The peaceful settlement of disputes and the prevention of their escalation are worthy goals for any two parties in a business relationship. When a commercial contract is involved, there are generally two ways to formally settle a dispute: arbitration or litigation. Understanding the difference between ordinary litigation and arbitration is crucial for individuals and businesses when deciding which method to pursue for dispute resolution.

What is Ordinary Litigation?

Ordinary litigation refers to the process of resolving disputes through the court system. It involves filing a lawsuit in a public court, where a judge (and sometimes a jury) hears the case and makes a binding decision based on the law.

Litigation is governed by strict procedural rules and is typically more formal than arbitration.

Litigation is governed by a set of rules called the Civil Procedure Rules. These rules try to ensure that cases are dealt with in a way that:

  • Makes sure all parties are on equal footing.
  • Saves expense.
  • Is proportionate to the specific circumstances of the dispute.
  • Streamlines timelines and is as efficient as possible.
  • Requires only the appropriate amount of the court’s resources.

What is Arbitration?

Arbitration is an alternative dispute resolution (ADR) method where parties agree to submit their conflict to one or more arbitrators, who make a binding decision outside of the court system.

This process is typically governed by an arbitration agreement between the parties involved, and the outcome is usually binding.

The arbitration process is usually less formal than litigation and can be tailored to the needs of the parties involved.

Arbitration involves three parties:

  • Claimant: The claimant is the person who brings the claim against the respondent.
  • Respondent: The respondent is the accused party.
  • Arbitrator: The arbitrator is an independent third party who determines the arbitration process by examining evidence and settling on an outcome.

Key Differences Between Ordinary Litigation and Arbitration

Ordinary litigation and arbitration are two distinct methods of resolving disputes. While both processes aim to settle conflicts, they differ significantly in terms of procedure, formality, and outcomes.

Understanding these differences is crucial for individuals and businesses when deciding which method to pursue for dispute resolution.

Here is the difference between ordinary litigation and arbitration including:

The Formality:

  • Ordinary Litigation: The litigation process is highly formalized, governed by strict rules of procedure and evidence. Court hearings are typically open to the public, and the process can be lengthy.
  • Arbitration: Arbitration is generally less formal than litigation. The rules can be tailored to the needs of the parties, and hearings are usually private. This flexibility can lead to a more streamlined process.

Timeframe:

  • Ordinary Litigation: Litigation can take a considerable amount of time, often spanning months or even years, due to court schedules, procedural requirements, and potential appeals.
  • Arbitration: Arbitration is typically faster than litigation. The parties can agree on a timeline, and the process is designed to be more efficient, often concluding within a few months.

Appeal Process:

  • Ordinary Litigation: Decisions made in litigation can often be appealed to a higher court, allowing for further review of the case.
  • Arbitration: Generally, arbitration awards are final and binding, with very limited grounds for appeal. This can provide certainty but may also limit recourse for parties dissatisfied with the outcome.

Privacy:

  • Ordinary Litigation: Court proceedings are typically public, which means that the details of the case can be accessible to the public and media.
  • Arbitration: Arbitration proceedings are private, allowing parties to keep the details of their dispute and resolution confidential.

The Cost:

  • Ordinary Litigation: The costs associated with litigation can be substantial, including attorney fees, court fees, and other related expenses. The lengthy nature of litigation can further increase costs.
  • Arbitration: While arbitration can also be expensive, it often results in lower overall costs compared to litigation due to its shorter duration and reduced procedural complexities.

Both ordinary litigation and arbitration serve as viable methods for resolving disputes, each with its own advantages and disadvantages. The choice between the two depends on various factors, including the nature of the dispute, the desired level of formality, cost considerations, and the importance of privacy.

Understanding these differences can help parties make informed decisions about the most appropriate method for their specific situation.

We are at “Consortio Law Firm” one of the few Law firms in the market with the knowledge and practical experience to successfully resolve cross-border disputes.

Whether your dispute has strategic, reputational or financial importance and whatever the subject matter, choosing the best method is our priority.

For more details, Contact us Now via the phone number 002 01028806061 or via WhatsApp or email Info@consortiolawfirm.com.