Legal disputes are an inevitable part of business and personal life. When civil or commercial disputes arise, there are various methods to resolve them. Two of the most common methods for dispute resolution are litigation and arbitration.
While both serve the same purpose of resolving legal disputes, they differ slightly in their processes, procedures, and outcomes.
In this article, we will delve into the 5 key differences between litigation and arbitration to help you better understand which option may be suitable for your specific case.
1. Nature of the process: Public vs Private
One of the main differences between litigation and arbitration is the nature of the process.
Litigation is a public process, wherein both sides present their case before a judge in court. Typically, the parties rely on lawyers to advocate on their behalf, and the outcome is determined by the judge. For most cases, the public or the media can be present to observe the trial.
On the other hand, arbitration is a private process in which both parties agree to select a neutral third party, known as the arbitrator, who will hear the evidence and make a decision. The hearing is held in private and the public and the media will not know about or be able to attend. While parties can still have legal representation in arbitration, the process tends to be less procedural as compared to litigation.
2. Cost and time
Litigation is often a lengthy and more costly process. The costs associated with litigation can be substantial, including lawyer’s fees and court filing fees. A case may take some time to be heard as parties are subject to the availability of judges to hear the case.
Arbitration may be slightly less costly as there are no filing fees and if only one arbitrator is appointed. Parties have more control over the arbitration process, including setting the timelines and selecting arbitrators. However, some arbitration hearings can be more expensive and take longer than the court process due to the number of arbitrators appointed and the more flexible timelines which may result in the process taking longer.
3. Appeal process
In litigation, either party has the right to appeal a judgment if they believe there was a legal error in the decision.
Arbitration decisions are typically final and binding, with limited grounds for appeal. While this can provide closure and certainty, it also means that parties have less recourse if they are dissatisfied with the arbitrator’s decision. It’s important to carefully consider this aspect when choosing arbitration.
Litigation follows established legal procedures and rules, which can limit the flexibility of the process. Parties have less control over the schedule, the judge assigned to the case, and the rules of evidence.
Arbitration, on the other hand, offers more flexibility. Parties can choose their arbitrators, set the rules for the proceedings, and determine the location and schedule of hearings. This flexibility allows parties to tailor the process to their specific needs and preferences.
Litigation and arbitration offer distinct approaches to dispute resolution, marked by significant differences in predictability. In litigation, the process begins with the uncertain assignment of a judge. Parties can find themselves unable to anticipate the judge’s decisions, even after researching their past rulings.
In contrast, arbitration presents a more predictable framework. Parties have the ability to select arbitrators who are experts in the relevant industry or subject matter, and who may be better equipped to navigate complex issues. Consequently, arbitration provides a controlled and efficient process for dispute resolution, offering greater predictability compared to the uncertainties inherent in litigation.
A judgment obtained in the court process can be enforced easily in Singapore but may have complexities and higher cost if it has to be enforced in a foreign country as the successful party may have to comply with the complicated court process in the country where the Singapore Judgment is to be enforced.
An arbitral award may be more easily enforced in a foreign country as Singapore acceded to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“New York Convention”) on 21 August 1986 which means that it will be able to enforce awards from Singapore in member countries.
In deciding between litigation and arbitration, it’s crucial to consider the nature of the dispute, your goals, and your budget. Litigation offers the advantage of a formal legal process with the right to appeal, but it may come with higher costs and longer timelines. Arbitration, on the other hand, may provide a more private, cost-effective, and flexible approach to dispute resolution.
Ultimately, the choice between litigation and arbitration will depend on the specific circumstances of your dispute and your priorities as a party involved. Consulting with experienced commercial litigation lawyers like DC Law LLC can help you make an informed decision that best suits your needs.
Get in touch with us today to learn more.