Litigation And Arbitration: What’s The Difference?

Two of the most commonly used terms in law are litigation and arbitration. Litigation and arbitration are sometimes easily confused because both refer to legally binding ways to resolve civil problems between two parties. However, there are some important differences between the two processes. 

What Is Litigation?

Litigation is the formal word for ‘dispute’. Applied when two or more individuals cannot reach a private agreement, litigation begins through the courts with a civil lawsuit. The most common areas of litigation are financial disagreements, property issues or business disagreements. The purpose of litigation is to resolve the dispute in a way, by using the law as a guide, and forcing a legally binding solution. During a case, an experienced judge will examine both sides of the case and use their knowledge and experience to make an order.

What Is Arbitration?

Arbitration is the formal word for ‘making a decision’. Used when two or more individuals try to settle a disagreement without the need for going to court, arbitration often involves mutually acceptable financial arrangements, personal injury claims, and employment disputes. As with litigation, the law is used to guide the process, although a qualified third-party can take the place of the judge.

Do I have To Participate In Litigation?

In litigation, the court is in charge of the proceedings, and this means both parties must participate. It is up to the individual whether or not to be present at court, but the court can proceed in their absence.

Do I Have To Participate In Arbitration?

Arbitration is usually voluntary, although agreeing to participate is advisable. Under section 73 of the Arbitration Act 1996, anyone who does not raise any objections at the beginning of the proceedings may lose their right to have a voice at a later stage. Often, the only reason for someone to fail to participate in arbitration is because they already understand that they cannot defend their position.

Is Litigation More Expensive Than Arbitration? 

There are inevitable costs involved in both litigation and arbitration. Most solicitors will advise clients to go for the less invasive – and therefore most cost-effective – option for their circumstances. Government statistics show that in most cases, problems can be resolved without the need to go to court. Even complicated situations can sometimes be brought to resolution via experienced arbitrators. As such, it is advisable to seek advice from a solicitor before making a decision about whether to opt for litigation or arbitration. 

Find Out More

At Astle Paterson, we understand the emotional, financial, and legal complexities involved in settling a disagreement. To speak with us in confidence about a legal matter or dispute, please call 01283 531366 today.

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