As the question points out, the use of arbitration or mediation to resolve legal disputes does reduce the burden on an overburdened court system. It also saves a great deal of money for all parties concerned, and can reduce the emotional trauma that can accompany the resolution of personal matters such as divorce when conducted in an open court proceeding. When disputes can be reasonably amicably settled around a conference table, it is usually far preferable to more confrontational processes associated with formal legal proceedings that take place in a public courtroom before a judge and, depending upon the nature of the case or issue involved, before a jury.
Arbitration proceedings are, by necessity, structured, but are less stringent processes than those that take place in a courtroom. In addition, because both parties have agreed to submit their dispute to arbitration, then there tends to be less manipulation of the legal process and a more expeditious resolution of the conflict. Absent the more formal and legally-structured rules of evidence, for example, there is less protracted gamesmanship, and less need of depositions and interrogatories, which can greatly inflame the emotional component of dispute resolution.
Disadvantages to using arbitration include the more “ironclad” nature of an arbitrator’s decision – there is no appellate process involved in arbitration – and the parties are entirely dependent upon the integrity and impartiality of the arbitrator. Absent an experienced and duty-bound to be impartial judge overseeing the proceedings, the possibility of an unfair outcome can be higher – although judges are certainly prone to biases and errors of judgment as well. In addition, the very privacy that can be a major advantage of arbitration can also work to one’s disadvantage if prejudicial decisions are made during a mediation process.
In cases involving parties committed to the most dispassionate and amicable resolution of a dispute, use of arbitration is almost always the favored approach. Court proceedings are, by definition and nature, confrontational, and involve the less-pleasant components of the civil justice system. Arbitration, which, as mentioned, is usually considerably less-expensive that court fees, can often provide a more cost-effective approach to dispute resolution.