Litigation vs. Arbitration: What's the Difference?

Edited by Huma Saeed || By Sawaira Riaz || Updated on November 6, 2023

Litigation is the process of taking legal action in court, while arbitration involves resolving disputes outside of court through a neutral third party.

Key Differences

Litigation and arbitration are both methods employed to resolve disputes. Litigation is the conventional method wherein disputes are resolved in a court of law, overseen by a judge, and possibly a jury. Parties involved present evidence, argue their case, and a verdict is eventually reached. Arbitration, on the other hand, is a method where disputes are settled outside of courts, typically in a less formal setting, overseen by one or more arbitrators chosen by the parties involved.

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One stark distinction between litigation and arbitration lies in their procedural formality. Litigation, being court-based, often follows strict rules and procedures set by the legal system. Parties are bound by the decisions of the court, and there's potential for appeal. Arbitration can be more flexible, with procedures agreed upon by the parties, and the decision, called an award, is generally final with limited grounds for appeal.

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In terms of cost and duration, litigation can be lengthy and expensive due to its procedural complexities, potentially taking years before a resolution is reached. Arbitration can be faster and might be less expensive, as it sidesteps some of the bureaucratic aspects of court proceedings. However, the costs of arbitrators and the proceedings themselves can also be substantial.

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Privacy is another difference between the two. Litigation is often public, with court proceedings and judgments accessible to the public. Arbitration is usually private, and parties can agree to keep the proceedings and outcomes confidential. This confidentiality is sometimes preferred by businesses or individuals seeking discretion.

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Lastly, the outcome's enforceability varies. Litigation results in a court judgment, enforceable by law. Arbitration awards may require additional steps to become enforceable but are recognized and enforceable in many jurisdictions under specific arbitration laws or treaties.

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Comparison Chart

Setting

Court of law.

Outside of courts, often in private settings.

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Decision Maker

Judge (and possibly a jury).

Arbitrator(s).

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Appeal Potential

Generally possible.

Limited appeal options.

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Privacy

Public, accessible records.

Private, with potential confidentiality.

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Procedural Rigidity

Strict legal procedures.

Can be more flexible, based on agreed procedures.

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Litigation and Arbitration Definitions

Litigation

Judicial contest to determine and enforce legal rights.

The litigation process can be long and tiresome.

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Arbitration

A method of settling disagreements without litigation.

Arbitration can be a cost-effective alternative to court battles.

Oct 27, 2023

Litigation

The process of resolving disputes in court.

The company is facing several litigation cases this year.

Oct 27, 2023

Arbitration

A process of resolving disputes outside of court using a neutral third party.

They agreed to settle their differences through arbitration.

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Litigation

Legal proceedings initiated between opposing parties.

The ongoing litigation has strained their relationship.

Oct 27, 2023

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Arbitration

An alternative dispute resolution method, bypassing courts.

They achieved a satisfactory result thanks to the arbitration process.

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Litigation

The act or process of taking a case through court.

They chose litigation instead of a peaceful negotiation.

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Arbitration

A procedure in which contention is settled by an arbitrator.

Arbitration can offer a faster resolution than traditional court cases.

Oct 27, 2023

Litigation

A lawsuit or legal action.

The threat of litigation made them reconsider their position.

Oct 27, 2023

Arbitration

The process by which the parties to a dispute submit their differences to the judgment of an impartial person or group appointed by mutual consent or statutory provision.

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Litigation

To prosecute or defend (a lawsuit or legal action); pursue (a legal case).

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Arbitration

The act or process of arbitrating.

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Litigation

To bring a lawsuit or defend against a lawsuit in court.

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Arbitration

A process through which two or more parties use an arbitrator or arbiter in order to resolve a dispute.

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Litigation

(legal) The conduct of a lawsuit.

There is ongoing litigation in this matter.

This law firm is known for its litigation practice.

That attorney has been chastised for his litigation behavior.

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Arbitration

In general, a form of justice where both parties designate a person whose ruling they will accept formally. More specifically in Market Anarchist (market anarchy) theory, arbitration designates the process by which two agencies pre-negotiate a set of common rules in anticipation of cases where a customer from each agency is involved in a dispute.

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Litigation

The act or process of litigating; a suit at law; a judicial contest.

Oct 13, 2023

Arbitration

The hearing and determination of a cause between parties in controversy, by a person or persons chosen by the parties.

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Litigation

A legal proceeding in a court; a judicial contest to determine and enforce legal rights

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Arbitration

(law) the hearing and determination of a dispute by an impartial referee agreed to by both parties (often used to settle disputes between labor and management)

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Arbitration

The act of deciding as an arbiter; giving authoritative judgment;

They submitted their disagreement to arbitration

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Arbitration

The act of referring a dispute to an impartial entity.

Their contract specifies mandatory arbitration for any disputes.

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FAQs

Who decides the outcome in arbitration?

An arbitrator or a panel of arbitrators determines the outcome in arbitration.

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Can arbitration be forced on someone?

Parties often agree to arbitration in contracts, making it mandatory for disputes arising from that contract.

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Is litigation always public?

While most litigation is public, some proceedings or documents may be sealed or kept confidential under certain conditions.

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When is arbitration preferred?

Arbitration is preferred for contractual disputes, international matters, or when privacy is a concern.

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Is arbitration similar to mediation?

While both are alternative dispute resolutions, arbitration results in a binding decision, unlike mediation, which seeks mutual agreement.

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Is arbitration always faster than litigation?

Arbitration can be faster, but it depends on the case, the arbitrators, and the parties involved.

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How long can litigation last?

Litigation can last from months to years, depending on the case's complexity and jurisdiction.

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What is the primary purpose of litigation?

Litigation aims to resolve disputes by taking them through the court system.

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Can litigation decisions be appealed?

Yes, litigation decisions, in most cases, can be appealed to a higher court.

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Who pays for litigation costs?

Typically, each party pays its own costs, but the court can order the losing party to pay the winner's costs in some instances.

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Are arbitration decisions internationally recognized?

Yes, many countries recognize and enforce arbitration awards under the New York Convention.

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What types of disputes are suited for litigation?

Complex disputes, those needing precedent, or ones involving public interest often go to litigation.

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Is the arbitration process formal?

While less formal than litigation, arbitration can still have structured proceedings based on the agreed rules.

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What's the role of evidence in litigation?

Evidence is crucial in litigation to prove or disprove claims and defenses presented in court.

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How is an arbitrator chosen?

Arbitrators are typically chosen by mutual agreement of the parties or through an arbitration institution.

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Can a litigation judgment be enforced internationally?

Enforcing litigation judgments internationally can be challenging and depends on treaties or agreements between countries.

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Can evidence be presented in arbitration?

Yes, parties can present evidence in arbitration, but the process might be more streamlined than in court.

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Can a third party intervene in litigation?

Depending on jurisdiction, third parties with a vested interest might intervene in litigation.

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Can outsiders participate in arbitration?

Typically, arbitration is restricted to the parties involved, but some rules might allow third-party participation.

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Can you switch from litigation to arbitration?

Yes, parties can agree to move from litigation to arbitration if they mutually consent.

Nov 04, 2023

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About Author

Written by

Sawaira is a dedicated content editor at difference.wiki, where she meticulously refines articles to ensure clarity and accuracy. With a keen eye for detail, she upholds the site's commitment to delivering insightful and precise content.

Edited by

Huma is a renowned researcher acclaimed for her innovative work in Difference Wiki. Her dedication has led to key breakthroughs, establishing her prominence in academia. Her contributions continually inspire and guide her field.