The key to a successful resolution through arbitration is the skill level and impartiality of the arbitrator or panel of arbitrators. Except in rare instances, the arbitrator's decision is final. If an arbitrator is incompetent or has an undisclosed or undiscovered bias, the binding decision handed down from the arbitrator may be incorrect. The losing party could then be without a legal avenue to argue its arbitrator-related grievances. Another possible drawback is the cost-splitting aspect of arbitration.
Many arbitration clauses require that costs be split evenly between the two parties.
For a large corporation, this represents a significant cost savings compared to the expenditures of trying the case in court. For small business owners who are bringing the action against the large business, the clause may actually increase their legal costs. Parties in public courts do not directly pay for the judges, clerks and facilities. Mediation, another form of ADR, is much less structured than arbitration. It is a method in which the two parties come together to discuss mutually agreeable solutions that will end their dispute.