At some point in your life, you’ve probably encountered an arbitration clause in a few contracts you’ve read and seen. Some of you might even wonder what the clause means and whether it is something you should worry about or not. Quite a few people even confuse arbitration with litigation. This is primarily because they don’t clearly understand how these two court processes differ from each other.
To clear up some of these confusions and help you understand the law better, here’s what makes these two legal processes differ from one another.
Arbitration by Definition
Arbitration (also commonly called alternative dispute resolution) is a process where two parties involved in a dispute agree to come together and work with a third party (the arbitrator) to resolve the disagreement between them. For this process, it’s possible to have one or more arbitrators listen and hear what both parties have to say. In choosing an arbitrator, s/he must be an attorney who is familiar and skilled with the field of law being decided.
Arbitration is a private form of settlement between the involved parties. This legal procedure is considered a useful means of a prompt and fair settlement.
Meaning of Litigation
Litigation, on the other hand, is the process of taking legal action and settling disputes in front of the court of law. This particular legal proceeding is typically initiated by the opposing parties to enforce and/or defend their legal rights. Unlike with arbitration, litigation is settled in court. The judge and/or jury would offer his/her verdict once all the evidence is presented.
In cases that the other parties are not satisfied with the court decision, the parties are welcome to appeal. It is during this point that they will review the evidence and see if there are any errors. If there are, the court may reverse the result or call for a retrial.
According to a law firm that specialises in criminal litigation, the type of court depends on the type of dispute and the jurisdiction. For civil cases, most of them are held in the jurisdiction on where the lawsuit originated.
How Do They Differ?
Settlement
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With arbitration, the settlement can be done privately with a neutral third party reviewing and studying the dispute. With litigation, all charges are brought in court to settle and determine how the charges
Cost
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In terms of the cost of money involved, arbitration is relatively a cheaper legal process as compared to litigation.
Resolution
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Arbitration is a quicker process than litigation. Since it can be settled off the court and/or during private meetings, the hearings can be scheduled based on the availability of the involved parties. It doesn’t depend on the court calendar schedule which may take way too long.
Cases
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Civil cases are primarily the type of cases that can be resolved through arbitration. Litigation, on the other hand, can be used as dispute resolution for both criminal and civil cases. It covers wider scope of proceedings as compared to the former.
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