Arbitration vs Litigation: What’s the Difference?

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You might have heard about arbitration before, but how about litigation? Have you ever heard about it before? There are a few distinct differences between these terms. An arbitration would require an arbitrator in order to settle a dispute. Litigation on the other hand is the process of taking any legal action to a court of law and seeking the judgement. If any of the readers are looking for an arbitration venue, you have to make an agreement with the other party for the venue. This is one of the differences between both arbitration and litigation. You will find out more about them in this post.

What is Arbitration?

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Alternative Dispute Resolution(ADR) contains several ways people can settle disputes without having to go to a trial. Arbitration, alongside other processes such as neutral evaluation and mediation, are among the ways. The arbitration process requires both parties to come together and then they need to agree to the decision that the arbitrator would make. Arbitration is a private process where the venue is not public. Hence why there is no public arbitration ever made in history. Because of that, arbitrations are usually less formal because they don’t usually take place in public spaces, unlike other processes. 

What is Litigation?

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Litigation is an act of taking any kind of legal action to a court of law in order for the judgements to be made. It simply means both parties have to go to court to settle a dispute between them. The judge that is appointed by the court as a litigator would be responsible for presenting his or her verdict on the issue being discussed after listening to all the evidences and arguments by both parties’ lawyers. Litigation is normally more formal since the common venue is a courtroom. 

The Main Differences Between Arbitration and a Litigation 

There are a few significant differences between these two in many terms. They are quite different in many aspects such as:

  • Formality

The formality of both arbitration and litigation is very distinct. As mentioned before, arbitration is a private process that would usually take place in a secluded space, hence it is less formal. As for litigation, it often takes place in a courtroom, making the whole process very formal and they have to follow rules implied. 

  • Completion Time

The time taken for arbitration is typically shorter than litigation. Arbitration often takes a few months just to commence the process and later, attend the main hearing. As for litigation, it would take more than that. If you choose to go with litigation, you probably have to wait up to 3 years just to get to trial. This is one of the reasons why most people choose arbitration over litigation. 

  • Cost

In terms of cost, arbitrary is less expensive than litigation. There isn’t much discovery found, hence why it influences the cost of the process. Not many filings and hearings need to be attended and this is why arbitrary is often cheaper. Litigation, on the other hand, is very expensive since lawyers have to draft and respond to countless court filings, making the process very costly. Other than that, they have to get expert witnesses and also outside consultants to help with the process. 

Which One Should You Choose?

Choosing between these two terms would require very critical thinking and consideration. Everything depends on you and the other party. Both processes have their own pros and cons, so do make sure to think thoroughly before making up your mind.

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