Comparison of Arbitration and Litigation

 

I. Different basis for jurisdiction

 

Arbitration

Arbitration is subject to agreement. The arbitration institution or arbitrator cannot accept and hear the case before an arbitration agreement is entered into by the parties involved. Arbitration institutions or arbitrators can be arbitrarily selected by the parties involved without considering regions or levels. In many countries, including China, the parties involved can arbitrarily choose arbitration institutions or arbitrators of other provinces or foreign countries to hear cases.

 

Litigation

The establishment of jurisdiction of the litigation is not based on whether the parties involved are willing to do so but is subject to the principles of regional jurisdiction and level jurisdiction. The parties involved cannot arbitrarily choose the court.

 

II. Autonomy in choose

 

Arbitration

Arbitration institutions, arbitration rules and arbitrators shall be selected by the parties involved themselves. After a dispute arises, whether to submit it to arbitration, to whom it is submitted, how the arbitral tribunal members are selected and what procedural rules and substantive laws are applicable to the arbitration are determined on a voluntary basis and negotiated by the parties involved, which fully reflects the autonomy of parties.

 

Litigation

The litigant has no right to choose the court, the applicable law on which the dispute is resolved, the litigation procedure and the trial organization or personnel.

 

III. The flexibility of the trial

 

Arbitration

Arbitration is not subject to region or level. It is possible to choose any place as long as the parties involved reach a consensus. The procedure of arbitration is also very simple, the parties involved can also customize the procedures; and the documents and various procedures are very simple as well, which can maximumly provide convenience for the parties involved and save a lot of energy, material resources and financial resources of the parties involved.

 

Litigation

Litigation is subject to strict region and level rules. The litigant has no right to customize the procedure and the case must be heard in strict accordance with procedures.

 

IV. Independence of trial

 

Arbitration

The relationship between the arbitration institution and the arbitral tribunal is serving and being served. The arbitrators are more independent, and their personnel and finances are not bound by the arbitration institution. Arbitrations are conducted independently and arbitration cases are subject to less intervention.

 

Litigation

The litigation system is characterized by that the superior supervises and manages the lower level. The trial organizations and judges at all levels are not independent in terms of personnel and finance.

 

V. Efficiency of trial

 

Arbitration

The arbitration award shall be final and binding. In principle, the case shall be closed within three months, the financial arbitration case shall be closed within two months and the quick-resolved arbitration case shall be closed within one month.

 

Litigation

The system of the court of second instance being the court of last instance is implemented for the litigation. The trial period can be extended to one year to two years.

 

VI. Different specialization degree of the trial personnel

 

Arbitration

Arbitration cases often involve complex legal, economic, trade and technical issues, and arbitrators are mostly composed of experts and scholars from all walks of life. Hangzhou Arbitration Commission has 523 arbitrators from different fields and has established more than ten professional arbitrator teams in finance, construction projects, real estate transactions and traffic accidents and so on. Professional arbitrators will form an arbitral tribunal to hear the case according to the nature of the case.

 

Litigation

In the litigation, a limited number of judges will hear various civil and commercial litigation cases.  

 

VII. Different levels of confidentiality

 

Arbitration

The arbitration case is based on the principle of non-public hearing, with the exception of public hearing, and the arbitration conclusions are not disclosed. The business secrets, trade activities and personal privacy of the parties involved will not be disclosed due to arbitration.

 

Litigation

The litigation case is based on the principle of public trial, with the exception of non-public trial, and the conclusion of the litigation is open to the public.

 

VIII. Economic consideration

 

Arbitration

The arbitration is subject to a final decision. The parties involved only need to pay once and the case is closed once. The quickness in time makes the cost of arbitration relatively small. In addition, the voluntary and confidential nature of arbitration makes that there is usually no fierce confrontation between the parties involved. There is also no need to make trade secrets public, and so there is little impact on future business opportunities between the parties involved.

 

Litigation

Litigation cases often have to go through the second instance. The costs of litigation and legal fees must be paid in the trail of the first and second instance.

 

IX. Effect of conclusion

 

Arbitration

Conclusions of both mediation result and arbitration result are guaranteed by the state's coercive power and have the same legal effect as the court judgment.

 

Litigation

The conclusion effect of the litigation is consistent with that of arbitration mediation and arbitral award.

 

X. Execution power of conclusion

 

Arbitration

China’s arbitration cases are generally accepted and implemented in 160 countries and regions around the world according to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, facilitating the parties involved to redeem their rights abroad.

 

Litigation

Litigation cases are subject to national sovereignty, and their conclusions cannot be accepted and enforced by other countries without special procedure of judicial assistance.

 

XI. Property preservation and enforcement

 

Arbitration

The property preservation and enforcement of arbitration cases shall be implemented by the state's mandatory force, and they are uniformly implemented by the intermediate people's courts.

 

Litigation

However, the property preservation and enforcement in litigation is mostly enforced by primary-level courts.

 

 

XII. Difference in the delivery method

 

Arbitration

Announcement delivery is canceled for financial arbitration cases, which greatly shortened the time limit for trials and improved the efficiency of handling cases and execution.

 

Litigation

Announcement delivery is one of the main delivery methods for litigation.