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What is Arbitration?
What is Litigation?
Arbitration is the process by which
A consensual system of judicature directed for the resolution of
commercial disputes in private
An arbitrator is a disinterested person to whose judgment and
decision matter s in dispute are referred.
Primary Elements of Arbitration
Arbitral process is consensual, based on agreement between the
parties
The parties have procedural freedom. This means that they may
organize their proceedings as they like
and may choose an adversarial or inquisitorial procedure as they
like or a mixture of the two.
The arbitrators must be independent and impartial in accordance
with codes of ethics and conduct. A
breach of that duty may result in the arbitrator being
challenged and eventually removed by the court or
by the arbitration institution concerned. It may also lead to
the annulment of the award .
The arbitrator is the master of his own procedure
The arbitrator must act in accordance with the rules of natural
justice
An arbitral award is binding upon the parties.
Arbitration, a form ofalternative dispute resolution (ADR), is a
legal technique for theresolution ofdisputes outside the courts,
wherein the parties to a dispute refer it to one or
more persons (the "arbitrators", "arbiters" or "arbitral
tribunal"), by whose decision (the"award") they agree to be bound.
It is a settlement technique in which a third party
reviews the case and imposes a decision that is legally binding
for both sides.[1]
Arbitration can be either voluntary or mandatory and can be
either binding ornon-binding.
A lawsuit is a civil action brought before a court of law in
which aplaintiff, a party whoclaims to have received damages from a
defendant's actions, seeks a legal orequitable
remedy. The defendant is required to respond to the plaintiff's
complaint. If the plaintiffis successful,judgment will be given in
the plaintiff's favor, and a range ofcourt orders
may be issued to enforce a right, award damages, or impose an
injunction to prevent anact or compel an act. A declaratory
judgment may be issued to prevent future legal
disputes.
According to Professor Albert Fiadjoe the following advantages
exist in Arbitration over Litigation:
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1. The parties have free choice to select a tribunal that fits
the nature of their dispute. Sofor Highly technical trade disputes,
the parties may select an expert in that field as the
arbitrator.
2. Arbitrations are held in private and they are also protected
by the laws of the privacy.This could be crucially important in a
dispute between rival companies in a competitive
business field who would like to keep their know how, business
strategy etc. from the
public.
3. Ease of enforcement of arbitral awards is a huge advantage.
As is well known enforcinga domestic decision against a government
is immensely problematic. That is not so with
arbitral awards because domestic laws and international
conventions permit the
registration and enforcement of these awards (see the Geneva
Convention of1927 and
the New York Convention of1958)
Per Shelton
1. Arbitration proceedings can be more suitable to the specific
commercial disputes ortechnical matters where the expertise of the
arbitrator can play a critical factor.
2. More flexibility in terms of its compliance with rules
regarding the submission ofevidence and / or procedural
elements.
3. The parties to the dispute retain more autonomy due to the
fact that arbitrationdeemed to be a contractual animal, hence the
process is more consensual.
4. Freedom to select the particular forum, judge and or
procedure to be followed.5. More confidentiality under the
Arbitration process6. In international context, due to a Mutual
distrust on behalf of either party in the judicial
fairness of the other parties court system. As well as it is
less of an affront to the states
sovereignty and since both parties consent there is no concern
regarding the waiver orinvocation of sovereign immunity.
Pros of Litigation
The parties receive a binding decision
Decision becomes a binding precedent
Trial provides procedural safeguards designed to ensure that a
fair and just result is obtained
Disadvantages
1. Cost2. Public Nature of the trial that is no privacy except
in the case of minors3. Delay in reaching a decision
