Binding third-party ruling

A binding third-party ruling involves the resolution of a conflict between parties by an independent third party, who issues a decisive ruling that the parties involved agree beforehand to accept as binding. Incidentally, the Dutch term is ‘bindend advies’, which translates literally as ‘binding recommendation’ but this is misleading as the ruling is a decision, not a recommendation.

Arbitration is not always appropriate for some disputes, for example because the case is of minor importance and a multidisciplinary arbitration board would be out of proportion. If the parties still wish to follow an independent final opinion given by an expert, a binding third-party ruling is the most suitable method for settling the dispute.

The procedure is straightforward. The parties ask SGOA to nominate an independent third party for the ruling. If both dispute parties agree to the independent third party, he or she decides on how to approach settlement of the dispute in consultation with the dispute parties. Depending on the situation, the third party visits both dispute parties, holds one or more sessions or deals with the case entirely in writing. The latter occurs when the dispute parties’ counsels have managed to reduce the case to one core element on which the third party can issue a ruling.

The independent third parties provided by SGOA are usually ICT specialists with some knowledge of the law. That makes this procedure cheap as no external experts have to be hired in. Another option is for the third party to draw on the assistance of a lawyer in writing the legal section of the binding third-party ruling. One disadvantage of a binding third-party ruling is that it is more difficult to enforce than a ruling produced by arbitration if one of the parties decides afterwards that it does not want to comply with the binding third-party ruling after all.