Litigation Vs Arbitration
Arbitration vs Litigation
Arbitration Vs Court
There are many businesses that do not know the appropriate solutions when they have a dispute with another business. The two most recommended solutions are either settling the dispute in a courtroom or resolving it through arbitration. Both litigation and arbitration are solutions that have strong and weak points. So, choose one that is more likely to have more pros than cons in your specific situation. If you have a question regarding litigation vs arbitration get in touch with an business law attorney.
What Is Litigation?
Litigation And Arbitration
When you go to court to resolve a dispute, it is referred to as litigation. The judge that oversees the case is chosen without input by parties involved in the case, and the court can compel parties to participate in court proceedings. Both parties have to present evidence before a judge and then the judge makes a decision based on those presentations.
But litigation can take a long time because each side has to present its case. This is also partly the reason why litigation can be very expensive. You don’t have to agree with the final decision of a judge if you lose the court case. You or the other party can appeal the decision based on a possible material error in the trial.
What is Arbitration?
Difference Between Arbitration And Litigation
Arbitration is not a legal process like litigation but the agreement reached in this process is binding and cannot be appealed in many situations. Unlike litigation, arbitration is a private process overseen by a neutral third party chosen with input from both disputing parties. The American Arbitration Association (AAA), American Health Law Association (AHLA), and Judicial Arbitration and Mediation (JAM) services are the most known providers of Arbitration services.
The matters being discussed and the progress of arbitration can be kept private from the media and outsiders in arbitration. That means your business disputes are less likely to make headlines and hurt your business or brand. What is even better is that your dispute can be resolved much faster through arbitration rather than through litigation.
But arbitration is only possible if both parties consent to it because you cannot compel a party to participate in the process.
When To Choose Litigation
Arbitration Vs Lawsuit
You have no choice but to choose litigation in a situation where the other party is not willing to go through arbitration to resolve your business. But there are disputes that you cannot resolve through arbitration when the dispute is about:
- Debt and debt collection
- Unfair competition
- Data breaches
- Infringement of trademark, copyrighted items, patents, and other intellectual property
- Land and zoning disputes
- Fraud and misrepresentation of facts
When To Choose Arbitration
Litigation Versus Arbitration
Since most business disputes are related to contractual instruments, the lawyer helping you draft a business contract may advise you to include litigation avoidance provisions in your contractual agreement. For example, you can include an arbitration provision that is or is not preceded by a mandatory mediation. Settling business disputes through arbitration is preferable when:
- There Breach of contract caused by a misunderstanding or ambiguous sections in the agreement
- Partners in a partnership do not agree about who should take a leadership position
- Suing a rival business or a partner could financially cripple your business