Disadvantages of Arbitration

Although alternative dispute resolution through arbitration is one of the most prevalently ascribed to methods for resolving disputes between individuals and parties, there are some arbitration disadvantages. Additionally, some disputes may not prove best resolved through arbitration either. Arbitration, itself, is a process of two parties mutually agreeing to allow a third, impartial party make a decision regarding an outstanding dispute. The decisions from an arbitrator are legally binding, and are enforceable in the court of law per the Federal Arbitration Act, as well as numerous state and local laws following the federal legislation. Unless in cases of corruption, fraud, or other circumstances that would affect an arbitrator's ability to remain impartial, almost all arbitration rulings are final. Additionally, the courts may rule against the decision and rulings of an arbitrator if the decision is egregiously against one party without basis.

Business Contracts often Require Arbitration

Typically, many business throughout virtually all industries in the United States use arbitration as a means of rectifying outstanding business disputes, however, for individuals embroiled in a dispute, the need for an arbitrator may not prove necessary, efficient, or cost effective. Personal disputes, between two individuals, often times are best served through the judicial system and the civil courts, given the costs associated with brining in an arbitrator to a given situation. Though for larger, more complex cases requiring esoteric knowledge regarding the dispute at hand, arbitration produces serious benefits; personal disputes involving a limited scope of impact will not require the expertise, impartiality, or knowledge of an arbitrator. Typically, these cases are better served through mediation, or if truly necessary, a jury trial in the civil courts.

Arbitration is Most Often Binding

Arbitration also leaves no room for an appeals process in the overwhelming majority of instances. This is a risk parties and individuals should seriously assess prior to engaging in arbitration, as well as when considering the methods for resolving their disputes. Most individuals would like the option for an appeal in the event a ruling is not in their favor, which is more than probable in the course of a civil court trial, however, with arbitration, the options for appeals are virtually nil, not to mention the costs associated with an appeals process may not even be worth the amount being disputed between two parties.

Also, in the arbitration process, there is a limited period of discovery, which can lead to surprise evidence or testimony occurring during an arbitration process, which a party may or may not be able to effectively refute at the time of their arbitration hearing. Likewise, there is no jury to decide the outcome of a dispute, but rather, the decision rests solely in the hands of the arbitrators, whom usually consist of one individual or a panel of three persons, that may or may not be able to remain entirely impartial during all proceedings regarding all matters.

If you feel that arbitration is not the best method of alternative dispute resolution, but are unsure of other methods of rectifying an outstanding dispute, contact a mediation lawyer in your area today.