Advantages and Disadvantages of Arbitration

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“Arbitration or Litigation?”

THE REASONS FOR CHOOSING ARBITRATION OVER LITIGATION

Over the last few decades, as the trade, commerce and investment has developed and evolved in an international aspect throughout the world, the necessity of an alternative resolution for the disputes arising between the parties involved in international business has occurred. From that necessity, international arbitration has emerged as a remedy, which is a method for dispute resolution between states, individuals and corporations providing an effective way of obtaining a final and binding decision on a dispute without reference to a court of law. With this, the controversial question regarding the advantages and disadvantages of arbitration over litigation has occurred by also bringing along two different perspectives as to the issue in question.

There are some several major advantages that make arbitration a more desirable and preferable method as a dispute resolution rather than litigation. Although there are some disadvantages of arbitration that are needed to be taken in to consideration by parties before choosing arbitration as a dispute resolution over litigation, when an overall consideration is made it can be said that arbitration as a dispute resolution is much more advantageous than litigation.

The main two reasons that make arbitration more advantageous than litigation are ‘neutrality’ and ‘enforcement’. Neutrality as an advantage can be commented as a freedom for parties to choose a neutral decision maker. One of the main reasons that parties agree to submit their future disputes to arbitration is that none of the contracting parties are willing to have their disputes subjected to the other party’s national jurisdiction as it is likely that the tribunal will be more sympathetic to the other party’s interest. Thus, one of the most valued characteristics of international arbitration is the parties’ ability to choose their tribunal, and thereby to ensure...
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