A Guide to Choosing Between Arbitration and Litigation

Fiduciary responsibility

The Difference Between Arbitration and Litigation

When it comes to disputes, many business owners and individuals must choose between arbitration and litigation. Arbitration occurs outside of the court system, when an arbitrator makes a decision, which the parties are bound by. Litigation, on the other hand, is known as the action brought in court to enforce a particular decision. In other words, arbitration allows disputes to be settled outside of court, while litigation requires that both parties take their dispute to court.

The Pros and Cons of Arbitration and Litigation

Intellectual property
law, for example, protects the creations of the intellect. Artistic works are often considered to be protected under intellectual property law, as well as music and inventions. Depending on the nature of a dispute concerning intellectual properties, the individual parties should determine whether they would prefer to settle the dispute via arbitration or litigation. First, they should consider time. Litigation tends to require more time, particularly as proceedings must occur in court based on various schedules. Despite this disadvantage, litigation is more likely to allow for an appeals process if the dispute is settled unfavorably. It is important to consider that fewer than one percent of all civil cases actually make it to trial in Federal Courts.

Next, it is important to consider the cost. Because arbitration requires less time and uses less resources, it tends to be less costly when compared to court litigation. This is also because court litigation utilizes significant expenses for the pre-trial discovery processes, such as interrogations of witnesses.

Thirdly, parties in the dispute should consider the expertise of the arbitrator compared to the expertise of the judge. While the judge is an expert in the field of law, arbitrators may have more experience in the industry involving the dispute. Thus, they may have a greater capability in understanding the viewpoints of both parties to make a more objective decision.

Finally, court litigation is tied to particular rules of law and court proceedings. Judges must follow particular protocols when in court, including what types of evidence may be seen. Therefore, it may at times be beneficial to consider arbitration during intellectual property law and patent law disputes, as the professional arbitrators have more flexibility in their process of decision making.

Making Your Decision

When making a decision between arbitration and litigation, it is important to consider all of the variables. Those listed above are just a few examples of the types of decisions that need to be made, as well as the pros and cons of each proceeding. Yet, by choosing the appropriate decision for your situation, you can ensure smooth legal proceedings that will result in the fairest outcome. While class actions are generally arbitrated by FedArb Arbitrators or Panels, it is important to consider all of the options when making these decisions.

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