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Arbitration is Cheaper – Myth or Reality?




In an article titled Arbitration is Cheaper – Myth or Reality? - published on 31st October 2023 - Thomas R. Snyder, Stephen Chan, Able Au and John Olatunji from Charles Russell Speechlys discuss whether the oft peddled statement that arbitration is cheaper (than litigation) is in fact a myth or a reality.


They state that arbitration is often seen as a faster and cheaper alternative to court litigation, but the reality is more complex. The costs of arbitration can be high, and they are influenced by how the process is conducted. International arbitration originated from the need for neutral resolution of cross-border disputes, leading to thorough and expensive procedures. However, efforts are being made to make arbitration more efficient and cost-effective, such as case management, expedited procedures, and the use of technology.


The question of whether arbitration is truly cheaper than traditional court litigation remains open.


Key Takeaways:


  • Arbitration is not always significantly cheaper than court litigation.

  • The costs of arbitration can be influenced by how the process is conducted.

  • International arbitration initially focused on neutrality and enforcement, leading to extensive and expensive procedures.

  • Over time, international arbitration has been used for a wider range of disputes, blurring the distinction with domestic arbitration.

  • Case management and procedural tools are being implemented to make arbitration more efficient and cost-effective.

  • Remote hearings are increasingly being used, especially for procedural and jurisdictional hearings.

The question of whether arbitration is cheaper than traditional court litigation is still debated and the article does not look in detail at the cost of consumer arbitration v the cost of litigation, where the cost of arbitration is capped and can be significantly less than running the equivalent case in the UK courts.


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