Utah General Contractors - Business and Law Practice Exam

What is a major risk associated with Arbitration as a dispute resolution method?

1. Longer resolution time

2. Non-binding nature

3. Limited appeal options

4. Increased involvement of parties

The correct answer is: Limited appeal options

Arbitration, as a method of dispute resolution, typically has fewer options for appeal compared to court proceedings, which is a significant risk for parties involved. In arbitration, once an arbitrator has made a decision, that decision is generally final and binding, meaning that the parties have very limited grounds on which to challenge or appeal the ruling. This finality can create concerns for parties who might feel that the arbitrator made an incorrect legal decision or failed to consider important evidence. Consequently, the limited opportunity for appeal can result in a situation where a party is stuck with a decision that they believe is unjust or flawed. This aspect of arbitration can lead to dissatisfaction with the outcome, particularly in cases involving complex legal issues where there may be more than one interpretation of the law. In contrast, the other options, such as longer resolution time, non-binding nature, and increased involvement of parties, do not capture the inherent characteristics of arbitration as accurately as the limited appeal options do. Many arbitrations are designed to provide quicker resolutions than court cases; additionally, arbitration can be either binding or non-binding based on the agreement between the parties. Finally, while parties may have substantial involvement in the arbitration process, this involvement is not inherently a risk in the same