Differences Among Arbitration, Litigation and Mediation

  Although the existing arbitration system is legally determined by laws and has a stricter jurisdiction system, the characteristics that arbitration inherits from commercial autonomy has remained and are reflected in every aspect of arbitration. In practice, arbitration and litigation mainly differ in the following ways.

I. Scope for accepting cases

Arbitration focuses on disputes arising from commercial transactions. Civil disputes involving personal relationships such as marriage, adoption, guardianship, raising, and inheritance may not be accepted. Administrative disputes also do not fall within the scope of business for an arbitration institution.

II. The voluntary principle

When both parties use arbitration to resolve a dispute, they shall voluntarily have reached an agreement or have made relevant clauses clearly stated in the contract. At the same time, the arbitration agreement or clauses must clearly stipulate the arbitration institution, otherwise it will be considered invalid.

III. Trial personnel

The litigation case is heard by a judge appointed by the court, and both parties cannot choose a judge. In arbitration cases, both parties have the right to choose arbitrators within a certain scope, and the arbitrators themselves, who are probably lawyers, scholars, or industry experts, view things from a different angle from that of judges.

 IV. Procedures in trial

The arbitration system shall be made once and final, and there is no second or retrial as in the lawsuit. In practice, the arbitration institution is more flexible in procedures than the court.

Arbitration and mediation are both a voluntary way of resolving disputes based on the will of both parties. The differences between the two are mainly as below.

1. Mediation is more arbitrary. In the mediation process, if either party is unwilling to continue, mediation may be terminated at any time and the mediator cannot force the party to continue. In arbitration procedures, both parties shall not arbitrarily change or terminate the process unless they reach a settlement agreement or the applicant requests to withdraw the application. If the mediation fails, the arbitral tribunal will give the award according to laws.

2. Mediation is more flexible. In the mediation, the two parties can mutually understand each other and reach a mediation agreement by consensus, yet arbitration needs to be conducted in accordance with the procedures stipulated in the arbitration rules, and the award must be based on the facts and the laws.

3. The mediation agreement can only be made with the consent of both parties, and the arbitral award is made independently by the arbitral tribunal without the consent of both parties.