Arbitration vs Litigation: Which is right for your business?

22 Jun 2024, 32 mins ago

Commercial disputes are stressful and can have a negative effect on your business. When all other methods of resolving the dispute have been explored, a business may find they need to take more formal routes to resolve the issue. Litigation is often the route that businesses take to resolve a dispute that threatens their business, however it is not the only option.

Litigation is the more traditional method of resolving disputes, and involves all parties going to court, a through the public court system. It involves a formal procedure governed by legal rules and can lead to a trial before a judge or jury, whose decision can be appealed.

Arbitration is a form of alternative dispute resolution that offers parties involved in a dispute an alternative to litigation. Arbitration takes place privately, not in a courtroom as happens with litigation. The decision of the arbitrators is usually final and binding. Arbitration has the benefit of typically being more efficient and cost-effective than traditional litigation and is often favoured due to the confidential nature of the proceedings.

Deciding whether litigation or arbitration is right for your business, is not straightforward, both have advantages and disadvantages. We have gathered the top considerations for each resolution method, and Gherson’s arbitration team is here to help should you want to discuss your options in more detail.

PrivacyOffers a private setting, making it ideal for sensitive matter.Public nature of court proceedings can expose the details of the dispute (there may be some cases where a dispute may be heard in a private setting).
CostCan be cost-effective but may involve substantial fees for arbitrators and administration.Often more expensive due to legal fees, court costs, and the potential for prolonged procedures.
TimeTypically, faster, with more flexible scheduling.Can be lengthy due to court backlogs and procedural requirements.
FormalityLess formal and more adaptable to the needs of the partiesFormal with strict adherence to procedural rules.
Decision & AppealArbitration award is final and binding, although limited scope for appealing is possible in certain jurisdictions.Decisions can be appealed, allowing for review and potential reversal by higher courts,
Enforcement in a Foreign CountryArbitration awards can be more easily enforced in any country which is a signatory of the “New York Convention”.Enforcing a foreign judgment depends on the law and process of the local State which can be much more complicated.

Making the Decision

When deciding between arbitration and litigation, parties should weigh these factors in relation to their business priorities. For disputes requiring confidentiality, speed, and specialised knowledge, arbitration may be more suitable. Conversely, if the parties seek the possibility of appeal and a formal legal process, litigation might be preferable. Consulting with legal counsel can provide tailored advice based on the specifics of the case. Ultimately, the choice should align with the dispute’s nature, the parties’ needs, and the desired outcomes.

How Gherson can assist

Gherson’s Litigation and Arbitration Team are highly experienced in advising on international commercial litigation and arbitration. If you have any questions arising from this blog, please do not hesitate to contact us for advice, or send us an e-mail. Don’t forget to follow us on XFacebookInstagram, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2024