What is the difference between direct and indirect arbitration?
Arbitration is a method of settling a dispute out of court by allowing a third party to make a decision. In Delaware, arbitration is governed by state and federal laws. Direct arbitration is a process in which a third party, known as an arbitrator, hears both sides of the argument and issues a binding decision. The parties involved in the dispute must agree to abide by the arbitrator’s ruling before the process begins. The arbitrator’s ruling is legally enforceable in a court of law. In contrast, indirect arbitration is a process in which a third party works with each of the parties involved in the dispute and attempts to help them come to an agreement. The third party does not issue a ruling or decision; instead, they are mediators who work on finding a common ground for the parties to agree on. This is a non-binding form of arbitration. If an agreement is not able to be reached, the parties may then move on to direct arbitration for a legally binding decision.
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