Arbitration versus Litigation

Arbitration versus Litigation

By: Shivanjali Mane

“Arbitrators and Judges are partners in the business of dispensing justice, the judges in the public sector & the arbitrator in the private sector.”

-Sir John Donaldson

Introduction

Alternative Dispute Resolution is a mechanism to resolve the dispute through the private forum.  Litigation is resolving the dispute through a court of law. There are different methods of Alternative Dispute Resolution such as Arbitration, Mediation, Conciliation, and Negotiation. Arbitration is one of the most common methods to resolve the dispute. Arbitration is considered as the most common and traditional method to resolve the dispute over litigation.

What is Arbitration?

Arbitration is the mode of settling the dispute by referring it to a nominated person who decided the issue in a quasi-judicial manner after hearing both sides. Arbitration is private, judicial determination of a dispute, by an independent third party.

What is Litigation?

Litigation is a lawsuit, a judicial contest or contest in the court of law. It means legal proceedings in a court or a judicial contest to determine and enforce a legal right. Litigation is also known as ‘Court based Adjudication’.

Comparison between Arbitration and Litigation

The pros and cons of theses two methods of resolution of disputes viz. arbitration and litigation may be weighed up for a proper understanding of the efficiency of each so that the disputant would be able o use the appropriate method in the resolution of their dispute.

Advantages of Arbitration

  1. Fair trial

Arbitration promises a fair trial by an independent and impartial tribunal. Neutrally and mutuality are perhaps the most redeeming features of the arbitration process.

  1. Procedural simplicity

Arbitration is very simple and saves the parties from the irritate caused by procedures which is the hallmark of court litigation.

  1. Privacy and confidentiality

The more emphasis upon the privacy treated as the biggest core of arbitration than the traditional court system. The arbitration hearing is confidential Conducted in closed doors, private meetings in which the media and members of the public are not able to attend.

  1. Choice of an expert as arbitrator

Arbitration offers parties a unique opportunity to designated persons of their choice s arbitrators. Parties are free to select one arbitrator from the list of potential arbitrators.

  1. Economically feasible

Litigation can drain the pockets of the parties. The process includes the fees of the court, the counsel, the travelling expenses incurred by the individual, whereas Arbitration is economically sound as it eliminates all these extra costs.

 Disadvantages of Arbitration

  • Uncertainty

Simple procedures and the corresponding lack of a detailed set of rules can create an element of uncertainty.

  • Misconduct of Arbitrator

It has been the experiences that justice expected of arbitration fails whenever the arbitrator is not a competent person or he gets interested in the subject matter or shows favouritism to any of the parties.

  • Splitting the baby-Thomas Crowley

Because of the relaxation of rules of evidence in arbitration, and the power of the arbitration to do equality, the arbitrator may render an award that, rather than granting complete relief to one side, splits the baby by giving each side part of what they requested.

  • Dropping out in the middle

Lack of in fractures facilities coupled with the rigidity of arbitral institutional makes the process of arbitration so cumbersome that halfway through the parties of the proceeding lose the interest in the proceeding and shifts to other modes of dispute resolution.

Advantages of Litigation

  1. All disputes are litigable

Courts are considered by the litigant public as the right forum for the resolution of all types of disputes.

  1. Qualified judges

The presiding officers of a court are qualified judges. A judge is one who decided questions between the contending parties according to the law.

  1. Reasonable principles

Principles applied by the court are reasonable and clearly discernible.

  1. Authoritative, consistent, predictable decision

Court based decision is authorities and based on precedent. They are in theory-based principles of the law that has been previously validated.

  1. Procedural safeguard

Court litigation offers procedural safeguard that ensures parties due process under the law. Among such safeguard cross-examination, limitation on hearsay and other rules of evidence, pre-hearing mandatory sharing of information between the sides and that will be fair enough.

Disadvantages of Litigation

  • Already overloaded

The traditional civil courts are overloaded with cases. It is estimated that India needs at least 5000 courts more courts to adjudicate over 30 millions of cases pending in courts of the country.

  • Slow and time-consuming

Courts dockets are often overbooked causing significant delays before a case is heard. In the meantime, the unresolved issue can cause serious problems for the disputants.

  • Delayed justice

The two most sought after things by litigants are justice and peace. In fact, these two things can be compared to two eyes. What happens if justice is not delivered to the litigant on time? Denied justice is like denied peace of mind and in such a situation the litigant is totally blind.

Distinction between Arbitration and Litigation

Arbitration is an alternative to proceedings in courts, which tent to be protected and expensive. It is a species of privatization of the official dispensation of justice. Court of litigation argues that through litigation is an adversarial process and guarantee the conclusion of the dispute.

Similarities between Arbitration and Litigation

Both arbitration and litigation are based on the concept of unilateral intervention. That is to say in both cases a decision is made by an outside person rather than by the parties themselves. Both are adversarial.

Conclusion

It is somewhat clear that the traditional approach to dispute resolution through litigation is risky, costly and takes up a lot of parties’ time but in arbitration involves all these problems a little bit, in a lesser extent. Due to this special advantage of arbitration over litigation, it has become preferable nowadays.

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