What is the Difference between Arbitration and Litigation

Arbitration differs from normal civil proceedings in several ways. An arbitral award is immediately enforceable (also internationally) and final. The finality of the arbitral award means that it is not subject to appeal, even if the arbitral award is incorrect (compare to a district court’s decision which can be appealed against to a court of appeals and further to the Supreme Court). An arbitral award may be reversed only in very few cases.

Arbitration is a fairly fast procedure compared to litigation, since the parties may agree on a maximum time for the procedure and the arbitral award is not subject to appeal. Ordinarily, arbitration lasts between 3 and 12 months, whereas litigation (including appealing to a court of appeals and the Supreme Court) can take several years.

Arbitration is flexible. The parties may decide on the procedure among themselves (for example the law which is applied, the language, the timetable, the number of briefs). Usually, the parties have agreed that certain rules are applied to the procedure (in Finland, usually, the Arbitration Rules of the Finland Chamber of Commerce).

In arbitration, the arbitrator is a private “judge” selected by the parties. This means that the parties may select arbitrators who are experts in the field of the dispute in question - even abroad. The number of arbitrators is usually one or three.

One of the advantages of arbitration and arbitral award is that they are non-public. The non-publicity may be vitally important to a company, for example due to trade secrets and the company’s image.

In international matters, the strong international enforceability of an arbitral award is a significant advantage compared to national court decisions.