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What are the differences between litigation and arbitration?

| Sep 8, 2020 | Business Law |

If you are seeking a binding decision to a legal issue, you may wonder what options are available both in and out of court. 

Business owners in California can choose to settle matters either through arbitration or litigation. 

Arbitration

According to the Superior Court of California, binding arbitration is an alternative conflict resolution option that does not require a judge or court involvement. Both parties must adhere to the decision reached by the arbitrator, who hears both sides of the dispute. This expert usually has special knowledge about a particular topic or legal matter, and you cannot appeal his or her final decision. You waive your rights to a trial in order to complete this process, but you still may have an attorney present during it. 

Litigation

In contrast, litigation gives both parties a public opportunity to argue each side of the case in a court of law, along with the ability to provide any evidence collected before a judge and jury. You can also appeal this decision after the trial, if necessary. The court process may take months, while arbitration is typically shorter and more private. 

Benefits and control

Although there are additional fees for legal proceedings, many arbitration costs include administrative agents, professionals, and even lawyers in addition to legal fees. Litigation can provide a more thorough and formal conclusion, especially to unusual business-related issues. While a judge must remain neutral, an arbitrator may have conflicts of interest, as long as he or she discloses them beforehand. 

In situations where both parties want to work together to reach a decisive solution to a problem, arbitration may provide a faster and more private experience. Some business contracts may have arbitration clauses that require this kind of process for any arguments that arise.