Benefits & disadvantages of arbitration

Updated April 17, 2017

During legal disputes, those involved may resort to arbitration to settle their differences. This procedure is effective, but it can also be crippling. Arbitration has its advantages as an alternative to court proceedings but there are drawbacks as well. If you are considering arbitration, you need to consider its strengths, weaknesses and alternatives to decide if it is right for you.


Arbitration is used to settle disputes in many areas of law as an alternative to court. It is common when settling labour disputes, copyright issues or civil proceedings. The parties must unanimously agree to an arbitration procedure and they choose their arbitrator or arbitrators. Arbitrators are neutral people who function like judges. They hear the arguments of each party and render a decision. The arbitrator has the final say in how the dispute is resolved.


One advantage to arbitration is that the parties can bring lawyers for advice and assistance. The arbitration process is also much faster than going to court, with arbitrators rendering their decisions more quickly. With arbitration, the parties are not bound by a court schedule. The time and place of the proceedings are selected based on convenience. Arbitration is also slightly informal compared to court. This can be advantageous for those who are nervous about speaking in a regimented public forum.


Arbitrators can be costly, since parties must pay them by the hour. Those involved must also be careful about what issues the arbitrator will address. The arbitrator cannot pass judgment on something without consent, so anything of importance must not be left out. Perhaps the most pressing problem is how the arbitrator's decision is final. There is no guarantee that the outcome will be desirable. Once the arbitrator decides, the parties must abide by the decision.

Mediation Alternative

If the parties do not wish to go to court or use arbitration, their other option is mediation. Unlike arbitration, the parties themselves have the final say for the dispute resolution. While arbitrators decide like judges, mediators are more like referees. Mediators are there to oversee the proceedings, but they cannot interfere with the outcome. Those involved have complete control over how the procedure is conducted. They may also stop the mediation if they find it is not helping. A major difference between mediation and arbitration is that any decisions reached during mediation are not final unless both parties agree.

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About the Author

Alex Saez is a writer who draws much of his information from his professional and academic experience. Saez holds a Bachelor of Arts in English literature from Queen's University and an advanced diploma in business administration, with a focus on human resources, from St. Lawrence College in Kingston, Ontario.