Commercial arbitration can be shockingly costly and the fees are difficult to negotiate

A recent article lambastes commercial arbitrations on the basis of their sometime costs. Writing in the NYSBA J., Vol. 81, July/Aug. 2009 at 30, Ronald Offenkrantz describes the unregulated and often unfettered charges of arbitrators. Various organizations set some rules for their arbitrator members, such as the AAA Commercial Rules or those of the American Health Lawyers Association, JAMS Resolution Centers (JAMS) or the International Chamber of Commerce but arbitral fees can shock clients. In a footnote, Offenkrantz mentions a study by Public Citizen, Cost of Arbitration: Executive Summary (May 1, 2002)(“[a]rbitration costs will probably always be higher than court costs.”).

I am sure there are two sides to this dispute. Granting that point, the advantages of alternative dispute resolution are touted much more than the disadvantages, such as the potential cost (See my post of Jan. 16, 2008: arbitration with 14 references.).