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 of alternative dispute resolution (ADR), is a legal technique for the
resolution of disputes 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 or non-
binding.

A lawsuit is a civil action brought before a court of law in which a plaintiff, a party who
claims to have received damages from a defendant's actions, seeks a legal or equitable
remedy. The defendant is required to respond to the plaintiff's complaint. If the plaintiff
is successful, judgment will be given in the plaintiff's favor, and a range of court orders
may be issued to enforce a right, award damages, or impose an injunction to prevent an
act 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:
 1. The parties have free choice to select a tribunal that fits the nature of their dispute. So
for 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 enforcing
a 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 of 1927 and
the New York Convention of 1958)

Per Shelton

1. Arbitration proceedings can be more suitable to the specific commercial disputes or

technical 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 of
evidence and / or procedural elements.
3. The parties to the dispute retain more autonomy due to the fact that arbitration
deemed 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 process
6. 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 state’s
sovereignty and since both parties consent there is no concern regarding the waiver or
invocation 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. Cost
2. Public Nature of the trial that is no privacy except in the case of minors
3. Delay in reaching a decision
4. Relative uncertainty as to what the result will be
5. The rigidity of the trial process
6. Potential to destroy a relationship between the parties
7. parties have very limited control over the process
8. No choice in the selection of the judge
9. No control over the outcome.