arbitration venue

Advantages and Disadvantages of Arbitration

If you want to know about the advantages and disadvantages of arbitration, you should know what arbitration means. It is the process of resolving a legal disagreement without going to trial. Going to trial may be costly and time-consuming, therefore arbitration can be beneficial to many people. A third person listens to both sides of a legal dispute during arbitration. The arbitrator will deliver a decision based on the papers supplied and the oral comments of all parties involved. Witnesses are occasionally summoned to make an oral statement.

arbitration venue - Advantages and Disadvantages of Arbitration
Source: designer491 / Shutterstock

You can find few arbitration venues in Malaysia if you ever feel like you want to use arbitrators’ services. These are some of the advantages and disadvantages of arbitration that you should know of before using this kind of service:


1.       Flexible due to less formal procedure

Arbitration hearings can be planned easily based on the availability of the parties and the arbiter. A court trial date may take many years to get, but an arbitration date is generally secured within a few months. The procedural and evidentiary requirements are considerably loosened and simplified, making the whole process much less formal than a conventional trial and allowing the parties greater flexibility.

2.       Better privacy

Arbitration processes are often done in secret, and parties might agree to keep the final result private. It can be very helpful if the disagreement includes sensitive or humiliating material. . Because all evidence, remarks, and arguments would remain totally secret, this might be appealing to well-known public personalities or clients in commercial disputes. Even if some documents are not revealed in court, there is always the possibility of some public access to potentially sensitive company information.

3.       Lower cost than court

Arbitration is generally considerably faster than court processes, thus attorney expenses are lowered. This is due to the fact that very little discovery is permitted in arbitration. It is a huge assistance in lowering the costs of finding a settlement.


1.       Inability to appeal

This is especially concerning considering that an arbitrator often has greater latitude and decision-making authority than a judge or jury. You should be informed that if the arbitration is binding, both parties waive their right to appeal. If one side believes the decision is incorrect, there is virtually little that can be done to remedy it.

2.       Might be more expensive than litigation

High-quality arbitrators can charge fees that would not be allowed in court. The final decision or award in a non-binding arbitration is not “binding,” and the parties are free to take their problem back to court, thus adding the expense of litigation to the cost of the earlier arbitration. It results in a higher cost than judicial procedures.

3.       Questionable fairness

There are a lot of questionable things that you can find from arbitration such as limited discovery, lack of consistency, no jury and also lack of transparency. Arbitration does away with juries altogether, instead relying on a single arbitrator who serves as both judge and jury. That can be one factor of unfairness and biases.