What are the Differences Between Arbitration and Litigation?

Jessica Ellis
Jessica Ellis

Arbitration and litigation are two types of legal dispute resolution. Litigation refers to the traditional court-based method of solving civil cases, while arbitration involves a more informal process that allows greater control by the involved parties. Arbitration and litigation are both legally binding forms of resolution, but each has distinct characteristics, advantages, and disadvantages.

An arbitrating panel is jointly chosen by the parties and may impose more limitations on permissible evidence and trial length.
An arbitrating panel is jointly chosen by the parties and may impose more limitations on permissible evidence and trial length.

When a civil dispute cannot be solved through conflict resolution matters outside of the legal system, deciding between arbitration and litigation becomes an important choice. Litigation typically must be used for the management of any criminal charges, but arbitration is usually a viable option for civil trials. Litigation may be brought by either party at any time, but choosing arbitration must be a joint decision by both involved parties. Arbitration may also be the result of a valid contract that requires the process as the only permissible means of solving legal disputes.

Litigation refers to the traditional court-based method of resolving civil cases, while arbitration is a more informal process.
Litigation refers to the traditional court-based method of resolving civil cases, while arbitration is a more informal process.

In litigation, attorneys and the judge nearly always run the show. Primary parties may be take part in the formation of the case, and may be called on to provide evidence and give testimony, but generally need to allow attorneys to handle the legal technicalities of the issue. Judges are chosen by the court, and neither clients nor attorneys have much say in which judge handles a case.

Litigation typically must be used for the management of any criminal charges, but arbitration is usually a viable option for civil trials.
Litigation typically must be used for the management of any criminal charges, but arbitration is usually a viable option for civil trials.

Arbitration, on the other hand, allows for greater involvement by the primary parties. Though attorneys can be used, many arbitrated disputes are done with limited lawyer involvement. The arbiter or arbitrating panel is jointly chosen by the parties, and may impose more limitations on permissible evidence and trial length.

Arbitration is usually handled by a representative of the court and any agreement is binding under regional law.
Arbitration is usually handled by a representative of the court and any agreement is binding under regional law.

One major difference between arbitration and litigation is the amount of public exposure. Court trials are nearly always open to the public, unless the judge has a specific reason to order the trial to be sealed. Arbitration, in contrast, is more private and usually held behind closed doors, which may be int the interest of the public reputation of one or both parties.

Cost and expediency may also distinguish arbitration and litigation. Arbitration is normally handled in a few short sessions or even a single day, leading to lower court costs. The more limited involvement of attorneys can also cut down on legal fees for both sides. Since arbitration has a much more limited docket than a court, disputes are also typically handled much faster, resulting in speedy closure to stressful disputes.

Despite the advantages in cost and expediency, many civil disputes end up in litigation instead of arbitration because of the availability of an appellate system. Most decisions reached through arbitration are considered final, and are not open to appeal by either side, unless clear, demonstrable bias can be shown by the appealing party. In cases where results are far from black and white, parties in a dispute may be justifiably concerned about the outcome and find it prohibitive to give up the opportunity for appeal if a judgment does not run their way.

Litigation is the process by which a case is resolved by a trial in a court of law.
Litigation is the process by which a case is resolved by a trial in a court of law.
Jessica Ellis
Jessica Ellis

With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica is passionate about drama and film. She has many other interests, and enjoys learning and writing about a wide range of topics in her role as a wiseGEEK writer.

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Discussion Comments

Logicfest

Another difference between arbitration and litigation is that there is usually a clear winner and a clear loser after a case goes to court. The goal of arbitration is to resolve disputes in a way that leaves both parties satisfied in the outcome (or, at least come to a resolution that both parties can live with when the matter has ended).

There was a major move in the 1990s to get more disputes in arbitration or mediation than in the courts. It was somewhat successful, but fell short of the goals pushing those methods of alternative dispute resolution.

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