The key difference between an arbitration

Running head: PRINCIPLES IN BUSINESS LAW
QUESTION-ANSWER ON ARBITRATION
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PRINCIPLES IN BUSINESS LAW1
Answer- 1
The arbitration clause is regarded to be as a contract provision which deals with the rights
and obligations of the parties in the case of the arrival of legal conflict over the agreement. In the
majority of arbitration clauses, the parties decide not to sue each other. Instead of suing, they
want to settle conflicts by arbitration. Arbitration is a mechanism which requires a third party
known as an arbitrator to assist the parties in negotiating the disputed matter. An arbitration
clause needs to draft appropriately so that it can settle the dispute of the parties competently,
reasonably and successfully.
Instead of suing each other, during these arbitration meetings, the contractual parties
would have to recognize their disagreements and find a common consent about how the issues
can be fixed. The arbitration clause ultimately settles the conflicts by paying remedies. The key
difference between an arbitration clause and a civil action is that arbitration is more open and
relaxed and helps the parties to negotiate the amount of compensation (Laughlin, 2017).
Generally, an arbitration clause of the contract includes language like ‘Both the contractual
parties hereby agree to settle legal conflicts through arbitration instead of civil action’. Apart
from that, the following elements need to be included in an arbitration clause, such as:
i) Information relating to those parties who get affected by the clause;
ii) The time when the clause comes into effect and the time of its expiration;
iii) Whether there exist any chances to modify the clause in future; and
iv) Results of breaching the arbitration clause (Moses, 2017).

PRINCIPLES IN BUSINESS LAW2
Whereas, the essential purpose of an arbitration agreement is to provide a framework
which helps to settle the disputes without going court. The agreement will be drafted with proper
care to ensure that the framework operates appropriately. An arbitration agreement shall usually
be created when a conflict occurs between two parties concerning a contractual arrangement. It
helps the parties to settle the disputes through an arbitrator without going to the courts. In the
matter of an arbitration, an arbitrator performs its duties as a judge. An arbitration agreement
would usually include who will appoint the arbitrator, the arbitrator’s choice of venue, judgment,
and other matters. Therefore, the parties need to sign an arbitration agreement which is
enforceable by law (Bermann, 2017).
Arbitration agreements have a similarity with a contingent contract the meaning of which
is that the enforceability of it depends upon the arrival of a dispute. The following elements need
to be included in an arbitration clause, such as:
i) The seat of arbitration;
ii) Language of arbitration;
iii) Process of appointing an arbitrator;
iv) Types of arbitration;
v) Name and address of the arbitration institution;
vi) Regulating law;
vii) Number and qualification of arbitrators (Nazzini, 2017).
Answer- 2
Regular arbitral provisions for potential disputes and current legal disputes have been
provided by the arbitral institutions. A justifiable amount of classical wisdom argues that a short