Arbitration Pros and Cons: Weighing the Scales for Businesses

Arbitration for Businesses

When businesses clash and start to have friction, there are several ways to cool the engines and solve everything in a way that leaves both parties as winners. Arbitration is an alternative method that’s becoming a popular choice for resolving disputes. 

However, like any other resolution option, arbitration has its own set of “yay”s and “nay”s that should be considered before making a decision. A balanced view of its potential benefits, effects, and consequences will help businesses glean the understanding needed on whether this is the right path for their brand.

Advantages of Arbitration for Businesses

For businesses, there are multiple upsides to going for the arbitration route. First and foremost is its cost-effectiveness compared to traditional litigation. By having one to three arbitrators working on the case, the process is often quicker and more streamlined, lacking the roadblocks that come with specific discovery and legal procedures. With affordability comes flexibility, as businesses can decide on the number of arbitrators, the venue, and the rules that all of them will play by. 

In relation to having this freedom, the arbitrators chosen will also have the expertise and experience in the same field the companies are operating in, leading to more informed and nuanced decisions. Arbitration proceedings are also confidential, which can be useful for companies working with sensitive or proprietary information. Moreover, whatever happens at the end of the arbitration process is final and legally binding, providing certainty and closure for all involved parties.

Disadvantages of Arbitration for Businesses

However, arbitration also has a number of downsides that should be considered before locking it down as the resolution method of choice. One of its strengths is also a major weakness: unlike traditional litigation where the ruling can be pushed up to a higher court for a re-appeal, when a decision is made after arbitration, it’s done and over with. Both parties will have to live with the effects of the decision, favorable or not. Furthermore, discovery in arbitration is often more limited, which can prevent a party’s ability to gather enough evidence to support their claims.

Additionally, the process can lack transparency since it can be done confidentially, leading to a lack of public records and the inability of a third party to assess the fairness of the proceedings. Finally, the potential for bias is also present, since the parties involved may have prior relationships with the lawyers or arbitrators chosen for their case.   

Factors to Consider Before Choosing Arbitration

Therefore, before jumping into arbitration as the dispute resolution method, businesses should think about whether arbitration is the right choice for their ongoing beef with another company. Here are a few questions businesses can ask themselves before proceeding with arbitration:

  • What kind of dispute are you in? How complex is the dispute situation? Arbitration can be more effective if the disagreement is simpler and smaller.
  • How large is the dispute? What are the potential damages involved? The cost of the process will depend on the answer.
  • What do you want to achieve? What outcome do you want to have? Will arbitration give you the results you want?
  • How much time do you have to settle the dispute? How much money are you willing to spend on it? Arbitration can be a faster and cheaper method of resolving issues.
  • What business relationship do you have with the other party? Arbitration may not be appropriate if the companies involved have a significant power imbalance (e.g. an international corporation vs. a small local brand) or if one party is refusing to cooperate.
  • How valuable is the information involved in the dispute? If the details need to be private and confidential, then arbitration can be a good way to go.

The Benefits of Arbitration Transcription 

Once the businesses involved decide on arbitration, the proceedings are recorded as a reference for all involved. LexTranscribe recognizes the significance of arbitration transcription, as critical details can easily be overlooked during the process. The use of arbitration transcription improves the accuracy of the decision by providing a complete and reliable record of the proceedings, especially in cases involving technical or specialized language. Arbitration transcription can also be more efficient compared to court reports, as it eliminates the need for manual note-taking and allows for easier search and retrieval of information. And if ever the decision is contested or up for re-appeal, there is a clear and objective record of what is said or done during proceedings, which can help influence a change of heart.

The Importance of Seeking Legal Advice Before Choosing Arbitration

Even after the rundown of arbitration as a potential conflict resolution method, consulting a lawyer for legal advice should not be discounted. There are different kinds of disputes, ranging from global cases that involve countries and international corporations to minor, local business issues. Commercial litigation is still a common practice for businesses due to its reliability, unbiased view, and the employment of knowledgeable counsel. Lawyers provide valuable guidance on the pros and cons of one’s case, help negotiate the terms of agreements, and ensure that the process is fair and acceptable for all involved. 

Without proper advice, businesses may unknowingly waive important legal rights or end up with an unfavorable outcome. Lawyers help parties understand their options apart from arbitration and litigation, protect their interests, and make informed decisions about how to proceed.


Arbitration can offer many benefits for businesses looking for an ending to their quarrels. At the same time, companies should take care in proceeding with this method, depending on the issue being discussed, the legal rights they have, and whether arbitration is the right choice for the parties involved. Seek the guidance of a qualified legal professional before making any final decisions, but if the endgame involves faster resolution, lower costs, and confidentiality, then arbitration may be the best bet in getting the scale balanced and equal to all involved.


Please enter your comment!
Please enter your name here