Going for an Arbitration? Make Sure You Know of the Cons in the Process

ArbitrationMay 15, 2020

When a dispute arises, there is more than one way to resolve it. Famous as the Alternative Dispute Resolution mechanism or ADR. This refers to the situation where a third party, other than the country’s judiciary system, interferes in the dispute resolution process. Conciliation, Arbitration, Mediation, are some of the popular methods of dispute regulation.

As legal proceedings are time-consuming, a lot of people across the globe are moving towards ADR. Besides saving time, it also has other advantages. For instance, you can pick your arbitrator, confidentiality in the process, control over the proceedings, the costs, practical solutions, etc. Arbitration is also more informal, meaning you have more free space to share your views. Similarly, you will also be able to get ample time to have your version of the dispute heard, which might not happen in litigation as courts operate with a time constraint.

However, there are quite a few disadvantages or cons to the ADR process too. While each ADR has it’s set of advantages, and disadvantages let us explore the drawbacks of the popular ADR approach, i.e., arbitration.

No Possibility to Appeal

Unlike court judgments, which you can always appeal, an arbitrator’s word is final. An arbitrator’s word is final, and there can be no appeal. This is challenging because, as a disputing party, you might have no clue what led to the judgment.

This applies if the judgment comes in your favor or against. However, there are certain exceptions to this, like instances like the arbitrator being unfair, accepting bribes, take favors, etc. In such instances, you can file for an appeal.

Expensive Process

The major reason people pick arbitration over court proceedings is that it is less expensive than litigation. While it is cheaper than the costs of litigation, it is higher than other ADR processes. This is because it might depend on the arbitrator’s fees. If you are appointing a panel of arbitrators, the cost might only be higher.

Private Proceedings

All the case hearings, cross-examinations, evidence evaluation,etc., will happen in private. This means that you will not have complete access to what the other party has to say about the case, the evidence they have, etc. Arbitrators have a history of taking sides and being partial. There is no telling that your arbitrator will not turn out to be one of them too.

However, even if it happens, you will not be able to find out about it as you will not be witnessing the proceedings. This is unlike a court hearing where both the disputing parties, along with the public, will be witnesses to the whole case and the hearing.

Lack of Transparency

The proceedings in arbitration are discrete. This means you will not be able to evaluate, examine, or cross-examine the witnesses presented by the opposite party. This means you will not be privy to all the proceedings interrogations that take place.

Similarly, it is not possible to understand the approaches that an arbitrator undertakes in evaluating the case. Like Aristotle once said, an Arbitrator goes by the equity of a case while the judge goes by the law. So, it is impossible to know what led to the judgment.

For instance, if your case is a money related dispute, the arbitrator might not take it too seriously if the amount is negligible. They might instead ask you to ignore the case instead, which might not be the case if you are in litigation fighting out the dispute in court.

In Conclusion:

While these are just a few disadvantages, there are a lot of advantages to it too. Research by the Corporate Counsel went on to show that arbitrations costs are higher in comparison to litigation; it does save ample time to both the parties. It is thus an advantageous process for both parties in the long run. However, before you go for arbitration, make sure you evaluate the pros and cons.

Also, make sure you carefully evaluate if your case needs arbitration, or you can resolve it out of court. It will also help if you take into consideration other ADR methods. If you have made up your mind to go for arbitration, make sure you spend ample time in selecting the right arbitrator for your case.