Litigation is the process of taking a case through court. In litigation process, a case (called suit or lawsuit) is brought before a court of law suitably empowered (having the jurisdiction) to hear the case, by the parties involved (the litigants) for resolution (the judgment).
Arbitration is the process of bringing a business dispute before a disinterested third party for resolution. The third party, an arbitrator, hears the evidence brought by both sides and makes a decision. Sometimes that decision is binding on the parties.
Arbitration is a form of alternative dispute resolution (ADR), used in place of in the litigation hope of settling a dispute without the cost and time of going to court.
The arbitration process is private, between the two parties and informal, while litigation is a formal process conducted in a public courtroom.
Private – between the two parties
Public – in a courtroom
Type of Proceeding
Civil – private
Civil and criminal
Limited evidentiary process
How arbitrator/judge selected
Parties select arbitrator
Court appoints judge – parties have limited input
Usually binding; no appeal possible
Use of attorneys
At discretion of parties; limited
Extensive use of attorneys
Waiting time for case to be heard
As soon as arbitrator selected; short
Must wait for case to be scheduled; long
Fee for arbitrator, attorneys
Court costs, attorney fees; costly