Advantages and Disadvantages of Arbitration | What are the Advantages and Disadvantages of Arbitration?

Advantages and Disadvantages of Arbitration: Arbitration is a process in which two parties agree to settle their dispute legally in front of an arbitrator without going to court. The arbitrator resolves the dispute by hearing the matter from both parties, an arbitrator can single-handedly do the same or it can be a group of arbitrators. We don’t need to go to court if the problem is solved with this and we can easily settle the dispute. The matter can be related to business, partnership, business transactions, etc. It is payable but beneficial if you don’t want to deal with the court’s process. Only possible with the concern of both parties.

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What is Arbitration? Advantages and Disadvantages of Arbitration 2022

If we want to settle any dispute between two parties regarding partnership, business transaction, etc then without going to the court we can resolve the dispute by an arbitrator, this is called Arbitration. It is a better option than court trials because court trials can be expensive and also time-consuming. In this process, an arbitrator or group of arbitrators looks at the whole matter with a presentation that is submitted by each party and then comes to a conclusion. Sometimes witnesses are also allowed to testify about the matter and an attorney is there from each side to talk about the matter of dispute.

In arbitration, both parties should agree to it because if one of the parties disagrees then the arbitration process is not possible and then anyone party can go to court. But it is the better alternative to resolving the dispute.

For this, the complaining party sends a notice to arbitrate the dispute with the reason. Then after the response of the second party, the process starts according to the way they select the type of arbitration to resolve the dispute. The rules of arbitration can vary according to the situation but the process involves the same basics of court trials. The arbitrator then final the settlement but any of the parties can have the right to appeal. The case ends with the arbitrator as binding for both parties. There are many types of arbitration such as ad hoc arbitration, fast track arbitration, institutional arbitration, and domestic arbitration. There are many advantages of arbitration and disadvantages also.

• Advantages of Arbitration
• Disadvantages of Arbitration
• Comparison Table between Advantages and Disadvantages of Arbitration
• FAQs on Pros and Cons of Arbitration

Advantages of Arbitration

Arbitration is beneficial when we want an easy and fast resolution of a dispute between two parties. As it has all the components of court trials then it becomes more reliable for solving any matter only when both parties agree to the arbitration. The following are the advantages of arbitration which are

• Both Parties Agree to the Arbitrator: when both parties of the dispute agree to the arbitrator then it becomes easy for the process to give a fair award to both the parties. Here both the parties agree to the arbitrator thus the final settlement becomes easy and in favour of both the parties.
• Less Time Consuming: As compared to the court trials arbitration is less time-consuming because here both the parties of dispute do not appeal again for the trial after the final settlement as both of them agree to the arbitrator. This saves a lot of time.
• Smooth process: The arbitrator is enough for the settlement as both the parties listen to the arbitrator and trust the reward which makes this process very smooth.
• Affordable: The arbitration is less time consuming and simple so it finishes the trial fast which automatically makes the trial cost low since there is a low chance of appeal by any of the parties.
• Privacy: The arbitration process is very private and confidential the trails. It is totally dependent upon both parties.
• Finality: Both parties agree to the final outcome so it is a much better option. There is almost zero chance of an appeal by any of the parties in dispute.

These were some of the advantages of arbitration.

Disadvantages of Arbitration

With many of the benefits of arbitration, there are some disadvantages that are to be considered while going through this process. Here are the disadvantages of arbitration

• Can be Uneconomical: If both the parties in dispute are for the less amount then the arbitration may cost more and it leads to being expensive. The arbitrator fees and other required documents may cost more than the amount of actual dispute between both parties.
• No Chance of Appeal by the Party: After binding, if any one party in a dispute is not happy with the decision then the party will not have the right to appeal. This is the biggest drawback of arbitration.
• Unclear Information is taken as evidence by the arbitrator: If the arbitrator is binding then the chance is without any cross-examination whatever documents are submitted are considered and can be taken for final arbitration. This can be sometimes u fair for one of the parties.
• The arbitrator may not follow the law: Unlike the court trials, the arbitrator can be biased sometimes toward one of the parties and also not follow the law. There are no standards in the arbitration so it is not consistent and can favour any one party.

These were the advantages and disadvantages of arbitration which explains the various factors that affect it and how it differs from court trials.

Comparison Table between Advantages and Disadvantages of Arbitration

FAQs on Pros and Cons of Arbitration

Question 1.
what is Arbitration?

Answer:
Arbitration is a process in which two parties agree to settle their dispute legally in front of an arbitrator without going to court. The arbitrator resolves the dispute by hearing the matter from both parties, an arbitrator can single-handedly do the same or it can be a group of arbitrators. The case ends with the arbitrator as binding for both parties.

Question 2.
What are the benefits of arbitration?

Answer:
In arbitration If we want to settle any dispute between two parties regarding partnership, business transaction, etc then without going to the court we can resolve the dispute by an arbitrator. Arbitration is beneficial when we want an easy and fast resolution of a dispute between two parties. Here are the benefits of arbitration which are as follows

• when both parties of the dispute agree to the arbitrator then it becomes easy for the process to give a fair award to both parties.
•  As compared to the court trials arbitration is less time-consuming because here both the parties of dispute do not appeal again for the trial after the final settlement as both of them agree to the arbitrator. This saves a lot of time.
• The arbitrator is enough for the settlement as both the parties listen to the arbitrator and trust the reward which makes this process very smooth.
• The arbitration is less time-consuming and simple so it finishes the trial fast which automatically makes the trial cost low since there is a low chance of appeal by any of the parties.
• The arbitration process is very private and confidential in the trials. It is totally dependent upon both parties.
• Both parties agree on the final outcome so it is a much better option. There is almost zero chance of an appeal by any of the parties in dispute.

Question 3.
What are the major disadvantages of Arbitration?

Answer:
The major disadvantage of the arbitration is as follows;

•  After binding, if any one party in a dispute is not happy with the decision then the party will not have the right to appeal. This is the biggest drawback of arbitration.
• If the arbitrator is binding then the chance is without any cross-examination whatever documents are submitted are considered and can be taken for final arbitration. This can be sometimes u fair for one of the parties.