Much Ado About The Cost Of Arbitration…

The high cost of arbitration is often cited as one of its drawbacks. This is clearly the case when compared with the cost of litigation, where the emoluments of the adjudicator (Judge) and the costs of the infrastructure (court rooms) and the administration (registry and support staff) are largely borne by the state. Whether the expensive nature of arbitration is a good or bad thing depends on one's perspective.

Pros

In jurisdictions plagued by frivolous litigations that frustrate the legitimate expectations of commercial parties, the relatively higher cost of arbitration, vis-à-vis litigation appears to be a reasonable quid pro quo.

A litigant who is party to an arbitration agreement is less likely to pursue a frivolous or speculative claim, when confronted with the reality of the likely costs involved. Also, because some of the costs associated with arbitration are, generally speaking, ad valorem, rising or falling with the quantum of the claim; a litigant