Question

Describe final offer arbitration. What are its advantages and disadvantages?

(300 words)

Answer 1

Final-offer arbitration is a type of interest arbitration in which both parties are required to submit their final offer to an arbitrator, and may choose any offer upon the arbitrator’s discretion.

advantages

1. The parties to the dispute usually agree on the arbitrator and dispute normally resolved much sooner
2. It is less expensive as fee paid the arbitrator is a lot less than the expense of paying expert witnesses to come and testify at trial.
3. arbitration is essentially a private procedure, so that if the parties desire privacy then the dispute and the resolution can be kept confidential.

disadvantages

1. If arbitration is binding then there is no real opportunity to correct what one party may feel is an erroneous arbitration decision.
2. If arbitration is mandatory or required by a contract, then the parties do not have the flexibility to choose arbitration only when both parties agree.
3. If certain information from a witness is presented by documents, then there is no opportunity to cross-examine the testimony of that witness.
4. The standards used by an arbitrator are not clear, although generally the arbitrator is required to follow the law. However, sometimes arbitrators may consider the “apparent fairness” of the respective parties’ positions instead of strictly following the law, which would result in a less favourable outcome for the party who is favoured by a strict reading of the law
5. If the matter is complicated but the amount of money involved is modest, then the arbitrator’s fee may make arbitration uneconomical.