How Is Arbitration Different From Litigation?

arbitration vs. litigation

Legal disputes are never easy. Commercial litigation can be expensive and time-consuming. This is why many companies require arbitration of disputes in their contracts. Your business may be required to engage in arbitration before you can file a separate lawsuit. Whether you must do so is best answered by an attorney, but you need to understand the differences between arbitration and litigation to help you get started. 

At the Parlatore Law Group, we take commercial litigation seriously. Our commercial litigators have years of experience in the courtroom and handling arbitration cases. We advise you on how to handle these disputes and fight for your legal rights.

What Is Arbitration?

Arbitration is a method of resolving legal disputes outside of the court system. It is a type of alternative dispute resolution (ADR) used by many companies to avoid a costly court battle. In arbitration, both sides have their case put to an independent arbitrator or arbitrators who hear the case and make the ultimate decision.

The parties typically agree on their choice of arbitrator together, but this can be more complicated than it sounds. Federal and state laws often dictate key aspects of the arbitration process to protect everyone’s rights. 

What Is Litigation?

Litigation is taking a case to court. This is often the last resort for commercial disputes when everything else has failed. It can be time-consuming and expensive, so many businesses prefer to avoid commercial litigation if possible. 

Sometimes, however, another company refuses to pay what they owe or comply with a contract, forcing your hand. You need an experienced commercial litigator at your side in these situations.

Key Differences Between Arbitration and Litigation

There are many differences between litigation and arbitration, but the following represent some of the most important distinctions between them:

  • Timeline: Arbitration is typically much faster than litigation. This is especially true for complicated cases or those filed in extremely busy courts. Many courts have years-long backlogs or your case could be tied up in significant motion practice. 
  • Flexibility: Arbitration is often more flexible than litigation. The parties can make choices together, investigate the case on their own terms, and much more. Courts require stringent adherence to discovery rules, evidence rules, and much more.
  • Cost: Arbitration is nearly always cheaper than litigation. The parties are better able to control their own costs, how long the case takes, and the ultimate resolution of the matter. 
  • Confidentiality: Arbitration proceedings are usually confidential. This is often important when protecting trade secrets or other valuable intellectual property that is in dispute. In court, nearly everything is public record or requires intensive procedures to keep matters private.
  • Contract Requirements: The business contract between two parties might require arbitration before a case may go to court. In others, it may require that any litigation be filed in a particular court.
  • Appellate Process: Arbitration often has very limited appeal options. Arbitrations are usually final and binding, making it challenging or impossible to overturn a mistake. Court cases have appeal rights, but this may further increase the costs associated with the lawsuit.

Is Arbitration Better Than Litigation?

Arbitration is not necessarily better or worse than litigation—it is simply different. There are many advantages and disadvantages to both options, as you can see from the list above. 

You should consult your commercial litigation attorney to determine whether you must participate in arbitration, whether you should, and what strategies you can employ to protect your legal rights. 

Work With an Experienced Arbitration and Litigation Attorney

At the Parlatore Law Group, our business lawyers are well-versed in both arbitration and litigation strategies. We aggressively fight for your clients and protect your rights to the full extent of the law. Our lawyers negotiate potential resolutions when possible to save you time, money, and frustration. When the other party refuses to cooperate, we know how to take it to the next step.

Contact us today or schedule a consultation to learn more about arbitration and commercial litigation. We are ready to help.