If you’re a corporate owner, business disputes are inevitable. Arbitration and litigation are two common ways of settling them. However, as a business owner, it’s important to know the difference between each form of dispute resolution to determine which may be best for your situation. While litigation is overseen by a judge, arbitration can let you resolve a dispute outside of court — it is sometimes also required by the terms of a business contract.
What is the Difference Between Litigation and Arbitration?
Although both litigation and arbitration can resolve a dispute, it’s critical to note the differences between these methods. Significantly, arbitration must be agreed upon by the parties either when the dispute arises or in the contract which is the basis for the arbitration. Litigation can be begun without the consent of the adversary. This can make litigation a better option in particularly contentious cases.
Other key differences between litigation and arbitration include:
- Litigation is public, while arbitration is private
- Evidence can be limited in arbitration
- Adversaries have an opportunity for more discovery in litigation
- Parties select an arbitrator instead of a judge being appointed
- Appeals are usually not possible with arbitration, except to enforce or toss out the result of the arbitration
- Arbitration does not depend on the court calendar
- Arbitration is more informal than litigation
Arbitration actively encourages the parties to a dispute to participate in reaching a resolution, rather than “winning” a lawsuit.
Is it Better to Litigate or Arbitrate a Case?
Many people believe that arbitration is less expensive than litigation, making it a better option. Arbitration can come with steep fees that the parties are responsible to pay. Unlike in litigation where the parties do not pay for the judge, the Petitioner and Respondent will need to pay the arbitrator if they use this form of alternative dispute resolution. Other costs of arbitration can include rental fees for the hearing room, and the costs a party will incur preparing their case.
Arbitration is usually binding. With binding arbitration, the party who did not prevail will not have the option to file an appeal as they would had the case been litigated; however, under limited circumstances, the award is arbitration is subject to attack, but it’s a costly process. Every dispute is unique — those involved in a commercial dispute should discuss the pros and cons of litigating their case versus arbitrating their case with an experienced business law attorney.
Contact an Experienced New York Business Law Attorney
If you are facing a commercial dispute, it’s vital to have the knowledge and insight of an experienced business attorney by your side. Offering skillful representation and aggressive advocacy, the attorneys at Brinen & Associates are committed to helping business owners resolve their disputes in both litigation and arbitration. Call (212) 330-8151 or send us a message to learn more about how we can help you.