Arbitration means the reference of a dispute to an impartial tribunal chosen by the parties to the dispute who agree in advance to abide the tribunal's award issued after a hearing at which both parties have an opportunity to be heard.
Arbitration is often referred to as an alternative to litigation. However, they share the same fundamental premise. A third party is responsible for deciding any dispute. In arbitration, the parties present their dispute to an impartial arbitrator who will make a binding decision on the parties. Arbitration takes place as a result of an agreement in the contract between the parties requiring disputes to be submitted to arbitration. Parties may also agree to arbitration after a dispute arises even in the absence of a contract provision.
Litigation, judicial proceeding, means contest in a court of law for the purpose of enforcing a right or seeking a remedy.
Litigation is a resolution of disputes through the judicial system. An action is commenced by the filing of an initial pleading, usually a Complaint, setting out a claim. The defendant answers, states defenses and may counterclaim against the plaintiff. The defendant may also bring other potentially responsible parties into the action through a Third Party Complaint. Those parties have the same rights as a defendant to bring claims and add parties.
They are two important methods of dispute resolutions.
Clearly Basic differences: ÃÂ¡ÃÂ½ Litigation ÃÂ¡ÃÂ¼Arbitration
ÃÂÃÂLitigation is a public law system available to all citizens
*Arbitration is private law system available only to use it instead of litigation
ÃÂÃÂThe institution, date, place and the jurisdiction of Litigation decides by court
*The institution, date, place and the jurisdiction can be provided in the written arbitration agreement between parties
ÃÂÃÂLitigation is a public proceeding with audience