It was held in Vide Murry Exportation v. Khaitan and Sons, 1956 that, the process of litigation and arbitration are both commonly the methods of resolving disputes, one inside a Court of law while through a private tribunal in the other . Litigation is regarded as the most conventional, and formal procedure of resolution of dispute. Litigation is based on the adversarial system, used in our country (a feature of common law countries) where two parties are pitted against one another, and only one side will prevail. A legal professional is used by the parties to represent them. The case is presented in the Court, where the parties make their agreements, witnesses are examined and their statements recorded, and evidence (documentary) is perused. Rules of evidence as per the statutes are followed in a strict manner. Finally, the Judge makes a conclusion of the matter by announcing a decision, taking into consideration the various laws applicable. That decision is subject appeal in the higher courts. In the process of litigation, parties to the dispute have almost no voice regarding choice of adjudicators and become mere spectators to the process.
The complete procedure of litigation generally involves a lot of expense. Litigation has to end in a win and lose situation and possibility of compromise is very less, thus causing serious concern, anxiety and stressful atmosphere. Though our judicial system is widely respected, but long delays in providing justice is a sad truth. There are a lot of formal procedures to be followed in the process of litigation.
'Arbitration' is a private procedure that initiates under an agreement by both the parties and hence a private procedure. The process of arbitration is less formal, very simple steps are to be followed and is a flexible process. Arbitration does not require adherence to the formal and strict regulations of evidence. Usually, the disputed parties are free to select their arbitrators. These arbitrators or adjudicators are selected on the basis of their knowledge and expertise in the matter of dispute.
The process of arbitration is less expensive and is generally speedy as it does not involve lengthy formal procedures. The adjudicator after listening to both the parties and going through the evidence concludes the proceeding by way of award.
From the discussion in the above paragraphs some basic features which can be noticed to distinguish the process of arbitration from that of a courtroom litigation which makes Arbitration more feasible:
Litigation is a process followed in the courts which are under the administration of the state. It is a process in which is manifested by the state to resolve the disputes between the parties. The judges are appointed by the state. While in arbitration the parties can consult an arbitration tribunal on their own.
The process of Litigation is generally expensive than Arbitration.
The process of Arbitration does not get stuck in formal procedures to be followed and therefore is able to avoid delays.