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Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. Arbitration Pros and Cons. Learn about the advantages and disadvantages of arbitration. Pros of Arbitration Promoted as a way to resolve disputes efficiently, proponents of arbitration commonly point to a number of advantages it offers over litigation, court hearings, and trials.
Cons of Arbitration Being aware of the possible drawbacks of arbitration will help you make an informed decision about whether to enter or remain in a consumer transaction that mandates it -- or whether to choose it as a resolution technique if a dispute arises.
Smart Steps for Consumers to Take Before Entering Arbitration Given the possible perils and unevenness for those who unwittingly enter arbitration contracts, the wise consumer can take a number of steps to become better informed and, possibly, ward off a bad experience.
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Lawsuits and Court. Filing a Lawsuit. Representing Yourself. Working With a Lawyer. How to Find a Lawyer. Cost of a Lawyer. Everybody's Guide to Small Claims Court. Represent Yourself in Court. See All Lawsuits and Court Articles. Related Products More. View More. Get Professional Help. The dispute will normally be resolved much sooner, as a date for the arbitration can usually be obtained a lot faster than a court date.
In Virginia, a trial date is normally about twelve months from the date the lawsuit is filed. Arbitration is usually a lot less expensive. Partly that is because the fee paid the arbitrator is a lot less than the expense of paying expert witnesses to come and testify at trial. There are also lower costs in preparing for the arbitration than there are in for preparing for a trial. Partly this is due to the fact that the rules of evidence are often more relaxed than in a trial, so that documents can be submitted in lieu of having a witness come to trial and testify.
For instance, if a claimant has several doctors who are out-of-state, the cost of bringing them to trial or going out-of-state to take their depositions may be prohibitive for trial, but in arbitration you can usually use just their records and reports.
Unlike a trial, arbitration is essentially a private procedure, so that if the parties desire privacy then the dispute and the resolution can be kept confidential. If arbitration is binding, there are very limited opportunities for either side to appeal, so the arbitration will be the end of the dispute. That gives finality to the arbitration award that is not often present with a trial decision.
Disadvantages of Arbitration There are, however, also some disadvantages to arbitration as a method of resolving a dispute. If arbitration is binding, both sides give up their right to an appeal. That means there is no real opportunity to correct what one party may feel is an erroneous arbitration decision. It may be cheaper to try the case before a judge in General District Court, where medical evidence can be presented by affidavits instead of paying the doctor to testify.
Rules of evidence may prevent some evidence from being considered by a judge or a jury, but an arbitrator may consider that evidence.
If certain information from a witness is presented by documents, then there is no opportunity to cross-examine the testimony of that witness. On the other hand, in court, even if certain records will not be released, there is still a risk of some public access to potentially sensitive business information.
Usually less expensive Most of the time, but not always the case, arbitration is a lot less expensive than litigation. Arbitration is often resolved much more quickly than court proceedings, so attorney fees are reduced. Also, there are lower costs in preparing for the arbitration than there are in preparing for a jury trial. Finality: The end of the dispute For binding arbitration, there are limited opportunities for appeal.
That gives finality to the arbitration that is not often available with a trial decision, which maybe subject to appeals, new trials and further appeals. For employers, class action waiver Recently in , the Supreme Court of the United States confirmed that valid arbitration agreements can include a class action waiver. Therefore, many employers became more interested in including a class action waiver in the employment agreement in order to limit risk exposure.
Mandatory arbitration If arbitration is mandatory by contract, then the parties do not have the flexibility to choose arbitration upon mutual consent. In these cases, one party can force the other party to go to arbitration, even a jury trial maybe more advantageous to the other party. Subjective Arbitrator The process of choosing an arbitrator is not always an objective one. There are cases when the arbitrator could be biased because it has a business relationship with one party or is selected by an agency from a pool list.
In those situations, impartiality is lost. Unbalanced Many arbitration clauses work in favor of a large employer or manufacturer when challenged by an employee or consumer who does not understand how arbitration works. This is important especially if your party would be favored by a strict reading of the law.
No jury For most, having a jury is an important right that helps prevent biases and unfairness. Arbitration eliminates juries entirely, leaving matters in the hands of a single arbitrator, who acts as both judge and jury. Lack of transparency Arbitration hearings are generally held in private which may be a positive to many. However, it is possible that this lack of transparency makes the process more likely to be biased, which may be problematic because arbitration decisions are also infrequently reviewed by the courts.
Finality: No appeals While this may be a positive if you find the arbitration decision favorable, you should be aware that if arbitration is binding, both sides give up their right to an appeal.
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