Litigation implies a method in which dispute between two parties is resolved by going court, for the judgement. However, due to the rigidity and high cost involved in the litigation process, there are instances when parties go to arbitration. Arbitration is a method of settling a dispute between parties wherein an independent person, selected by the parties mutually to decide the case.
The basic difference between arbitration and litigation is that court is involved in the case of litigation, as it is a lawsuit, whereas, in arbitration, a settlement between the parties is done out of court. So, take a read of this article to understand some more differences amidst the two dispute resolving methods.
Content: Arbitration Vs Litigation
|Basis for Comparison||Arbitration||Litigation|
|Meaning||Arbitration implies a non-judicial process in which a neutral third party is appointed for the resolving disputes between parties.||Litigation refers to a formal judicial process wherein the parties under dispute go to the court for its settlement.|
|Nature||Civil||Civil or criminal|
|Place||Decided by the parties||Court|
|Decided by||An arbitrator who is chosen by the parties mutually.||A judge who is appointed by the court.|
Definition of Arbitration
Arbitration can be described as the private method of adjudication of disputes, wherein the parties seeking a settlement, mutually select one or more independent and unbiased persons as arbitrator. The arbitrator studies the situation and listens to the arguments and evidence of the parties, to make recommendations on the case, which is considered as final and binding upon the parties concerned.
Arbitration is one of the methods of alternative dispute resolution, which can be possible only with the consent of the disputing parties, which is contained in an agreement called as an arbitration agreement. The agreement must be in writing and specifically express the will of the parties to arbitrate the dispute.
Definition of Litigation
By the term ‘litigation’, we mean going to court for settling the dispute between or among parties. It is a legal proceeding initiated between the opposing parties, with the aim of enforcing or defending the legal right.
In this process, the case is brought to the court, wherein the judge (appointed by the court to act as the litigator) gives his/her verdict on the issue after considering the all the arguments, evidence and facts presented by the lawyers of the parties. If the parties do not agree with the decisions of the court, they can appeal to a superior court for getting justice, provided certain conditions are fulfilled.
Key Differences Between Arbitration and Litigation
The difference between arbitration and litigation can be drawn clearly on the following premises:
- Arbitration is a method of resolving the dispute in which a neutral third party is appointed to study the dispute, listen to the parties and then make recommendations. On the other hand, litigation is described as a legal process in which the parties resort to the court for the settlement of disputes.
- Arbitration is always civil in nature. Conversely, litigation can be civil litigation or criminal litigation.
- Arbitration is a private method of resolving controversies between the parties, wherein complete confidentiality is maintained. On the contrary, litigation is a public proceeding.
- The place for arbitration of the issue is decided by the parties seeking the settlement, whereas, the litigation takes place in the court only.
- In arbitration, it is the arbitrator, who is appointed by the parties, to decide the matter. As against, in litigation, the parties have no say, as to who will be the judge to decide their case. The judge is appointed by the court only.
- The cost of the arbitration process is comparatively lower than the litigation.
- The decision made by the arbitrator is final and binding in nature, and so further appeal cannot be made. On the contrary, in litigation, the litigants can appeal to higher court, if they do not agree with the decision made by the court, but subject to certain conditions.
Arbitration is preferred by the parties over litigation due to many reasons such as greater confidentiality, quick judgement, choice of solutions, higher chances of settlement, low cost, flexibility in process etc. Although, litigation has a number of advantages, i.e. numerous appeals can be made, easy enforcement of the final outcome, etc.