Differences Between Arbitration and Lawsuits
By Jay Young | January 26, 2018 | LegalThere are times when you may see an arbitration clause in a contract or were told by a colleague that you should include an arbitration clause in a contract. At these times, you might wonder about arbitration and how this may differ from a lawsuit. There are a number of ways that lawsuits and arbitration differ, and you need to understand this before you go any further.
What Is Arbitration?
To better understand the differences, you need to know what arbitration is and what a lawsuit is. Arbitration will involve 2 parties who are in a dispute agreeing to work with an unbiased third party to resolve the dispute. When going through the process of arbitration, there may be more than one arbitrator who will hear both sides of the dispute. The arbitrators are the ones who will make a decision on the issue.
What Is a Lawsuit?
A lawsuit also known as litigation is a very old process where a dispute is solved through the courts. This process will include a judge and may include a jury. Most people will have a civil lawsuit or civil litigation because this is the dispute between two parties. Criminal litigation will only occur when the people involved have broken the law.
The Differences Between Arbitration and Lawsuits
The first difference is the privacy of the procedures. Arbitration is more private as it will take place between the 2 parties, and the arbitrators and are informal. Lawsuits are a more formal process and will be conducted in a public courtroom. The proceedings will also be a matter of public record once the lawsuit has been completed.
The speed of the process also differs. When compared to a lawsuit, arbitration can be completed fairly quickly. Once arbitrators have been selected, the case can be heard immediately which is something you will not find with a lawsuit. When dealing with a lawsuit, the case has to wait until the court has the time to hear it and this could be in many months’ time. There are times when the courts are very busy and it can take years for a lawsuit to be heard.
The cost of the processes also differs with arbitration being limited to the fee that is paid to the arbitrator. The fee will vary depending on the size of the claim, the expenses of the claim, and the experience of the arbitrator. Lawsuits will have higher fees as lawyers will be involved and court costs will need to be covered. These fees can be very high depending on the experience of the lawyers.
The selection of the arbitrator is left to the parties in the dispute. They will have to mutually agree on the arbitrator who will hear their case. With a lawsuit, the judge will be assigned by the courts and the parties in dispute will not have any say in this. However, the parties will have the choice of having the case heard by a judge or by a jury.
In terms of evidence, arbitration has a limited evidence process and the arbitrator will control the evidence that is allowed. When dealing with a lawsuit, there needs to be full disclosure of evidence to both parties. This disclosure is not part of the arbitration process.
When you go through arbitration, there are no appeals and the decision is binding. The only time an appeal is allowed is when it has been included in the arbitration clause. There are times when the decision from arbitration can be vacated by a judge if it is found that the arbitrator was biased. Lawsuits allow for a number of appeals at varying levels.
Comments are currently closed.