There are advantages and disadvantages to Arbitration.  These are discussed below:

Advantages:

The first advantage in resorting to arbitration in lieu on going to court lies in the appointment of arbitrators who are experts on the subject-matter of the dispute.  In many areas of industry as arbitrators are appointed persons who have experience in the relevant branch of industry, for example, in construction, trade of nuts and other goods, maritime transport, etc.  The expertise of the potential arbitrator is a dominant factor in the constitution of the arbitral tribunal.  In court proceedings , expert opinions may fill this gap in the knowledge of the judges, but most often the court will appoint an independent expert.  In arbitration this can usually be avoided as arbitrators have enough experience of their own.

The second advantage of arbitration is that the parties can choose the arbitrators.  If they cannot agree upon a particular person or persons, they can almost invariably agree upon some institution to make the appointment.  And thereby agree upon the qualifications of the person or persons to be appointed.  For example, the Chairman of a Court of Commercial arbitration is likely to appoint someone known to the experienced as an arbitrator, because so requires the prestige of the institutional arbitration.  On another hand, the possibility for both parties to choose arbitrators is of particular importance where the parties to a contract are from different countries or cultures.  Each party can be sure that the arbitration will include at least one member familiar with his country or culture.

The third advantage of arbitration is the more informal atmosphere in which arbitration procedures take place.  In arbitration the atmosphere is more relaxed than in court proceedings.  At least this should be the case, but it depends to a large extent on the way the chairman conducts the hearings.  As a rule, the parties wish to maintain friendly relations even during arbitration proceedings as they are expected to continue doing business with each other.  For example, it is a common practice to make a coffee and tea breaks during the arbitration hearing during which the arbitrators, parties and their representatives have a friendly discussion.

The fourth advantage of arbitration is that the parties are free to decide in respect of the mode of proceedings.  The principle of party autonomy allows the parties to agree upon written procedure, upon the periods of time, content of an award and upon many other questions of arbitration procedure.  So the parties are real “owners” or arbitration proceedings and theoretically may create own “Code of arbitration proceedings”.  In contrast, court proceedings are formalized by the rules of the Code of Civil Procedure, and the parties has no possibility to create own way of proceedings.

The fifth advantage of arbitration is confidentiality.  The conflict between the parties is not revealed to the outside world.  Publication of the award may therefore, as a rule, only take place with the consent of the parties or without mentioning their names and without any either indication which might reveal their identity.

The sixth advantage of arbitration is that the cost are minor as compared to court proceedings.  However, contrary to judges, arbitrators have to be paid which may increase the costs of arbitration in particular in case of a tribunal of three arbitrators.  Also, in institutional arbitration the administration costs of the Institution have to be paid.

The seventh advantage of arbitration is that Arbitrators, as a rule decide in one instance, whilst in judicial proceedings, except in cases of minor importance, a second instance, which may be followed by a third instance, may be needed to arrive at a final decision.  In particular this aspect may justify to qualify arbitration as lest costly.  For this reason the risk of delays is also minimal.

The eight advantage of arbitration is that speed is also used as a pro-arbitration argument.  Thanks to the freedom arbitration laws in general allow the arbitrators in the conduct of an arbitration, they may arrive in a relatively short period at their decision.  Since arbitrators decide in one instance, a final decision may indeed obtained sooner in arbitration.  In comparison, the average duration of civil litigation in the courts of first instance averages about 7 months.  Together with appeal and cassation proceedings the duration of civil litigation could take 2-3 years or even more years.  The possibility of the re-opening of the civil case also must be kept in mind. 

The ninth advantage of arbitration is clear procedure even in the event of international arbitration.  In the event of litigation in foreign courts the procedure normally is unknown. 

The tenth advantage of arbitration is selection of the place of arbitration and language are usually mentioned as an advantage of arbitration compared with court proceedings.  Apart from its great convenience in some cases, it can be in neutral territory rather than on what is perceived to be the home territory of one party.

The eleventh advantage of arbitration is that parties represent themselves.  The monopoly of lawyers is established in the court proceedings.  So, only a lawyer could be as representative of a party in court proceedings.  In the arbitration proceedings there are no such requirement, e.g.  in a quality arbitration there no need of lawyer at all.

The twelfth advantage of arbitration is the possibility of the parties to choose the mode of arbitration proceedings – written, or oral, or mixed.  So the principle of party’ autonomy of much wider and greater in arbitration proceedings than in court’s proceedings.

The thirteenth advantage of arbitration is the question of applicable law – arbitrators are private persons, so the arbitrators are more free to choose the applicable law.  The State judge depends from the national rules of conflicts of laws.  Arbitrators on the contrary, my rule on the basis of lex mercatoria, principles of justice and good faith, etc. 

The final advantage of arbitration is that the signing of arbitration agreement shall mean the refusal of the immunity by the State.  So, arbitration is acceptable to many States and State institutions which for reasons of national prestige would be unwilling to submit to the jurisdiction of the courts of the foreign country.

Disadvantages

The first disadvantage of arbitration is the possibility of the attack on the arbitral award seriously diminish the speed approach of the arbitration .  The possibility of the State control of the arbitral award and arbitration proceedings may lead to delay in arbitration proceedings.  So the enforcement of the arbitral award can be postponed.

The second disadvantage of arbitration is that the arbitrators, as a general rule, have to be paid.  Sometimes, keeping in mind the qualification and the professional and social status of the arbitrators, the arbitrators fees are very high.  However, the foreign experience shows, that never the less, arbitration can be cheaper than litigation, e.g., where the dispute is a technical one and the arbitrator or arbitrators are technically qualified.

The third disadvantage of arbitration is that the Arbitrators are private persons empowered by parties.  However, the Arbitrators don't have the same powers as State judges. 

Lastly, the fourth disadvantage of arbitration is the lack of appeal instance increase the possibility of mistake regarding law or fact in arbitration proceedings and this is also as one of disadvantages of arbitration.