Mandatory arbitration is a more recent phenomenon. States such as Minnesota, New York, and New Jersey have enacted statutes that force disputes over automobile insurance claims into this forum. In addition, courts sometimes order disputants into arbitration. In theory, arbitration has many advantages over litigation. Efficiency is perhaps the greatest.
Proponents say arbitration is easier, cheaper, and faster.
Proponents also point to the greater flexibility with which parties in arbitration can fashion the terms and rules of the process. Furthermore, although arbitrators can be lawyers, they do not need to be. These theoretical advantages do not always hold up in practice. Even when efficiency is achieved, some critics argue, the price is a lower quality of justice, and it can be made worse by the difficulty of appealing an award. Yet even arbitrators agree that as arbitration has become increasingly formal, it sometimes resembles litigation in its complexity.