The Western Balkan States have enormous potential to further develop arbitration as the most attractive method of alternative dispute resolution. The courts in this region are overburdened. The litigation in commercial cases takes too long. Arbitration should benefit from the lack of efficiency in litigation, but it does not. This paper aims to determine the challenges for arbitration in the Western Balkans to reach its full potential. Besides some legislative restrictions, the paper identifies gaps in legal education as one of the important reasons behind the small number of cases before local arbitration institutions. While it is true that arbitration institutions should do more to keep their arbitration rules attractive, this is usually not the reason for parties not to choose arbitration. The stakeholders simply lack awareness of all the benefits of arbitration. The expertise is present only in small circles of professionals, making it difficult to promote the use of arbitration for a broader audience.