Critics of arbitration argue that contractual requirements to arbitrate can be unfair to employees or consumers who have no power to negotiate what is often a form contract. In these cases, the choice of arbiter may be spelled out in a contract. The arbitration panel may contain industry experts who may be more sympathetic to the industry than to the individual. Also, some have argued that the fact that an arbitration company may handle many cases for a corporation while an individual rarely goes through arbitration twice may bias the arbitrators in favor of the company. On this note, many arbitration companies have these corporations as their sole source of income, further biasing their judgments. The fact that most arbitral procedures are not public, and that there may be no provision for an individual to be represented by counsel, may also work to the disadvantage of the individual. These potential disadvantages make the ethics and professionalism of arbitrators even more important.

Arbitration in the U.S. has has also been criticized because of the unavailability of appellate review. Although the New York and federal arbitration laws were based on the English arbitration law of 1898, they omitted the English provision permitting for de novo review of questions of law. Thus, American courts can overturn arbitral rulings only for extremely gross procedural errors that violate due process, but cannot reverse most substantive errors.

Unlike judicial opinions, arbitration opinions are often confidential. As a result, the law relating to activities (such as reinsurance contracts and certain types of securities industry disputes) where contracts to arbitrate are widespread may develop more slowly because the usual process of creating precedent is not available.