This baby-and-the-bath-water argument points out that there are all sorts of private arbitrations, including religious courts like the Jewish Bais Din, which allow private parties who share a common belief system to use their own system to adjudicate their internal disputes.
In this third critique where the argument is proffered that outlawing sharia arbitrations will lead to outlawing all private religious arbitrations, the question that must be asked is whether there are any principled and prudential distinctions between sharia as a "bad thing" and other religious codes as a "good thing" (or if not a "good thing" at least as an "acceptable thing")?