Litigation vs. Arbitration: What's Best for Your Business?

A Legal Background on Business Disputes

Business disputes are disagreements that arise in the context of a business transaction or relationship. These disputes may involve breach of contract, infringement of intellectual property, employment law violations, and other legal issues that arise in the course of conducting business.

When such disputes arise, parties may seek resolution through negotiation or mediation. However, if unsuccessful, the parties may need to turn to litigation and arbitration.

The Advantages of Resolving Disputes through Arbitration

One of the most significant advantages of arbitration is that disputes are typically resolved more quickly than in court. In addition, the arbitration process is typically more flexible.

Arbitration proceedings are also confidential in nature and are not part of the public record. As such, the outcome of the arbitration proceedings is confidential. This is particularly important for companies who wish to avoid the possibility of any damage to its reputation, or if the trade of the business are highly sensitive in nature.

Arbitration awards are typically final and binding, with limited rights of appeal. This provides a conclusive resolution to a dispute and reduce the risk of protracted litigation where a party is entitled to appeal against an unsatisfactory outcome. As a result, parties may save time, money, and resources while still achieving a fair and satisfactory resolution to their dispute.

Arbitration awards are also enforceable by registering the same in the relevant courts depending on the laws of the country.

The Advantages of Resolving Disputes through Litigation

On the flip side, a party’s entitlement to appeal against an outcome may also be an advantage in litigation. This is especially so if an outcome is unsatisfactory.

Documents filed in court proceedings may form part of the public record, and on certain occasions, there may be published decisions by the Court in relation to your dispute. As such, the parties are held publicly accountable for their actions and this may be a deterrent factor for future litigation.

Having published decisions also develops the laws in Singapore and would serve as a precedent for similar disputes in the future, and parties in the future may be able to avoid litigation if there had been a similar dispute and a decision on the same.

Unlike arbitration, court orders and judgments are enforceable without the need to apply for the same to be registered.

Factors to Consider in Choosing Litigation or Arbitration

When deciding whether to opt for litigation or arbitration, confidentiality is one of the key factors to be considered. The fact that the parties have greater autonomy in arbitration – such as the appointment of an arbitrator is also a relevant factor. Parties may prefer an arbitrator who has the necessary expertise and experience in the same trade.

Tailored Dispute Resolution Solutions: Michael Por Law Corporation's Legal Services

Michael Por Law Corporation ("MPLC") is a Singapore-based boutique dispute resolution and corporate law firm founded by our Managing Director, Michael Por. Their lawyers in Singapore have considerable experience in a wide variety of litigation and arbitration work, particularly in construction law, as well as in commercial disputes.

It is crucial to seek legal advice when choosing between litigation and arbitration, as choosing the wrong method can lead to wasted time and money. Let Michael Por Law Corporation assist you by reaching out here.