When a business faces a dispute, it has several options for resolving it. Two of the most common options are to take the dispute to court or initiate arbitration. The Autrey law firm explains that each process has advantages and disadvantages that you should carefully consider before deciding which path to take.
What is Arbitration?
Arbitration is a private method of resolving a dispute in which the party seeking settlement jointly selects one or more independent and impartial individuals to act as arbitrators. The arbitrator will investigate the circumstances, hear the parties’ allegations and evidence, and make recommendations on the case that are considered final and binding on the parties involved.
Arbitration is an alternative dispute resolution method available only with the party’s consent to the dispute contained in an arbitration agreement. Agreements must be in writing and expressly state that the parties wish to resolve the dispute.
What is litigation?
The term “litigation” refers to going to court to settle a dispute between parties. It is a legal proceeding initiated between opposing parties to enforce or defend legal claims.
In this process, the case is brought before the court, and the judge (appointed by the court to the litigants) renders a verdict on the matter after examining all the arguments, evidence, and facts presented to the parties by the court’s counsel. If a party disagrees with the court’s decision, it may appeal to a higher court, provided certain conditions are met. Courts have specific and formal procedures for resolving disputes between parties that everyone follows strictly.
Key Differences Between Arbitration and Litigation
The Autrey law firm explains the following key differences between the two legal terms:
Arbitration
- Arbitration is a dispute resolution method by appointing a neutral third party to investigate the dispute, hear the parties, and make recommendations.
- Arbitration is a confidential procedure.
- The arbitration process is speedy in comparison to litigation.
- The parties cannot appeal against the arbitrator’s decision unless a special circumstance.
- Both parties can choose an arbitrator based on expertise in the field.
- One party cannot compel the other to attend the arbitration unless stated in the contract.
- The cost is less than litigation.
Litigation
- Litigation is a court proceeding where the parties go to court to settle their disputes.
- Litigation is a public procedure.
- Pre-trial discovery and appeals make litigation a longer process.
- Either of the parties can appeal against the decision of the court.
- The court decides the judge without any input from the parties.
- In the case of a litigation, both parties have to attend the court proceedings.
- Court Proceedings are costly.
Conclusion Arbitration is preferred over court proceedings by the parties for several reasons. Some of them include greater confidentiality, faster decision-making, choice of solutions, higher likelihood of settlement, lower costs, and flexibility of procedures. Going to court has many advantages, such as filing more appeals and making the outcome easier to enforce. We can look into your case at the Autrey law firm and help you decide which legal procedure suits the matter.
