THE PROS AND CONS OF LITIGATION, ARBITRATION AND MEDIATION IN COMMERCIAL DISPUTES
Tucked away at the back end of contracts and not frequently the subject of lengthy negotiation are dispute resolution clauses. Nevertheless, these provisions can become critical in the event of a dispute. It is not unusual to find that a contract includes a dispute resolution clause that has not been as well considered as other provisions in the contract or given any real thought at all.
With that in mind, this article sets out a comparison between litigation, arbitration and mediation, highlighting recent trends and important factors to consider when deciding whether to opt for arbitration or litigation, and whether to agree to mediate.
What is the difference between litigation and arbitration? In short, parties to a contract can choose for disputes arising under or in connection to the contract to be decided either by the national courts (for example, the courts in England and Wales) or by an arbitral tribunal. There are key differences between the two in terms of procedure, including flexibility, confidentiality, cost, finality, and crucially, enforcement.
In a 2018 survey carried out by the School of International Arbitration at Queen Mary, University of London, the enforceability of arbitral awards was identified as the most valuable characteristic of arbitration. This, of course, comes as no surprise given that there are 170 state parties to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, including the UK; a treaty which applies to the recognition and enforcement of foreign arbitral awards by contracting states.
Oct-Dec 2022 issue
Shoosmiths