DIFFERENCE BETWEEN ARBITRATION AND LITIGATION

1.Definition

Arbitration is a non-court method in which an independent arbitrator or arbitrators is/are appointed by the parties to rule a decision which is usually binding and confidential. By contrast, litigation is the court process of resolving a dispute in which a trial panel rules the case by a decision or a judgment.

2. Private/Public

Whereas litigation is a formal process of resolving the disputes between the parties performed in a public courtroom, the arbitration process is a private and confidential process.

3. Nature of disputes

While arbitration handles commercial disputes, which is agreed by the parties of the dispute, litigation can be performed by the Court with respect to various disputes such as civil, administrative, criminal and commercial disputes.

4. Speed of process

One of the advantages of arbitration is the speed of process to settle disputes can be shorter than litigation proceedings.

5. Selection of the parties

In the Arbitration process, the parties choose arbitrator for each party, while the jurisdiction of the Court shall be decided in accordance with the law.

6. Effect

The arbitral award made by the arbitral tribunal is final and binding, but it cannot be made by further appeal. By contrast, in litigation procedure, the litigants can appeal to higher court, if they do not agree with the decision/judgement made by the court.

Nowadays, the arbitration method is preferred by the parties to litigation method because of several reasons such as speed of judgment, confidentiality, friendliness and binding force.