Understanding the differences that lie between arbitration and litigation begins with knowing that these are the two different processes that exist for resolving disputes. Here we review the basic principles of each resolution process and also the advantages and disadvantages one can encounter while going through each process. This article is meant to clarify reasons as to why you may choose one process over the other to resolve a specific civil dispute.
The Litigation Process
Litigation has long been around, and this old resolution process takes place in the courtroom. A judge or a magistrate presides over the hearing, and each case hearing happens as it is placed forward. After this, judgment is delivered. Civil litigation is a court hearing between two parties, while a criminal lawsuit is a court hearing between the State and one party. However, there might be times where more than one party is involved. Generally, civil litigation is a public affair and is conducted in a way that the public may listen in, though it is formal and intensely regulated. The whole matter is put on record. The files are accessible to anyone, including the public, press, and those involved in the case.
The Arbitration process
Then we have arbitration. Arbitration is not as commonly used as litigation when it comes to the resolution of disputes. Arbitration is a process that doesn’t take place in a courtroom, but rather in a chosen venue, selected by the parties involved in the conflict. It also a far less formal affair than a litigation process. The arbitration hearing is held entirely out of the courtroom. The parties in dispute move forward by having the arbitration mediated under an agreement that both the parties signed and agreed even before the dispute arose. Here the parties agree on the place of the arbitration process, who the arbitrator will be, and when it ill be held. They even agree on terms of appeal in case one of them is not happy with the outcome.
The Essential Difference Between Arbitration and Litigation
The essential difference between these two processes is simple. In arbitration, an arbitrator is appointed upon mutual agreement by the disputing parties. However, in litigation, the Judge or Magistrate is actually appointed by the State. The disputing parties have no say in the appointment of the judge. Also, an arbitrator can be someone who has knowledge and experience in the subject over which the dispute is about, and not necessarily have any other skills or knowledge. In Civil litigation, the Judge or Magistrate is qualified with a degree in law.
In terms of speed, an arbitration process is way faster than that of civil litigation. The moment the disputing parties have their documentation prepared, and once they have secured their respective expert witnesses, the arbitration hearing is quickly set down. It is in a matter of months, on average, for the process to be completed. At most, arbitration hearings are complete at about six months. However, litigation proceedings are notorious for their lengthy times and can take anywhere from 18 months to over two years to get a trial in the courtroom. It would depend on the complexity of the dispute at hand when it comes to how long the process takes.
The litigation process takes place in a public courtroom with the records of the hearing being available to any member of the public. However, arbitrated disputes are entirely confidential. This applies to both the trail and the documentation process. It is also possible to add a ‘confidentiality clause‘ to the arbitration contract, which forces each party to maintain strict confidentiality around every part of the process.
In the litigation process, the court judgment may be appealed by either party should they feel unhappy with the outcome. While this appeal may add on a further two years to the process, it is a means of challenging and changing the outcome of the hearing. However, arbitration is about finality. However, in the event of an appeal, the date is based on the availability of the arbitrators. This means a far more expeditious process.
Arbitration is a more expensive route to follow than that of litigation. The disputing parties foot the cost of the arbitrator. On the other hand, in dispute, the taxpayer pays for the courtroom, Magistrate, Judge, and court officials. But of course, time is money, and so lengthy process of appeal could have long turnaround time, and if you have a private lawyer, you’ll be paying a lot from your pocket for the appearances.
In short, both litigation and arbitration hold a strong place in the function of the legal system and the resolution of disputes. You have to weigh your pros and cons and make the final choice of going to court or solving it by arbitration.