Disadvantages of Arbitration

Arbitration does have disadvantages, however. Like adjudication, it is adversarial in nature. It does not rebuild relationships, and it does nothing to foster trust between the disputing parties. Rather, arbitration can encourage the continued escalation of the conflict as the parties attempt to present their own versions of the story in the strongest possible terms while belittling or disputing the facts presented by the other side. In addition, the decision-making authority is taken away from the parties themselves. Some see this as disempowering and ultimately less satisfying than a process, such as mediation, that allows the conflicting parties to tailor the outcome to best meet their interests and needs.

Others decry arbitration for being too informal and potentially unjust. Since arbitration decisions are not appealable, the arbitrator has broad powers, which can potentially be abused. Some charge that arbitrators tend to look for compromise solutions, even when doing so doesn't make sense, in an effort to please both parties so that they will be chosen as arbitrators again. Others charge that arbitrators tend to make win-lose decisions based on obvious criteria, without carefully looking into the parties' interests to ferret out possible win-win outcomes. Since arbitration usually simplifies and shortens many aspects of court adjudication (limiting discovery and the presentation of testimony), some charge that arbitration fails to provide due process. Like mediation, arbitration also fails to produce a public record of the proceedings, which is important in some cases.