There are many reasons to prefer a non-binding arbitration clause to a binding arbitration clause. While non-binding arbitration may not provide a final solution or resolve the dispute completely, it can help the parties involved better resolve disputes. Arbitration tends to be healthier for industrial relations. Sometimes full court proceedings can become ugly, so arbitration is more likely to preserve a positive work environment or relationship. Many agreements usually contain arbitration clauses. You will then likely find in: An arbitration clause usually states that all disputes arising out of the larger contract will be subject to binding arbitration. Sometimes a contract states that only certain disputes will be settled. Arbitration agreements are everywhere these days, and chances are you`ve signed them without realizing it. You may have agreed to arbitrate disputes if you clicked «Accept» a software license or purchased ordinary goods or services. Consumer advocates have fought the practice of businesses requiring consumers to sign arbitration agreements, arguing that consumers generally do not know that they have waived their procedural rights and because arbitration decisions regularly favour businesses over consumers (for more information on disputes regularly resolved by arbitration, see also Employee Complaints: Most Disputes are resolved through arbitration or litigation?). In a survey of 19,000 mandatory arbitrations in California handled in 2003 by arbitrators appointed by the for-profit National Arbitration Forum (NAF), the nonprofit watchdog group Public Citizen found that companies won over consumers in 94 percent of the disputes. To reduce costs and improve the efficiency of dispute resolution, companies often require their customers and employees to sign an arbitration agreement.
Unfortunately, because arbitration clauses in long standard contracts often appear as «fine print,» people often sign arbitration agreements without realizing it. The tribunal noted that if it had been true that the AAA`s arbitrators had indeed been required to make a binding decision, clause 7.7 would have constituted an arbitration agreement, regardless of the term «non-binding.» Since the Court did not establish a basis for the basis on which IQVIA could be compelled to submit to the arbitration clause of the cooperation agreement, it granted IQVIA`s request for suspension of arbitration.  Although the law does not define the term «arbitration», there is a good authority in English law that arbitration must provide for binding dispute resolution. The plaintiff and the defendants agreed that an arbitral award in the AAA proceedings would not bind the parties. This means, according to Baker J.A., that there is no arbitration agreement between the parties. In arbitration, a trained, professional and neutral arbitrator acts as a judge who makes a decision to end your dispute. Arbitrators are often retired judges, but that doesn`t mean they follow traditional legal procedures to the letter. Arbitration is actually a very flexible process, the ground rules of which are open to negotiation (more on the differences between arbitration and mediation can you also find undecided in your dispute resolution procedure? Combine mediation and arbitration with Med-Arb). Before the arbitration can proceed, the parties must have agreed to settle the dispute. An agreement to submit to non-binding arbitration is not a binding arbitration agreement under the Arbitration Act 1996.
The court rejected a request for a stay of English proceedings under Article 9, citing the absence of a valid arbitration agreement between the parties. The court ruled that an arbitration agreement must provide for binding dispute resolution: IS Prime Ltd v. (1) TF Global Markets (UK) Ltd (2) TF Global Markets (AUST) PTY LTD (3) Think Capital Ltd (2020)  EWHC 3375 (Comm) The respondents argued that Article 58(1) supports the validity of non-binding arbitrations as it allows the parties to: agree that an arbitral award is not binding until an appeal procedure has been exhausted. Baker J. rejected this proposal without going into detail, arguing that the clause could not be interpreted as supporting the argument that the parties could agree that an arbitral award would never be binding. This is consistent with berkeley Burke`s  conclusion EWHC 2396 (Comm), in which Teare J. noted that subsection 58(1) presupposes the existence of a valid arbitration agreement and applies to cases that provide for a graduated arbitration panel. Often, parties opt for non-binding arbitration on a subject that is not very complex or when they simply need professional advice and comment on that subject. Whenever a problem between two parties causes a deterioration in their communication practices, the involvement of an impartial third party can work wonders. They might be able to not only reach a mutual agreement, but also save their relationship.