What is the Difference Between Litigation and Arbitration?

If you are in a business disagreement, you likely want a quick, peaceful, and fair resolution. The law provides two main ways to formally settle a disputed commercial contract: litigation and arbitration.

Arbitration and litigation are similar in many ways. Both seek to uphold justice, for example, and they do so by following applicable laws. Arbitration and litigation both use neutral third parties to decide the matter. In most cases, one party wins and the other party loses.

While they share similarities, litigation, and arbitration are actually quite different, and understanding the difference between the two can help you get the best outcome possible. Having an attorney experienced in handling litigation and arbitration can also help.

What is Litigation?

Litigation is the “older” method of resolving conflicts in commercial contracts. This centuries-old approach is a public proceeding that takes place in a courtroom and in front of a judge or jury. It follows strict procedures and formalities, and appeals are often allowed. This approach to conflict resolution is an option when one of the parties refuses to participate in arbitration, or when the contract does not require arbitration to resolve disputes.

Litigation can often be contentious, expensive, and intrusive.

What is Arbitration?

Simply put, arbitration is settled out of court. An impartial third party, known as the arbitrator, makes the final decision – appeals are generally not allowed.

The proceedings during arbitration are confidential and done in private at an agreed-upon location. It does not follow any specific procedure, and all parties are given a chance to be heard.

Arbitration provides a binding decision quickly, with the average arbitration case taking about seven months and the typical litigation taking 33 to 40 months. Without a judge, jury, or courtroom and limited discovery, arbitration often comes at a lower price tag too.

Many commercial contracts contain arbitration clauses that require arbitration in the event of a conflict. When the parties sign the contract, they pledge to resolve any disputes in front of an arbitrator and to accept the arbitrator’s decision. The arbitration provisions in some contracts also lay out specific rules for arbitration, such as the timeframe in which the mediation must take place, the types of damages that may be awarded, appeals, and any limits on discovery and exchange of information between the parties.

One of the things that set arbitration apart from litigation is that arbitration can give the parties full control of the process. Parties usually have a voice in selecting the arbitrator, for example, whereas it is nearly impossible to choose the judge overseeing the litigation.

Contact Brown & Gould For More Information About Arbitration

For more information on litigation and arbitration – or if you need legal assistance during litigation or arbitration – contact Brown & Gould. Our Oklahoma City civil litigation attorneys have extensive experience in several areas of business litigation, including:

• Commercial and contract disputes
• Business torts
• Real estate disputes
• Professional negligence
• Class actions
• Insurance and bad faith
• Antitrust
• Fraud claims
• Probate litigation
• State and federal appellate practice

To speak to one of our attorneys about litigation or arbitration, please call 405-235-4500 or contact us online today.