Summary

Arbitration fee is set by the buyer when creating the escrow and funding it. As a result, the arbitration fee should be limited to certain percentage of price, else seller will loose funds on dispute irrespective initiates the dispute.

Vulnerability Details

Arbitration fee can be set at 50 to 99% value of price and the validations in the constructor will pass.
Since the contract enforces the seller to bear the arbitration charges, if buyer initialised the arbitration fees close to 99% of the price, the seller will loose his funds as he will get a very small amount even after successful arbitration in seller's favour.

Most of the funds will be transferred to arbitrator. Seller is at risk if arbitration is initiated which is not fair delivery from escrow.

Impact

Seller will loose funds irrespective of who initiates the dispute and hence deters him to initiate the dispute even in extreme circumstances. Buyer does not have any deter to initiate a dispute as there are no stakes or risk. Most of the other side of the transaction is offchain which escrow is not aware of.

Since the fee is set by buyer, seller has no say in the arbitation process and the fee which poses risk to seller.

Tools Used

Manual Review

Recommendations

a) Arbitration fee should be accepted by the seller to activate the escrow
b) Only max and min arbitrator fee values should be initialised and arbitrator should have flexibility to adjust the
effective fee while resolving the issue to effectively close the dispute. At least, such provision should be there in
the contract