling is easier when you’re not coordinating everyone’s presence in one location – no need to fly a team out for a one-day hearing that could be done by video. It also allows continuity – even if a sudden travel restriction or other issue arises, the case can go on. There’s also an argument that virtual hearings can be more focused and slightly less formal, which some find advantageous for resolving issues efficiently.
Tools and Security: There are now purpose-built platforms for arbitral proceedings (like Opus 2 and others) that provide integrated case management with video hearing capabilities. These offer end-to-end encryption and secure document handling, addressing any confidentiality concerns. Parties can upload evidence to a secure portal, and arbitrators can annotate and organize materials digitally. The technology for virtual arbitration has matured to the point where many arbitrators have a standard “virtual hearing protocol” to follow, ensuring that the process runs smoothly (covering things like how exhibits are introduced, ensuring stable connections, etc.).
Example: Imagine a dispute between a company in New York and a company in Sydney under ICC arbitration. Instead of everyone flying to a single location, they agree to hold the hearing virtually. Over a series of days (scheduled to accommodate time zones), the arbitrator sits in London, the claimant’s team logs in from New York, the respondent’s from Sydney, and witnesses from various places join as needed. They present evidence via screen-share and everyone can see and hear each other in real time. After the hearing, the arbitrator deliberates and issues an award electronically. This entire process can be done without anyone crossing a border. Such a scenario was rare a decade ago, but is now quite normal.

In conclusion, online and virtual arbitration are now part of the standard toolkit. As a corporate legal team, you can absolutely request and arrange a virtual arbitration if in-person meetings are impractical or too costly. Arbitral institutions support it – for instance, the ICC has even launched enhanced digital case management platforms to make online arbitration easier[39][37]. While some very complex cases may still benefit from face-to-face interaction, the option of resolving disputes from the comfort of your office via a secure video platform is a reality. This has made arbitration even more accessible and efficient in the modern era.

Are arbitration proceedings confidential, and are the results enforceable?

Confidentiality: Arbitration is private by nature, but confidentiality can be a slightly separate concept. The proceedings of an arbitration are not open to the public – there’s no public gallery or media watching, and typically no public transcript or filing that anyone outside the case can access[11]. In this sense, arbitration offers a high degree of privacy: you can think of it as a closed-door trial. This privacy is one of the reasons companies choose arbitration, especially for sensitive matters; it protects trade secrets and business reputations by keeping disputes out of the news[12]. For example, if two companies arbitrate a contract dispute involving proprietary technology, the technical details revealed in the hearing and in the arbitrator’s award are not automatically public record.

However, pure confidentiality (in the sense of a legal obligation not to disclose information about the case) is not absolute unless specified. Different arbitration rules and national laws handle confidentiality differently. Many institutional rules imply or require confidentiality to some extent. For instance, the parties often agree (explicitly or implicitly) not to disclose the arbitral award or the evidence presented, except as needed to enforce the award or as required by law. In some jurisdictions (like in England or Singapore), there is a general duty of confidentiality recognized in arbitration proceedings; in others (like the United States), arbitration confidentiality is not automatic unless the parties contract for it or the rules provide it[40]. Therefore, it’s wise for corporate counsel to include a confidentiality clause in the arbitration agreement or to choose arbitral rules that mandate confidentiality if this is important.

In practice, most commercial arbitrations are kept confidential by agreement of the parties. Arbitration institutions also typically keep filings confidential. Arbitrators themselves are bound to confidentiality. So, yes, you can expect a far greater degree of confidentiality in arbitration than in litigation – just be aware to set the ground rules in advance to make sure, for example, that neither party can publish the award or sensitive documents from the case. And of course, if you need to enforce the award in court later, some details might come out in that court filing, but even then you can often ask the court to seal those records if confidentiality is crucial.

Enforceability of Awards: Arbitral awards are highly enforceable – both domestically and internationally – which is a major strength of arbitration. In a domestic context, say you arbitrate a dispute in California and you win; if the other side doesn’t pay the amount awarded, you can go to a court in California (or wherever the other side’s assets are) and have the award confirmed as a judgment. The court generally will not re-examine the merits of the case; it will simply ensure the arbitration was conducted properly (e.g., no fraud or serious procedural unfairness) and then convert the award into a normal judgment that can be enforced like any court decision[31]. U.S. courts, for instance, are required by the FAA to confirm arbitration awards except in very narrow circumstances. This means as the winning party, you have the full power of the legal system to collect money or enforce injunctive relief as granted by the arbitrator.

Internationally, enforcement is where arbitration truly outshines litigation. Thanks to the New York Convention (1958), a treaty joined by over 170 countries, a valid arbitral award from one country is enforceable almost anywhere in the world with minimal fuss[25]. For example, if you obtain an arbitral award in London against a company that has assets in Brazil and India, you can take that award to courts in Brazil and India, and those courts are treaty-bound to recognize and enforce the award (save for a few limited defenses like if the arbitration violated due process or the award conflicts with public policy)[25]. In contrast, if you got a UK court judgment and tried to enforce it in those countries, you might face a lot more hurdles (or it might not be enforceable at all without a separate lawsuit). Arbitration provides a nearly universal enforcement mechanism – a huge relief for companies engaged in cross-border business. Put simply, an arbitral award “travels” much better globally than a court judgment does[41].

Binding and Final: As discussed earlier, arbitration awards are binding, which goes hand-in-hand with enforceability. They carry the weight of a decision that courts will uphold. There are only very limited grounds on which a court can refuse to enforce an award. These include things like a party proving the arbitration agreement was invalid, or that it wasn’t given a fair opportunity to present its case, or that the award deals with issues beyond the scope of the agreement, or perhaps that enforcing the award would violate public policy in that country[25]. These exceptions are rare and difficult to establish – the vast majority of awards are enforced without issue.

It’s also worth noting that arbitration awards, once final, cannot be easily avoided. In the rare case a losing party simply ignores an award, the winning party can pursue enforcement in court, and typically courts will add interest and possibly legal fees to the amount due for the delay. Arbitrations, especially international ones, are backed by this strong enforcement regime which gives them real teeth.

Confidentiality vs. Enforcement: Occasionally there’s a tension – enforcing an award might require revealing some info from the arbitration in court filings (which are public). Most companies find this acceptable as a trade-off; the key sensitive details can often be minimized or protective orders can be sought. The arbitration proceedings themselves remain confidential; only the necessary parts for enforcement need to be exposed to a court.

In summary, arbitration proceedings are private and usually confidential, providing a discreet forum for dispute resolution. And the awards are emphatically enforceable, both in the country where the arbitration is seated and around the world via international conventions[25]. For corporate counsel, this means you can arbitrate knowing your secrets stay in the vault, and if you win, you have solid mechanisms to compel the other side to comply with the outcome.

What is the role of legal counsel in arbitration?

Legal counsel plays a critical role in arbitration much as they do in litigation, though the approach and procedures differ. For corporate legal teams, understanding how to best use counsel (both in-house and outside lawyers) in an arbitration setting is key to effectively managing the case.

Firstly, you are allowed (and encouraged) to have attorneys represent you in arbitration. Some smaller arbitrations or certain consumer cases might proceed without lawyers, but in any significant commercial dispute companies almost always have legal counsel. Arbitration may be more informal than court, but it’s still an adversarial process where skilled advocacy, knowledge of the law, and strategic procedure are important. Having a lawyer familiar with arbitration ensures you don’t inadvertently waive any rights or mishandle any steps. In fact, many arbitration clauses specify that disputes will be handled in a certain city or under certain rules – you’ll often engage outside counsel experienced with those rules/jurisdictions to navigate the process effectively.

Counsel’s role begins even before a dispute formally arises: Corporate lawyers will typically advise during contract drafting on the arbitration clause itself (choosing seat, rules, etc., as discussed). When a dispute is brewing, counsel will consider whether arbitration is beneficial or if there’s any reason to litigate instead (for example, if there’s no arbitration clause or a strategic reason to go to court).

Once in arbitration, legal counsel’s responsibilities include:

Case Strategy and Preparation: Your attorneys will formulate the legal strategy, just as in litigation. They’ll analyze the contract and facts, determine the strongest claims or defenses, and advise on what relief to seek or settlement to consider. They’ll also handle the filings – drafting the notice of arbitration or claim, the statement of defense, and any counterclaims. These documents lay out the legal arguments and are akin to pleadings in court (though often more detailed since they might double as written witness statements or summaries of evidence in some arbitration systems).
Selecting the Arbitrator(s): As discussed earlier, picking the right arbitrator is crucial. Counsel will research potential arbitrators, liaise with the other side or the institution on nominations, and make objections if an arbitrator seems conflicted. Experienced arbitration counsel often know the reputations and styles of various arbitrators, which is invaluable in selection. For example, a savvy counsel might prefer a retired judge known for strict procedural control if the case needs a firm hand, or an engineer-arbitrator if the dispute is highly technical. Your lawyers will use their network and resources to help ensure a fair and qualified tribunal is appointed.
Managing Procedure and Evidence: Arbitration has different procedural nuances – for instance, more limited discovery. Legal counsel will negotiate the scope of document exchange with the other side (or present arguments to the arbitrator about what should be allowed), making sure the process is fair but not overly burdensome to your company. They’ll prepare witness statements/affidavits if required, gather key documents, and perhaps work with expert witnesses to prepare expert reports. Essentially, they curate the evidence in a focused way because arbitration doesn’t allow the fishing expeditions that court sometimes does. Your counsel will also keep track of timelines, ensuring filings are made on time and procedural orders from the arbitrator are followed.
Advocacy at the Hearing: In the arbitration hearing, your lawyers take the lead in presenting your case. They will make opening statements to frame the issues, cross-examine the opponent’s witnesses, and argue points of law to the arbitrator. Arbitration hearings are somewhat less formal than court – for example, strict rules of evidence may not apply – but that places even more onus on counsel’s persuasive abilities to prevent inadmissible or unreliable evidence from unduly swaying the arbitrator. Good arbitration counsel know how to distill complex business or technical issues into clear, compelling presentations for the arbitrator. They might use visual aids or pre-written witness statements to streamline the process. At the end, they’ll deliver closing arguments or file post-hearing briefs to summarize why the award should be in their client’s favor.
Advising on Settlement: Just like in litigation, counsel will continuously assess the case’s strengths and weaknesses and may explore settlement opportunities. Arbitration doesn’t preclude settlement; parties often negotiate alongside the proceedings. Your lawyers might engage in without-prejudice discussions with the other side’s counsel or even suggest mediation during arbitration. They’ll advise you on any settlement offers – weighing them against the expected outcome in arbitration.
Post-Award Actions: After the arbitrator issues the award, counsel will review it carefully. If you’re the winning party, your lawyer can handle enforcing the award – for example, filing the necessary paperwork in the relevant court to convert it to a judgment (especially if enforcement is needed abroad, they might coordinate with local counsel in that jurisdiction)[25]. If you’re on the losing end and there are grounds to challenge the award (which are rare and strictly limited), counsel will advise on possibly filing an application to vacate or set aside the award. They’ll be candid about the low odds of success (since appeals are not available, only narrow challenges like proving arbitrator bias or a serious procedural defect might be tried). In essence, the lawyers see the case through to its ultimate conclusion – either the award is paid or it’s enforced through courts.
In-House vs. External Counsel: For corporate legal teams, a common approach is that in-house counsel manage the overall dispute and interface with the business persons, while outside arbitration counsel (often a law firm specialized in arbitration) is retained to do the heavy lifting in the arbitration itself. In-house counsel play a critical coordinating role: they ensure the outside lawyers understand the company’s objectives, they gather internal documents and witnesses for the case, and they keep the business leadership informed. In-house lawyers also help with practical decisions, like budgeting for the arbitration and selecting which outside counsel has the right experience for a given arbitral forum or jurisdiction.

It’s important to note that while arbitration is less formal, it is still a legal proceeding with outcomes that can have major financial and operational impacts. Skilled legal advocacy is just as vital in arbitration as in court. The tone might be a bit less combative (arbitrations often encourage a bit more civility and direct dialogue between parties), but you want counsel who knows how to leverage the arbitration rules in your favor – for instance, how to request interim measures from the arbitrator if you need urgent relief, or how to effectively examine a witness via video link, etc. Experienced arbitration lawyers also know the arbitrators and what arguments tend to be persuasive in an arbitral context (which can differ from a jury appeal, for example).

In summary, legal counsel in arbitration serves as your navigator and advocate: they guide your company through the procedure, make the case on your behalf, and protect your interests at every stage. While arbitration is designed to be more user-friendly than court, when significant money or issues are at stake, having seasoned arbitration counsel is indispensable to achieving a good outcome[42]. Think of it this way – you wouldn’t go into a multi-million dollar court trial without a lawyer; similarly, you should have professional legal representation in a high-value arbitration. Your lawyers will ensure the process runs properly and that your side of the story is compellingly presented to the arbitrator for a favorable decision.

Can an arbitration award be appealed or challenged?

One of the defining features of arbitration is the finality of the outcome. In most cases, an arbitration award cannot be appealed in the way a court judgment can. When parties agree to arbitration, they generally waive their rights to go through the normal appellate process that courts offer[15]. This means that once the arbitrator (or panel) issues the final award, that’s the end of the dispute – the winner can move to enforcement, and the loser can’t seek a do-over on the merits of the case.

However, “cannot be appealed” doesn’t mean zero review whatsoever. There are extremely limited grounds on which an arbitration award can be challenged in court, but these are narrow exceptions and not appeals on the substance:

Vacating or Setting Aside an Award: Under laws like the FAA in the U.S. or the arbitration laws of other countries, a losing party can ask a court to vacate (nullify) the award only on specific grounds. These grounds typically include: (a) the award was procured by fraud or corruption, (b) the arbitrator was evidently partial or corrupt (i.e., proven bias or serious conflict of interest), (c) serious misconduct by the arbitrator (such as refusal to hear critical evidence or other procedural unfairness that prejudiced the rights of a party), (d) the arbitrator exceeded their powers (deciding issues not submitted to arbitration or going beyond the scope of the arbitration agreement), or (e) in some jurisdictions, an award that manifestly disregards the law. Under the New York Convention (for international awards), additional grounds include if the arbitration agreement was invalid under the law, or if recognition of the award would violate the public policy of the country[25]. These are technical and rarely successful arguments – courts uphold the vast majority of awards.
No Review of Facts or Law: Crucially, none of those grounds permits a court to re-examine the case’s facts or whether the arbitrator made the “right” decision on the law. In other words, you cannot appeal for a mistake in the arbitrator’s reasoning or because you think the arbitrator misinterpreted the contract or the evidence. Even if the arbitrator did err on the law or facts, that alone isn’t typically a basis to overturn the award. This is what we mean by “no appeal on the merits.” The idea (often explicitly stated in statutes) is that arbitration awards are final and binding, and courts are not to second-guess arbitrators as long as the process was fair[30].
Appeal within Arbitration: It’s worth mentioning that parties can agree to a form of appeal within the arbitration system itself (for example, some arbitration institutions or private services offer optional appellate arbitration rules, where a new panel can review the award for errors of law). These are not common in commercial practice unless explicitly built into the contract. The vast majority of arbitration clauses do not include an appellate arbitration layer because it adds time and cost, negating some benefits of arbitration. Unless your contract says otherwise, you should assume that there is no internal appeals process – it goes straight to final award.

Given the above, corporate counsel should approach arbitration knowing that “there is no Plan B” if the outcome is unfavorable, absent truly extraordinary issues. This underscores the importance of doing the best job you can during the arbitration itself – from selecting a good arbitrator to presenting a thorough case – because you won’t get a mulligan. It’s also why some clients value arbitration’s finality (you avoid years of appeals and get closure), while others are uneasy about it (because a significant error can’t be corrected on appeal)[43].

Practical reality of challenges: Challenges to arbitration awards are infrequent and usually unsuccessful. Courts apply a high bar – for instance, proving an arbitrator was biased might require clear evidence of undisclosed relationships or misconduct. Arguing “manifest disregard of the law” in the U.S. (where it’s recognized) requires showing the arbitrator knowingly flouted a well-defined law – a tough standard. Public policy defenses (under the New York Convention) are very narrowly applied; basically the award has to violate the forum state’s most basic notions of morality or justice. Statistically, the overwhelming majority of awards are confirmed and enforced without issue. From a timeline perspective, even if you attempt a challenge, it doesn’t really function like an appeal that re-litigates the case – it’s a summary proceeding and if you lose the challenge, you’re back to the award. In an international context, you might see a party resist enforcement in one country’s court claiming an Article V defense under the New York Convention, but unless one of those defenses clearly exists, enforcement will be granted[25].

Can you ever appeal an award? Generally no, but one rare scenario: certain arbitration systems (like some industry-specific or appellate arbitration programs, or for example FINRA in securities arbitration does not allow appeals, but JAMS has optional appeal, etc.) aside – the default answer is no appeal. An example to illustrate: Suppose two businesses arbitrate a dispute and the arbitrator awards damages against one of them. That losing business can’t go to an appellate court to argue the arbitrator misinterpreted the contract – that argument won’t be heard. They could only try to vacate if, say, they discovered the arbitrator had secretly been employed by the winning party – a clear conflict (bias) – which would be a valid reason to vacate[31]. If nothing like that exists, the award stands.

In summary, arbitration awards are intended to be final. There is no standard appeal path to correct factual or legal errors. Courts can intervene only in exceptional cases of arbitrator misconduct or similar issues, not simply because one party is unhappy with the outcome. For corporate counsel, this means you should go into arbitration with the mindset that you have one shot at it. The flipside is that if you win, you won’t have to defend your victory through multiple layers of appeals – you can swiftly move to enforcement and collect on the award, which is often a relief compared to the drawn-out appeal process in litigation[14][30]. The finality of arbitration is a core feature to be embraced and strategized around: it brings both risk and certainty, and it’s crucial to prepare accordingly.

[1] [2] [3] [5] [6] [7] [8] [9] [11] [12] [14] [15] [23] [31] Arbitration vs. litigation: The differences | Legal Blog

[4] [32] [33] [34] Legal News > Your source for information behind the law

[10] [16] [19] [20] [21] [24] [43] Arbitration vs. Litigation: When to Enforce an Arbitration Agreement and When to Litigate

[13] [17] [18] [22] [25] [26] [27] [28] [29] [30] [35] [40] 10 Reasons Why Companies Prefer to Resolve International Commercial Disputes by International Arbitration

[36] 2021 International Arbitration Survey: Adapting Arbitration to a Changing World – School of International Arbitration

[37] [38] [39] ICC launches next-generation digital case management platform for dispute resolution services – ICC – International Chamber of Commerce

[41] A Case for Diversity in the Seat of Arbitration

[42] Preventing and Resolving Problems with Investment Professionals