Advantages Of Arbitration
Advantages Of Arbitration
Supporters of arbitration hold that it has a multitude of advantages over court action. The following are a sample of these advantages.
Choice of Decision Maker – For example, parties can choose a technical person as arbitrator if the dispute is of a technical nature so that the evidence will be more readily understood.
Efficiency – Arbitration can usually be heard sooner than it takes for court proceedings to be heard. As well, the arbitration hearing should be shorter in length, and the preparation work less demanding.
Privacy – Arbitration hearings are confidential, private meetings in which the media and members of the public are not able to attend. As well, final decisions are not published, nor are they directly accessible. This is particularly useful to the employer who does not want his ‘dirty laundry’ being aired.
Convenience – Hearings are arranged at times and places to suit the parties, arbitrators and witnesses.
Flexibility – The procedures can be segmented, streamlined or simplified, according to the circumstances.
Finality – There is in general, no right of appeal in arbitration. (Although, the court has limited powers to set aside or remit an award).
Having cited the above list of advantages, it is only appropriate to mention some of the most commonly perceived drawbacks of arbitration.
Cost - One or both of the parties will pay for the arbitrator’s services, while the court system provides an adjudicator who does not charge a fee. The fees for an arbitrator can be hefty. To give an example, for an amount of claims up to Rs100,000/-, the minimum fee for a single arbitrator is Rs.2,000/-. The maximum fee can reach ten percent of the claim. However, supporters of arbitration argue that this should be more than compensated for by the potential for the increase in the efficiency of arbitration to reduce the other costs involved.
‘Splitting the Baby’ – Thomas Crowley states that because of the relaxation of rules of evidence in arbitration, and the power of the arbitrator to ‘do equity’ (make decisions based on fairness), the arbitrator may render an award that, rather than granting complete relief to one side, splits the baby by giving each side part of what they requested. Thus both parties are leave the table feeling that justice was not served.
No Appeal – Unless there is evidence of outright corruption or fraud, the award is binding and usually not appeal-able. Thus if the arbitrator makes a mistake, or is simply an idiot, the losing party usually has no remedy.
Narcotic/Chilling Effects – The chilling and narcotic effects are two related concepts, which many theorists, including David Lipsky, believe to be inadequacies of interest arbitration. Chilling occurs when neither party is willing to compromise during negotiations in anticipation of an arbitrated settlement. Two measures most commonly used to weigh this effect are: the number of issues settled during negotiations versus the amount of issues left for arbitration, and a comparison with the management’s and union’s initial offers (chilling takes place when the two parties take extreme positions and are not willing to budge). The narcotic effect refers to an increasing dependence of the parties on arbitration, resulting in a loss of ability to negotiate. Common methods of assessing the narcotic effect are: the proportion of units going to arbitration over time and, perhaps more importantly, the number of times an individual unit returns to arbitration over a series of negotiations.
Supporters of arbitration hold that it has a multitude of advantages over court action. The following are a sample of these advantages.
Choice of Decision Maker – For example, parties can choose a technical person as arbitrator if the dispute is of a technical nature so that the evidence will be more readily understood.
Efficiency – Arbitration can usually be heard sooner than it takes for court proceedings to be heard. As well, the arbitration hearing should be shorter in length, and the preparation work less demanding.
Privacy – Arbitration hearings are confidential, private meetings in which the media and members of the public are not able to attend. As well, final decisions are not published, nor are they directly accessible. This is particularly useful to the employer who does not want his ‘dirty laundry’ being aired.
Convenience – Hearings are arranged at times and places to suit the parties, arbitrators and witnesses.
Flexibility – The procedures can be segmented, streamlined or simplified, according to the circumstances.
Finality – There is in general, no right of appeal in arbitration. (Although, the court has limited powers to set aside or remit an award).
Having cited the above list of advantages, it is only appropriate to mention some of the most commonly perceived drawbacks of arbitration.
Cost - One or both of the parties will pay for the arbitrator’s services, while the court system provides an adjudicator who does not charge a fee. The fees for an arbitrator can be hefty. To give an example, for an amount of claims up to Rs100,000/-, the minimum fee for a single arbitrator is Rs.2,000/-. The maximum fee can reach ten percent of the claim. However, supporters of arbitration argue that this should be more than compensated for by the potential for the increase in the efficiency of arbitration to reduce the other costs involved.
‘Splitting the Baby’ – Thomas Crowley states that because of the relaxation of rules of evidence in arbitration, and the power of the arbitrator to ‘do equity’ (make decisions based on fairness), the arbitrator may render an award that, rather than granting complete relief to one side, splits the baby by giving each side part of what they requested. Thus both parties are leave the table feeling that justice was not served.
No Appeal – Unless there is evidence of outright corruption or fraud, the award is binding and usually not appeal-able. Thus if the arbitrator makes a mistake, or is simply an idiot, the losing party usually has no remedy.
Narcotic/Chilling Effects – The chilling and narcotic effects are two related concepts, which many theorists, including David Lipsky, believe to be inadequacies of interest arbitration. Chilling occurs when neither party is willing to compromise during negotiations in anticipation of an arbitrated settlement. Two measures most commonly used to weigh this effect are: the number of issues settled during negotiations versus the amount of issues left for arbitration, and a comparison with the management’s and union’s initial offers (chilling takes place when the two parties take extreme positions and are not willing to budge). The narcotic effect refers to an increasing dependence of the parties on arbitration, resulting in a loss of ability to negotiate. Common methods of assessing the narcotic effect are: the proportion of units going to arbitration over time and, perhaps more importantly, the number of times an individual unit returns to arbitration over a series of negotiations.
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