Differences between Arbitration and Litigation 

Differences between Arbitration and Litigation 

Although Arbitration is a quasi-judicial system in that an arbitrator, similar to a judge, resolves the disagreement, it keeps vital distinguishing elements that make it more desirable than litigation. They differ regarding who hears the case, how the procedure works, and whether the ruling is appealable. The differences between Arbitration and litigation will be discussed below:

1. Privacy:

Arbitration is more private than adjudication. Majority of the time, the court filings in lawsuits are open to the public. This means that members of the public, notably reporters and bloggers, have access to the filings’ content and can share it with others. As a result, a lawsuit may generate news or social media buzz that portrays one party in a negative manner, harming both its reputation and business interests. Furthermore, court filings and the publicity surrounding such files can expose previously hidden details that the parties would wish to keep hidden, such as tax records and other financial information.

On the other hand, Arbitration is nearly typically done in private because there is no public Arbitration docket, and the parties’ documents and any filings related to the Arbitration need not be made public. As a result, there is usually little worry about the media or other members of the public putting a spotlight on the parties in Arbitration procedures and the nature of their disagreement.

2. Time efficiency:

Litigation is known for not moving at a rapid pace. A case filed today in Nigeria or most other jurisdictions might take 18 to 36 months to reach trial and even take longer to conclude. This delay is caused by overcrowding on court dockets. There will be more back and forth between the parties and the Judge if lawyers do not start cooperating by actively complying with court regulations involving civil procedure and discovery.

This can bring the litigation process to a standstill. This time element in litigation can be illustrated with a plethora of cases, including the following; Alhaji G. Kyari v Alhaji C. Akdid , ACB Ltd. & Ors v BB ApugoAnd Adeleke v Iyanda. These cases took 15, 18 and 19 years to go from the High Court to the Supreme Court consecutively. On the other hand, Arbitration moves more quickly than litigation because there is often less established procedure throughout an Arbitration. The parties in many Arbitrations only have to wait a few months between starting the process and attending the main hearing.

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3. Availability of Appeal

Litigation can appear endless because many of a judge’s or magistrate’s rulings can be subject to appeal. When a losing party utilises its right to appeal a judicial decision, the parties must devote more time and money to the case due to the appeal until it gets to the Supreme Court, which is the apex court.

Most Arbitrations, on the other hand, are final and binding. As a result, the Arbitration award is typically the conclusive decision on the legal issue (unless the parties agreed that an Arbitration decision would be appealable, or, in some jurisdictions, the losing party can show bias or fraud by one or more arbitrators).

4. Appointment of Judge

The Judge in litigation is appointed, and the parties have little or no input on who is chosen. Unless the decision is stipulated in the Arbitration provision of a contract, the two parties usually choose an arbitrator together. The arbitrator serves as the presiding officer in Arbitration, whereas the Judge, magistrate, or any other appointed judicial officer serves as the presiding officer in litigation.

Merits and Demerits of Arbitration

In consideration of the fact that everything that has an advantage must have a disadvantage, this article lay bare the following points on merits and demerits of Arbitration proceedings below:

Merits

1. Party Autonomy: the ability for parties to choose their Arbitration tribunal to resolve their dispute is a benefit because they have the freedom to appoint members to the tribunal.
2. Privacy: Parties have the privilege of keeping their secrets to themselves. The goal of Arbitration is often to keep the parties’ sensitive interests from being leaked to the public.

Arbitration is a significantly less formal process than a trial. Unlike trials, which must take place in a courtroom, Arbitration can take place anywhere that is convenient for the parties. The standards of procedure and evidence are also substantially reduced and streamlined, making the process far less formal than a traditional trial and giving the parties more power.

3. Speed in resolving disputes: Issues that cause the parties to disagree are rapidly resolved. Arbitration allows parties to resolve disagreements without going through the time-consuming process of litigation, which is often required owing to inevitable judicial procedures.
4. Maintains good relations: Arbitration is a simple process that helps maintain ties once a disagreement has been resolved. This contrasts with litigation, which frequently develops in animosity between the parties. Arbitration has an advantage over litigation since it is less confrontational and more casual.
5. Finality of decision: An Arbitration panel’s decision is generally final and binding on the parties, and there is no right of appeal in this case.

Demerits

1. Arbitration costs may be high: Arbitration is not always a cheaper alternative to litigation for settling conflicts. First, the parties must pay the arbitrator’s fees and expenses, which can be significant. Administrative fees and expenses may be high depending on the arbitral institution (if utilised), especially if fees are calculated in relation to the amount in dispute. Fees will be paid for various services required to ensure a smooth arbitral process, which will increase the cost of
2. Arbitrators have no coercive power of enforcement, and parties may have to rely on the courts to enforce awards.
3. Independence of Awards: Decisions reached in Arbitration proceedings are confidential, making it challenging to have precedents to follow when there are similar facts and issues in dispute to which arbitrators can refer. Since the system of precedents is not applicable in Arbitration, each Award stands on its own.
4. Arbitrators’ Powers are Restricted: Arbitrators have limited powers to resolve conflicts between parties. An arbitral tribunal cannot use the same authorities as the courts to compel the presence of a party or witness. When an award must be enforced promptly, the Arbitration tribunal can only do so after it has been registered in court.
5. Limited scope of application: Arbitration has no universally acceptable application to all forms of disputes. For instance, it is suitably applicable to commercial disputes but not to criminal cases.
6. Eventual failure of the enforcement of the Award leading to litigation in the end: Some Arbitration proceedings nonetheless fail at the end, resulting in new litigation and a waste of time, money, and resources that could have been saved if the action had been pursued from the start.