Usually, arbitration is used to settle commercial disputes. Looking at the rapid rate at which globalization is moving, arbitration is becoming a method settling business and business-related disputes.
Multi-national companies operating in Ghana, state-related contracts and several corporate entities are now resorting to arbitration as their new method of settling business related disputes.
In Ghana, arbitration is normally used in areas like energy, construction, labour disputes, oil and gas, mining, insurance services, intellectual property rights, maritime and shipping as well as property and land disputes.
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The high level of popularity arbitration has attained among multinational companies is as a result of its greater confidentiality, privacy and speed of proceedings it offers.
Divergent to this fact, some firms still prefer to use the litigation method rather than the arbitration method for settling business related disputes.
The banking sector as well as some small and medium-sized business still prefer litigation to the arbitration method of dispute resolution.
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In 2007, the Bank of Ghana took a decision to clean up the banking sector which resulted in the revocation of licenses of a number of banks and specialized deposit taking financial institutions.
This led to an increase in the use of arbitration as a method of dispute resolution within the banking sector.
The advantages of arbitration as compared to the litigation method are listed below;
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- Expertise of the arbitral tribunal
- Privacy of proceedings.
- Finality of decision
- Low cost
- Procedural Informality
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Arbitration also has its downsides as compared to litigation. Some disadvantages of arbitration in comparison to litigation are;
- Cost associated with venue and fees of tribunal.
- The need to invoke the court’s assistance for enforcement.
- Lack of knowledge in arbitration advocacy by lawyers.
- Limited power of the arbitral tribunal for interim orders.