Advantages of Arbitration:

 

(a) Save Time:

Arbitration is speedy. Trials are lengthy, and in many states and counties it could take years to have a case heard by a judge or jury. Appeals can then last months or years after that. In a matter of hours, an arbitrator often can hear a case that otherwise may take a week in court to try with live witnesses. With arbitration, the evidence can be submitted by documents rather than by testimony presented through witnesses. ADR can be scheduled by the parties and the panellist as soon as they are all able to meet together. A dispute often can be settled or decided much sooner with ADR, often in a matter of months, even weeks, while bringing a lawsuit to trial can take a year or more.

 

(b)           Save Money:

Expenses are reduced. Attorneys and expert witnesses are very expensive. Litigating a case can easily run into the tens of thousands of dollars. Alternative dispute resolution offers the benefit of getting the issue resolved quicker than would occur at trial and that means less fees incurred by all parties. When cases are resolved earlier through ADR, the parties may save some of the money they would have spent on attorney fees, court costs, and experts fees.

 

(c) More flexibility:

In case of arbitration, the parties have far more flexibility to select what procedural and discovery rules will apply to their dispute. They can choose to apply relevant industry standards, domestic law, the law of a foreign country, etc.

 

(d)           Select your own Arbitrator or Mediator: 

The parties can often select the arbitrator or mediator that will hear their case, typically selecting someone with expertise in the substantive field involved in the dispute. The arbitrator or panel members need not even be an attorney. In this way the focus can be on the substantive issues involved rather than on technical procedural rules. In normal litigation, the parties cannot select the judge, and the judge and/or jury may often need expert witnesses to explain extremely complex issues. The greater the expertise of the arbitrator, the less time that needs to be spent bringing him up to speed.

 

(e) The results can be kept confidential:

The parties can agree that information disclosed during negotiations or arbitration hearings cannot be used later even if litigation ensues. The final outcome can also be made private if the parties so stipulate and agree. On the other hand, most trials and related proceedings are open to the public and the press.

 

(f)  Increase Control over the Process and the Outcome: 

In arbitration, parties typically play a greater role in shaping both the process and its outcome. In most arbitration processes, parties have more opportunity to tell their side of the story than they do at trial. Some arbitration processes, such as mediation, allow the parties to fashion creative resolutions that are not available in a trial. Other arbitration processes, such as arbitration, allow the parties to choose an expert in a particular field to decide the dispute.

 

(g) Preserve Relationships:

Arbitration can be a less adversarial and hostile way to resolve a dispute. For example, an experienced mediator can help the parties effectively communicate their needs and point of view to the other side. This can be an important advantage where the parties have a relationship to preserve.

 

(h)           Increase Satisfaction:

In a trial, there is typically a winner and a loser. The loser is not likely to be happy, and even the winner may not be completely satisfied with the outcome. ADR can help the parties find win-win solutions and achieve their real goals. This, along with all of ADR’s other potential advantages, may increase the parties overall satisfaction with both the dispute resolution process and the outcome.

 

(i)   Improve Attorney-Client Relationships: 

Attorneys may also benefit from arbitration by being seen as problem-solvers rather than combatants. Quick, cost-effective, and satisfying resolutions are likely to produce happier clients and thus generate repeat business from clients and referrals of their friends and associates.

 

 

 

 

 

 

Disadvantages of Arbitration:

 

(i)               Consent of the parties:

For arbitration to be successful, especially in arbitration proceedings, both the parties must agree to refer the dispute to be settled through arbitration or mediation. Under the Arbitration Act, 2001 if one party does not respond to the other party’s notice requesting arbitration to solve a particular dispute, the system provided by the current Act of 2001 as regards appointment of an arbitrator through Court on behalf of the non-responding party is very cumbersome and sometimes it takes years together to even get the arbitration tribunal constituted and the hearing started.

 

(ii)             Fee for the Neutral:

The neutral mediator or arbitrator charges a fee for his or her services. Depending on the arbitrator or mediator selected, the fees can be substantial of course the parties typically agree to divide the fees between themselves. Depending on the contract language and state law, a prevailing party can be awarded fees and costs. A judge on the other hand, charges no fees for his services.

 

(iii)          Lack of precise Rules:

Since no specific Rules of Procedure have been framed for arbitration, the parties are to depend on the Rules of arbitration determined by a Tribunal. This lacuna in the system makes ADR an uncertain game.

 

(iv)           Arbitration decisions are final:

With very few exceptions, the decision of a neutral arbitrator cannot be appealed, with fraud being an obvious exception. Additionally, some states will not enforce decisions of arbitrators that are patently unfair, a high standard to meet. Another ground for setting aside an award is if the arbitrator’s decision exceeded the scope of the arbitration clause or agreement. Some arbitration clauses are broad, others are narrowly limited to specific disputes. Decisions of a court, on the other hand, usually can be appealed to an appellate court for a variety of legal grounds and for numerous alleged procedural errors.

 

(v)             No appeal on merit:

Even if a party is not satisfied with the merit of the outcome of a resolution of a dispute through arbitration, there is no room for filing any appeal on merit. Only an award can be set aside if it can be seen that the Tribunal was biased. This aspect of the matter sometimes deters a prospective litigant from choosing arbitration over litigation.

 

(vi)           Non-binding arbitration:

Sometimes the court may order nonbinding or Judicial Arbitration. This means that if a party is not satisfied with the decision of the arbitrator, they can file a request for trial with the court within a specified time period after the arbitration award. Depending on the process ordered, if that party does not receive a more favorable result at trial, they may have to pay a penalty or fees to the other side.

 

(vii)        Warning:

The parties pursing ADR must be careful not to let a Statute of Limitation run while a dispute is in any ADR process. Once the statute expires, judicial remedies may no longer be available.

 

(viii)      Lack of institutional support:

Countries where the system of ADR has become successful put much emphasis on institutionalization of the system of ADR. For example, in the UK, USA, Singapore, France etc., we will find that there are so many private institutions which offer institutional support for ADR. This is helpful because these institutions have their separate Rules of procedure and panel of Arbitrators. They have their own system of arranging the whole arbitration in their own way. The parties simply write to them referring a dispute and they do the rest. Some of the big names are London Court of International Arbitration (LCIA), Singapore International Arbitration Center, Hong Kong International Arbitration Center, Indian Council of Arbitration etc.

In Bangladesh we have Bangladesh Council of Arbitration (BCA), Bangladesh International Arbitration Center (BIAC), Dhaka International and Domestic Arbitration Center (DIDAC) etc.

 

(ix)           May have no choice:

Often the contract in dispute contains a broadly worded mandatory arbitration clause. Many lease agreements and employment contracts. For example, contain mandatory arbitration provisions, as do operating agreements and other types of business contracts. Unless both parties waive arbitration, most states will compel arbitration at the request of any party.

 

(x)             Lack of awareness:

People will have to be made aware of the advantages of arbitration and disadvantages of court based litigations. People do not have the requisite knowledge of the system. That is why the system is not becoming common in our country.