One major difference between litigation and arbitration is that the rules that govern the procedures in court are enacted by government and are set consistently based on the jurisdiction of the court. Arbitration, on the other hand, has rules that are agreed upon by the involved parties upon entering into the contract. My understanding of this is that disputes of similar facts and circumstances that occur in the same jurisdiction will be litigated the same way (procedure wise) every time in court. This is not the case for arbitration as the procedures in which the dispute will be handled will depend on the procedures that were agreed upon by the parties when they entered into the contract.

Another major difference is that the arbitration ruling is final and binding, where as in court, a ruling can be appealed to higher court for various reasons. I think this is a big reason why many large companies prefer arbitration for dispute resolution. Court appeals are time consuming, costly, and can draw negative media attention which is bad for business.

Do you agree or disagree? Why or why not?