Arbitration and submission agreements are two legal terms that often get confused with each other. Although they are both related to the resolution of disputes, they represent different ways of reaching a resolution. In this article, we`ll explore the differences between an arbitration clause and a submission agreement.
Arbitration Clause
An arbitration clause is a provision in a contract that requires the parties involved to resolve their disputes through arbitration rather than litigation. It specifies that any disagreement between the parties will be handled by a neutral third party, known as an arbitrator, who is chosen by both parties. The arbitrator then listens to both sides, examines the evidence presented, and makes a final decision.
One of the main benefits of an arbitration clause is that it offers a quicker and cheaper way of resolving disputes compared to going to court. It also gives parties more control over the process by allowing them to choose the arbitrator and tailor the arbitration process to their needs. Additionally, arbitrations are often private, which makes it easier to keep sensitive information confidential.
Submission Agreement
A submission agreement, on the other hand, is an agreement between the parties involved to submit a particular dispute to arbitration. It is not a contract provision, but a separate agreement that is signed after a dispute arises. Unlike an arbitration clause, which is included in the original contract, a submission agreement is created when the parties agree to arbitrate a specific dispute.
The advantage of a submission agreement is that it offers an option for resolving a dispute without going to court. It allows parties to avoid the uncertainty and expense of a court proceeding and instead rely on an impartial arbitrator to reach a decision. Additionally, because the submission agreement is created after the dispute arises, parties can be more confident in their decision to arbitrate and the specific terms of the arbitration process.
Key Differences
The main difference between an arbitration clause and a submission agreement is the timing of their creation. An arbitration clause is included in the original contract, while a submission agreement is created after a dispute arises.
Another difference is that an arbitration clause applies to all disputes that may arise under the contract, while a submission agreement is limited to a specific dispute or set of disputes. An arbitration clause provides parties with a pre-agreed mechanism for resolving disputes, while a submission agreement is created on a case-by-case basis.
In conclusion, while both arbitration clauses and submission agreements can help parties avoid litigation, they represent different approaches to resolving disputes. Arbitration clauses offer a pre-agreed mechanism for resolving disputes, while submission agreements provide parties with a way to resolve a specific dispute. As a professional, it`s important to understand the differences between these two terms to ensure accurate and effective communication with readers.