Arbitration and litigation are two legal dispute resolution methods. Litigation is traditional and formal, while arbitration is informal and allows for greater involvement of the parties. Arbitration is faster and cheaper, but decisions are final and cannot be appealed. Litigation has an appellate system, but is more costly and time-consuming.
Arbitration and litigation are two types of legal dispute resolution. Litigation refers to the traditional judicial method of resolving civil cases, while arbitration involves a more informal process that allows for greater scrutiny by the parties involved. Arbitration and litigation are both legally binding forms of resolution, but each has distinct characteristics, advantages, and disadvantages.
When a civil dispute cannot be resolved through resolving issues outside the legal system, deciding between arbitration and litigation becomes an important choice. Litigation typically is to be used for the handling of any criminal charges, but arbitration is usually a viable option for civil trials. Either party may bring a dispute at any time, but the choice of arbitration must be a joint decision of both parties involved. Arbitration may also be the result of a valid contract that requires trial as the only permissible means of resolving legal disputes.
In litigation, the lawyers and judge almost always run the show. Principal parties may take part in the formation of the case and may be called upon to provide evidence and testify, but typically must allow attorneys to handle the legal technicalities of the matter. Judges are chosen by the court, and neither clients nor lawyers have much say as to which judge handles a case.
Arbitration, on the other hand, allows for greater involvement of the primary parties. While attorneys may be used, many arbitrated disputes are handled with limited attorney involvement. The arbitrator or arbitration panel is chosen by mutual agreement of the parties and can impose greater limitations on the admissible evidence and on the duration of the trial.
One major difference between arbitration and litigation is the amount of public exposure. Court trials are almost always open to the public, unless the judge has a specific reason to order the trial closed. Arbitration, by contrast, is more private and usually takes place behind closed doors, which may be in the interest of one or both parties’ public reputation.
Cost and opportunity can also distinguish between arbitration and litigation. Arbitration is typically handled in a few short sessions or even a single day, resulting in lower court costs. The more limited involvement of lawyers can also reduce legal costs for both parties. Because arbitration has a much more limited record than a court of law, disputes are also typically handled much faster, resulting in a quick closure of stressful disputes.
Despite the cost and opportunity benefits, many civil disputes end up in litigation rather than arbitration due to the availability of an appellate system. Most decisions reached through arbitration are considered final and cannot be appealed by either party, unless the appellant party can demonstrate clear and demonstrable prejudice. In cases where the results are anything but black and white, parties to a dispute may be justifiably concerned about the outcome and find it prohibitive to forfeit an opportunity to appeal if a judgment is not upheld.
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