Arbitration, indeed one of the best ways to resolve a dispute outside the court. And even the most cost-effective way when you consider the other Alternative Dispute Resolution Systems. That’s one of the reasons why most people decided to go for it. But what not many people might know is that it comes with a huge list of disadvantages too, which you should know about before approaching an arbitrator.
Five Disadvantages in the Process That You Might Not Know About
More expensive than legislation
Approaching a court to resolve a dispute might be a time taking procedure, but it was cost-effective in comparison to arbitration. And it is also hard to determine the extent to which an arbitration cost could go up because the arbitrators do not have a fixed band of charges.
Besides the expenses of the proceedings, the legal system also has a cap on the fine or penalties it can impose. However, there’s no such limitation or restriction in terms of the arbitration. Thus, it puts you at risk of losing all your wealth if your arbitrator decides to pass a judgment that says so by imposing huge penalties.
Arbitrators are not bound law
Unlike the judges who need to abide by the legal systems and the judiciary, arbitrators are not bound by law. They are free to pass judgments based on their findings from the trail. This means that while arbitrators must be fair and just, there is no law governing or binding them. It thus, makes it possible for an arbitrator to favor one party over another. Like Aristotle once said, an arbitrator goes by the equity in a case and a judge by the law.
Most people overlook this aspect while choosing arbitration only to regret their decision later. So, think twice before you make a decision. However, the fact that you can pick your arbitrator makes up for it! Thus giving you a certain motivation to trust the arbitrator.
A courtroom makes it possible for everyone to be aware of the proceedings of the case. The developments, evidence, arguments, witness testimony, etc., is available for everyone interested in the case. However, in the case of an arbitration, there’s a lot of ambiguity. Thus that the disputing parties will not have a complete and clear picture of the proceedings. It is, therefore, impossible to know what led to the decision being in favor of one party over the other as the arbitrator owes no explanation, and there’s no possibility of cross-examination.
Arbitrators must be neutral. However, there’s no telling if they have biases like stereotypes, preferences, or any other reason. For instance, an arbitrator might show preference to the party that hired them over the other disputing party. Besides this, cultural and language bias are also barriers that prevent arbitration from becoming a popular dispute redressal mechanism.
Arbitration binds the parties
The major, but less discussed point in the arbitration is that both the parties sign an agreement before they start the arbitration process. This agreement prevents them from filing for an appeal in case the judgment isn’t satisfactory. This is unlike the legal proceedings where the disputing parties could contest the judgment if they have valid reasons to believe so. Thus, if you go for arbitration and have signed a binding agreement, you cannot file for an appeal and will have to live with the judgment, no matter how erroneous the arbitration decision sounds.
However, this does not mean that you shouldn’t go for arbitration. That’s because it has its own set of advantages in comparison to other Alternative Dispute Resolution systems or the legislation. For instance, it is quicker, cheaper, and more efficient than most ADR processes. While there are certain disadvantages, it is still popular, due to the advantages it has too.
To make sure you get the right resolution for your dispute, make sure you explore all the possible options you have. You should carefully evaluate the pros and cons and make an informed decision. Talking to your legal advisor about the best dispute redressal method for your case would be of great help! If you’re picking arbitration, ask for arbitrator recommendations from your friends and legal advisor.