Arbitration Disadvantages

• Lack of Predictability

  Arbitrator is not bound by the strict rules of judicial precedent. Each case is judged on its own merits, providing no real guidelines for future disputes. This leads to inconsistent decisions and conclusions. The Office of Fair Trading has approved over 20 codes of practise for arbitration so there are wide variations in how arbitration hearings are conducted. This means that awards can be inconsistent and difficult to predict.
• Lack of Public Awareness

  Some cases are not appropriate for arbitration and some parties may not want to try it because they do not understand it or have faith in it. The general public do not understand this form of dispute resolution which means that the take-up rate is low; used in less than 5% of civil disputes. Cases dealt with by arbitration have not increased since the CPR reforms introduced by Lord Woolf in April 1999 which aimed to promote all forms of ADR and Arbitration is still less commonly used than the courts.
• Cost

  Whilst arbitration may be cheaper than litigation, it can still be too expensive for many parties as there is no public funding and the arbitrator’s daily fees can be high and these have to be paid up-front. A poorer claimant may still find £100 to pay for an Arbitrator too expensive. Whilst the rights of appeal to the high court are limited, if they are pursued, they will extend the time and costs of the process.
• Less Legal Background

  Does not have the legal expertise as a judge which means that the arbitrator may have difficulty in dealing with complicated points of law. Although they do have the expertise in the area of industry the issue is dealing with, it could be argued that is not fair and just to allow them to create legally binding decisions which cannot be later remedied through litigation unless there are serious irregularities.