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Arbitration's Cost-advantage is fictitious, says a 2005 Survey

Many people are advocating the use of arbitration as a method of dispute resolution alternative ("ADR") to traditional litigation in court. One of the frequently used arguments is it takes up costs less than spent in court proceedings. This has become a fiction as in recent years, costs of international arbitration have increased dramatically. Practitioners are nowadays extremely zealous about arbitrations proceedings. When complex arbitration matters are coupled by volumnous paper works, arbitration proceedings have become costly much to the surprise of the parties to the proceedings.

A survey in 2005 carried out among in-house lawyers of international corporations having experience in international arbitrations has come up with the following significant findings in respect of arbitration's costs:

  • 50% of the respondents who answered the releant question ranked expense as the most important disadvantage of arbitration.
  • on the question of costs on international arbitrations comparing with litigation:
    • 26% of respondents considered it more expensive to a great extent.
    • 38% considered it more expensive to some extents.
    • 23% considered it about the same and
    • 13% considered it less expensive.

In short, majority of the respondents are of the opinion that arbitraion is more expensive than litigations. At the same time, only a minority are believing that arbitrations help to save costs.