Advantages of Arbitration

Michael RainerManaging Partner, MTR Rechtsanwälte

The courts are not the only venue for settling legal disputes. Arbitration proceedings are a good alternative in many domestic and international cases.

Arbitration proceedings have several advantages over judicial proceedings. The former can be conducted more quickly, are less expensive, and are closed to the public. Moreover, the parties are able to choose the arbitrators, provided the latter are free and independent. One benefit of this is that it means real experts who are well acquainted with the subject matter can be chosen. We at the commercial law firm MTR Rechtsanwälte note that the outcome of these proceedings replaces a court judgment and can be enforced both domestically and abroad. 

Another important benefit of arbitration proceedings is the fact that they often achieve legal certainty much more quickly. Whereas the parties to court proceedings can potentially appeal multiple times to higher courts, the outcome of arbitration proceedings is normally binding and final at first instance, there being no opportunity to appeal. Indeed, the decision can only be contested in limited circumstances by a regular court of law. 

For arbitration proceedings to be initiated, the parties must have concluded a binding arbitration agreement. This can be agreed within the framework of contractual negotiations and affords the parties considerable leeway, it being possible at this early stage to determine key aspects such as the location and language of proceedings, the arbitrations rules, the arbitrators, and, in particular, the applicable substantive laws. That being said, it is equally possible to conclude the arbitration agreement shortly before a legal dispute comes to a head.

The choice of applicable laws or the language of proceedings is particularly significant in cases involving international trade relations. Arbitration proceedings allow the parties to avoid getting themselves into unknown legal territory or involved in litigation risks that are difficult to assess. The final outcome is internationally recognized and enforceable.

Experienced lawyers can advise on concluding arbitration agreements as well as other issues relating to arbitration.


Contributing Advisors

Marc KlaasLawyer (Rechtsanwalt), MTR Rechtsanwälte