18:49
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LSDefine
Simple English definitions for legal terms
compromissory arbitration
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A quick definition of compromissory arbitration:
Compromissory arbitration is a way to solve a disagreement between two parties by having a neutral third party make a decision that both parties agree to follow. This type of arbitration is usually used in international disputes and is based on a mutual promise to define the scope of the disagreement and abide by the arbitrator's decision. It is different from other types of arbitration, such as grievance arbitration or interest arbitration, which are used to resolve specific types of disputes. Compromissory arbitration is voluntary and requires both parties to agree to the process.
A more thorough explanation:
Compromissory arbitration is a method of resolving disputes between two parties with the help of a neutral third party. The third party is agreed upon by both parties and their decision is binding. This means that both parties must abide by the decision made by the arbitrator.
One example of compromissory arbitration is when two companies from different countries agree to resolve a dispute through arbitration. They both sign a mutual promise to define the scope of the dispute and abide by the arbitrator's decision. This is known as an international arbitration.
Another example is when two individuals agree to resolve a dispute through arbitration instead of going to court. They both choose an arbitrator and agree to abide by their decision.
Compromissory arbitration is different from voluntary arbitration, which is when both parties agree to resolve a dispute through arbitration without any prior agreement.