Litigation vs arbitration: what’s the difference?

Author: Ian Aldridge, Progressive Legal

Litigation and arbitration are two distinct methods of resolving legal disputes. While both involve a process of adjudication, there are several key differences between the two. In this article we discuss litigation vs arbitration.

Arbitration is classified as Alternative Dispute Resolution (ADR) to the more formal dispute resolution process through the Courts or Tribunal. A Judge or Magistrate will decide in Court, a Tribunal Member in a Tribunal, whereas an Arbitrator will hear the evidence of the parties and make a decision and provide reasons. 

Process

Litigation is a formal legal process that takes place in court. It involves the filing of legal proceedings, potentially a discovery process, a trial, and an appeals process if requested, appropriate and allowed.

In contrast, arbitration is an informal process that typically takes place outside of Court. It involves the selection of a neutral third party (an arbitrator) who hears each side’s evidence and arguments from both parties and makes a binding decision.

The parties must comply with the formal rules of evidence and procedure as opposed to Arbitration where it is usually more flexible and less rigid, therefore less interlocutory skirmishes and decreased costs.  

Control

In litigation, the parties have slightly less control over the process and outcome. The Court determines the procedures to be followed and makes the final decision.  

In arbitration, the parties have slightly more control over the process and can select the arbitrator together, set the rules of the process, and agree to the decision-making process.

The parties can select from a number of experts in the field, so they get to choose who will be ultimately the decision maker, who may in fact have more experience in that chosen field than a Judge allocated to a matter.  

Time and Cost

Litigation can be a lengthy and expensive process, involving multiple court appearances, discovery and interlocutory skirmishes.  

The cost of litigation can be high, and it can take years for a case to be resolved which is usually in the interests of neither party.  

Arbitration, on the other hand, is generally a faster and less expensive process than formal litigation through the Courts.  

The parties can also agree to a more streamlined process, and the decision of the arbitrator is typically final and not subject to appeal.

An arbitrator will usually hand down their decision faster than a Judge and the cost involved overall in matters which are arbitrated are less than formal litigation.  

Publicity

Litigation is a public process that takes place in open Court, and Court records are generally available to the public.

In contrast, arbitration is a private process that takes place outside of Court, and the proceedings and decision are generally confidential.

In sensitive cases, it may be more appropriate to go through the arbitration process, especially when both parties want to keep the matter private. 

Binding Effect

In litigation, the Court’s decision is binding on the parties and can be enforced by the Court.

In arbitration, the decision of the arbitrator is generally binding on the parties and can be enforced by a Court.

However, the parties can agree to non-binding arbitration, where the decision of the arbitrator is not final and can be subject to negotiation or appeal. 

In summary, litigation vs arbitration are two different methods of resolving legal disputes, with differences in the process, control, time and cost, publicity, and binding effect.

The choice between litigation or arbitration will depend on the specific circumstances of the dispute and the preferences of the parties involved. 

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*NB// The contents of this article are information only and should not be relied on as legal advice. Please seek specialist legal advice in relation to your particular situation. 

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