There are several ways in which various kinds of disputes and conflicts are resolved. Arbitration is a type of Alternative Dispute Resolution (ADR), where in a discrepancy between two or more individuals or groups are resolved by impartial individuals called the arbitrators. This is generally opted in order to keep away from a costly and lengthy proceedings process in courts. There are no judges or juries as in the normal cases of courts, but only an arbitrator or a panel of arbitrators chosen by the parties to conduct a hearing and determine the proper action to resolve legal problems, determine legal questions as well as legal controversies.
This type of ADR has been in existence for a long time especially in the areas of labor, construction, and securities regulation, and is gaining popularity in other business disputes (iPay, Ltd., 2005). Aristotle wrote, “For an arbitrator goes by the equity of a case, a judge by the law, and arbitration was invented with the express purpose of securing full power for equity.” (Smith, 1998) Though this is an easy way of resolving conflicts there are several problems associated with it. This paper brings out some of the reasons why one should not go to arbitration.
Though enormous number of unsettled stockbroker/customer disputes are resolved through arbitration, it is not always a right way to resolve legal problems. Even though it avoids lengthy, time-consuming and costly exercises such as depositions, interrogatories, etc., documents which are very important to supporting the customer’s claim are often in the control of the brokerage firm. As a result the arbitration rules for production of documents have been commonly criticized as “lacking teeth.” Though this might result in delays and customer may not be able to thoroughly review such information (Miller, 2007)
Another disadvantage of arbitration is that the decision of the arbitrator is final and in general one cannot go to court and appeal the arbitrator’s decision. It may be only allowed if one can demonstrate that an arbitrator was impartial or biased and has time limitations. It is possible within three months from the date the arbitrator’s decision was rendered, to file in court a “motion to vacate.” Otherwise, the right to petition the arbitrator’s decision will forever be disqualified (iPay, Ltd., 2005).
As in court-based settlement, arbitration outcomes are in general win-lose and not win-win. Thus, the arbitrator usually decides that one side was right and the other wrong. This can increase the chances of conflict. Arbitrators do not often go out of their way to develop new approaches for meeting the interests of both sides simultaneously, as a mediator would do, though if a win-win solution is apparent, the arbitrator would probably recommend it.
Besides, arbitration takes decision making power away from the parties and as a result they may help to resolve the current conflict, but does nothing to help the parties learn how to resolve their own conflicts in the future (Conflict Research Consortium, 1998).
Other disadvantages include the lack of set pattern and often no justification for the interpretation behind the award. Arbitration awards need not necessarily be “reasoned,” i.e., it is nor necessary to contain findings of fact or conclusions of law, except if the parties request that the arbitrators deliver a reasoned award. Arbitrators may generally make any award that is “just and equitable,” although the award of punitive damages by arbitrators is generally not permissible in all jurisdictions. An offensive arbitration award is much more difficult to reverse than a court judgment (Smith, 1998).
Therefore, it can be concluded that there are several problems that may be associated with arbitration. Though the court decisions may take long and may be expensive, it is always good to go through it rather than arbitration.
References
Bennett S.C. ESQ. Arbitration :Essential concepts. Web.
Conflict Research Consortium, (1998) Arbitration, International Online Training Program on Intractable Conflict. Web.
iPay, Ltd., (2005) How To Deal With Legal Problems: The Arbitration & Mediation Alternatives. Web.
Miller, H. S. (2007) The Arbitration Process. Web.
Smith, R.M. (1998) About ADR : Arbitration Overview. Web.