Arbitration vs Litigation

We’re here to talk today about the differences between arbitration and litigation. Arbitration and litigation have many similarities, but also some key differences. With litigation, typically, almost exclusively, you’re going to be in a public courthouse, and the judge will be a sitting judge appointed or elected to have that position. In arbitration, most likely, you’re going to be in a conference room or some facility, and the person deciding it, the arbitrator, will either be a retired judge or a lawyer or in some cases, an industry professional that happens to be an expert in the industry that the dispute seems to be about. 

How You Get to Arbitration vs. Litigation 

The most common way that you end up in arbitration rather than litigation is if you have a contract that’s at issue. And that contract has an arbitration clause. Absent a contract that requires arbitration or an arbitration proceeding, the decision to go to arbitration is really decided by the parties. 

Once there’s a dispute between the parties, parties can essentially decide how to resolve it any way they want. They can go to arbitration, they can go to litigation, they can agree that they’ll go to litigation and not have a jury, they can agree to decide it based on flipping a coin or any other way you want it you want to decide a dispute. 

The key is that after you have a dispute or are in a dispute, the parties get to decide. For example, if you’re in a dispute with someone, and there is no arbitration clause, the parties can agree to arbitration. And vice versa. If there is an arbitration clause, the parties can instead, change their mind and proceed to litigation.

The Key Differences Between Arbitration and Litigation 

Most people will say that the pros for arbitration is that it’s generally a quicker proceeding, and that it’ll be less costly. That’s generally true. 

One of the key things about arbitration is that the parties get to choose an arbitrator. Typically, you’ll get a list and the parties can select someone they agree on to decide their arbitration case.

The same thing is true with respect to discovery. Typically, discovery in an arbitration proceeding is much narrower, that it will be in litigation, and hence much quicker and less costly. But the key thing to remember, again, the parties control the dispute. So even at arbitration, the parties agreed to and they can have any discovery they  want to do. 

The other difference between arbitration and litigation is that in litigation, you have no choice as to who your judge is. Whatever judge you’re assigned to, that judge decides your case. 

In terms of the actual proceedings themselves, there’s several key differences. In an arbitration proceeding, you will have essentially no ability to try to limit the claims before they actually go to the arbitration proceeding. In litigation, the key thing is that you have the ability to do, particularly if you’re a defendant, you will try to limit the case. In an arbitration proceeding, you have no opportunity to do that. So in an arbitration proceeding, it’s much more likely that you’re going to be able to proceed if you are a plaintiff, under a very broad set of claims, whereas in litigation, the defendants might be able to narrow those claims down. 

The other key thing to think about in terms of arbitration versus litigation is during the proceeding itself. The rules of evidence are much, much looser, and much more loosely applied in arbitration procedure; things like hearsay authentication and documents. Those types of things that present issues in a superior court trial or litigation are much, much easier to get around in arbitration. Most times the rules of evidence that apply to litigation are not applied in arbitration. 

So the requirements in terms of what you need to prepare, how much detail you need to put into the case, are much greater than in arbitration. And hence, the costs are typically much more than arbitration. 

The final main difference is in an arbitration, whatever the arbitrator rules, whatever the arbitrator decides, whether he gets the law wrong, or he gets the facts wrong, whatever the situation may be, what he or she decides, it is very, very hard to appeal a decision from an arbitration proceeding. 

Contrast that to litigation where virtually every decision is subject to appeal. So that creates problems and deals tend to drag on and increase the costs of litigation. 

So those are kind of the pros and cons of litigation versus arbitration.