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The Difference Between Compulsory and Voluntary Arbitration

Monday, March, 28, 2011

In the case of a dispute over a contract or other legal matter, arbitration may be in order. Arbitration involves the use of a neutral party to both review and help settle the dispute. The use of arbitration helps keep the matter from going to the courts, and may be either compulsory or voluntary.

In compulsory arbitration, the parties involved are required to go through the third party to settle their dispute. If an arbitration clause is included in a contract, and if the contract itself is valid, the parties must abide by the clause. Arbitration may also be ordered by a court as a means to prevent a situation from going to trial, and the parties must comply or face possible sanctions.

Another possibility is voluntary arbitration. In this instance, the sides involved agree on their own to use an outside party, like an arbitration attorney, to help settle their differences. No contract or law requires this action, yet deciding to use arbitration can save money, time and maybe even good will. In business relationships, all of these are important. If the matter is personal, such as in a divorce proceeding, voluntary arbitration can be equally valuable.

Whether you are mandated by a contract or court, or you choose voluntary arbitration, educating yourself beforehand will help you be prepared for the process. You can read about arbitration on this site, and use the resources here to find an arbitration attorney in your area who specializes in your area of concern.