Is Arbitration a good thing?
11-Aug-2021 | Article by Legal White Official
The answer to the above question is not at all simple and easy. The best way to answer this is to say that, arbitration is an alternate method for solving disputes between parties or people. Arbitration is an arm of ADR (Alternative Dispute Resolution) which promotes it as an alternative to the litigation process. In order to answer the question as to whether it is a good or bad, we have to do an analysis with regards to its benefits and drawbacks.
Let us discuss some of its benefits, which are listed below
- Arbitration is a less formal process as compared to the court proceedings. Being a less formal process, the amount of documentation is also less.
- Arbitration allows anyone to represent his or her case in front of the arbitrational tribunal as opposed to the litigation wherein a lawyer is a must to represent the case on behalf of the client.
- Under arbitration, the disputing parties have complete control over the appointment of the arbitrators. The arbitrators can be appointed mutually by the parties. In case the parties are unable to agree on arbitrators, they can approach the high court or the supreme court and it can appoint them for the case.
- Arbitration is a faster process in comparison to the court process. Due to its quick nature, the cost of the arbitration is usually less. Due to this, only the most relevant evidences are examined rest all irrelevant stuff can be ignored.
- Arbitration hearing is generally conducted in a closed room and only the relevant people are allowed to attend it. The reason for this is to prevent the business-related documents from becoming public, as it might harm the business. Due to this, the companies and businesses choose arbitration over court process.
- Arbitration also enables the parties to make the arbitrators to pass a judgement which can be almost impossible for the judges of the court to grant.
- The decision or the award made by the arbitrators in the tribunal is final and binding to both party majority of the time. The court undertakes the execution of the awards once passed.
Below are some of the drawbacks of arbitration.
- In the past few years, it has been assessed that, arbitration has become expensive. The cost of the arbitrators has also gone up considerably. It has even been seen in some cases that the cost of arbitration has gone higher than the process of litigation.
- It has become a trend that arbitration clause is incorporated in most of the contracts, even employee and employer contracts. The arbitration clause usually works in favour of the employer or the company in case of the dispute between them.
- Arbitrators which the companies appoint are generally biased towards that company, in this case the decision may not be entirely fair.
- As it is a less formal process, many of the evidences can be easily overlooked which can change the complete decision.
- Once the decision has been made, there is very less scope of the appeal which can be annoying for the losing party.
To conclude, I would like to suggest that, one must choose arbitration based on the advantages and disadvantages both. Once we analyse both the sides of the coin perfectly, we will be able to answer the question correctly.