Question

Advantages and disadvantages of international commercial arbitration

Answer 1

Answer:

Despite the disadvantages of this method, such as the possibility of biased private arbitrators, the difficulties of the enforcement process in some countries who are not members of New York Convention, the opportunity of creating procedural rules in favour of one party, limited discovery rights in terms of public ...

Answer 2

Answer:

Advantages

1. Cost. Generally, arbitration proceedings will result in quicker dispute resolution than in the court system. This, in turn, results in lower overall costs. In addition, only limited discovery is allowed in arbitration, which greatly helps to reduce the costs of reaching a resolution.
2. Informality. Arbitration proceedings are far less formal than a trial. Unlike trials, which must be held in a courtroom, parties can agree to have arbitrations in any convenient setting of their choosing. Also, the rules of procedure and evidence are greatly relaxed and simplified, making the overall process much less formal than a typical trial and giving the parties more control.
3. Privacy. Arbitration proceedings are generally held in private, and parties can agree to keep the final resolution confidential. This is especially appealing if the subject matter of the dispute involves private or embarrassing information.
4. Control. Parties have the ability to maintain greater control over the dispute resolution process through arbitration. The arbitrator is selected by the parties. Unlike in a trial, where the judge or jury may know very little about the subject matter of the dispute, the parties to arbitration have the ability to select an arbitrator with expertise in a certain area, which may lend to a more equitable and informed decision. Additionally, the parties can generally select and stipulate as to the legal and procedural rules that will govern the process.

Disadvantages

1. Inability to Appeal. As a general and practical rule, the arbitrator’s decision cannot be appealed. Only in certain limited situations, such as when the arbitrator exceeded his or her authority or upon proof of corruption, fraud or undue influence, will an arbitrator’s decision be reviewed by a district court. This can be especially troubling given that an arbitrator generally has more discretionary and decision-making power than a judge or jury. Therefore, the binding nature of the decision and the general lack of ability to seek recourse from an incorrect decision make the consequences of the arbitration more profound.
2. Lack of Formal Discovery. Although the lack of a full fledge formal discovery process in arbitration proceedings may result in decreased costs, it can also mean that the parties (or one party in particular) may not have all of the information necessary to fully evaluate the case. Therefore, a party may present its case to an arbitrator without being privy to all of the pertinent facts that could have been revealed had more formal discovery, such as interrogatories, requests for production and depositions, been conducted.
3. Discretion of the Arbitrator. An arbitrator may make his or her decision without issuing any written opinion or explanatory statement. Furthermore, since arbitrations are private and so infrequently reviewed by courts, the lack of transparency in the decision-making process may leave room for bias in arbitration proceedings.
4. Rising Costs. Although arbitrations are typically going to be less expensive than litigation, the cost of arbitration is on the rise, making arbitration often more expensive than other ADR proceedings.