Organisations should avoid mandatory arbitration clauses in customer agreements. Such clauses may have unintended consequences.
More frequently, arbitration over proceedings through courts results in significant costs to the organisation. In events such as class actions, arbitration can be crippling for an organisation or leads to large financial loss as litigators are likely to exploit the weaknesses of arbitration.
As organisations try to use arbitration to avoid their lawful responsibilities, such practice often ends with significant financial and brand equity loss.
In situations where there is a large volume of complaints, such as hundreds or thousands. The respondent may be liable for the cost of each arbitration individually. Disputing a large number of complaints individually is costly and time consuming.