Arbitration vs. Litigation  4 Differences

 ■ Jurisdictions

Litigation is compulsory jurisdiction by law and arbitration is governed by agreement. On the premise that both parties mutually agree to settle the dispute, there is no restriction of hierarchical jurisdiction or territorial jurisdiction and administrative intervention and local protectionism are avoided. Once the parties choose arbitration for settlement, the court has no jurisdiction.

 ■ Organizational settings

Courts in our country have set up four-level courts. The two-instance final system is implemented. Any party who is dissatisfied with the judgment of the first instance may appeal in accordance with the law. Arbitration agencies are not set up level by level according to administrative divisions and there is no relationship of subordination with each other. The system of final ruling shall be implemented and an award shall come into force once it is made. The party concerned may apply for arbitration or file a lawsuit with the people's court for the same dispute again, and the arbitration commission and the people's court shall not accept it.

 ■ Whether Public or not

Litigation cases shall be heard in public, with non-public as the exception, and the principle of "promoting justice by public" shall be upheld; arbitration cases shall be heard in public, with public as the exception, and except where the public hearing agreed by the parties on autonomy of will is respected, cases shall not be heard in public, which better reflects the principle of confidentiality, and protects the trade secrets of the parties.

 ▪ Enforcement

Enforcement of a court decision outside the country where the judgment is made generally requires a mutual legal assistance treaty between the country where the judgment is made and the country where the judgment is enforced, or a principle of reciprocity recognized by both countries. Enforcement of an arbitral award outside the country is easier to recognize and enforce because 148 countries, including our own, have acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.