Litigation vs Arbitration – what’s the difference?

Litigation and arbitration are two distinct methods of resolving civil and commercial disputes, each with unique characteristics and implications. While both aim to provide enforceable outcomes, they differ significantly in their processes and advantages. Below is a straightforward breakdown of how they differ, and when one may be preferable over the other.

What is Litigation?

Litigation is conducted within the public court system, overseen by state-appointed judges, and governed by fixed procedural rules such as the Civil Procedure Rules (CPR) in England and Wales. It is a public process, meaning hearings and judgments are accessible, creating case law and public records. Fixed court fees are paid when issuing a claim and during the course of the claim, depending on the remedy sought and the amounts involved. Litigants have no choice on the judge dealing with the dispute and, whilst there are some specialist lists, and different divisions in the High Court, it is not unusual, especially in the county courts, for a judge not to be a specialist in the subject matter of the particular dispute.

Litigation is well-suited to:

• Complex commercial disputes where judicial precedent is helpful
• Situations requiring interim court powers (e.g., freezing injunctions)
• Cases involving insolvency, fraud, or urgent relief

However, litigation can be slow and more open to scrutiny, which some businesses may wish to avoid.

What is Arbitration?

Arbitration, on the other hand, is a private form of dispute resolution, typically based on mutual agreement between parties, subject to the rules in the Arbitration Act 1996, often through an arbitration clause in a contract. It is conducted by an appointed arbitral tribunal (an arbitrator or a panel depending on the circumstances), which acts in a quasi-judicial manner. Unlike litigation, arbitration proceedings are private, ensuring confidentiality and protecting sensitive information.

Arbitral awards are final, binding, and enforceable, with limited rights of appeal.

Arbitration offers flexibility in terms of procedure, location, and the choice of arbitrators with specific expertise in the relevant field. It is often preferred in international transactions and disputes to ensure neutrality and avoid local courts with which one party may have a particular connection or knowledge of specific pactices, as well as for its global enforceability under treaties like the New York Convention. It is possible for instance, to hold an arbitration in London to determine a dispute governed by say French law. However, arbitration can sometimes be more expensive than litigation due to costs such as arbitrator fees and venue expenses.

Arbitrators are often barristers appointed to the King’s Counsel (“KCs”). Unlike litigation where fixed court fees are paid, arbitrators typically charge on an hourly or daily rate or a fixed fee based upon an estimated time charge. Arbitrator fees for a straightforward claim can range from £500 to £15,000+ VAT per party. For a £1 million ICC (International Chamber of Commerce) dispute, arbitrator fees can be around £60,000 (one arbitrator) or more. This is well in excess of court fee of around £11,334 for a litigated dispute of the same value.  

Arbitration is often the preferred choice for:

 • Cross-border contracts and international transactions

 • Parties who require privacy

• Parties who require sector-specific expertise

• Disputes where enforceability in foreign jurisdictions is key

The trade-off is that arbitration can be costly, and with limited appeal rights it means errors of law are harder to correct.

Key differences at a glance

So which is “better”?

There is no universal answer – it depends on the dispute.

Examples:

• A multi-jurisdictional energy supply dispute with counterparties in different countries will often favour arbitration, due to confidentiality, enforceability, and specialist tribunals.

• A contractual dispute requiring urgent injunctions or setting a legal precedent may lean toward litigation, where the courts have stronger coercive powers.

In many commercial contracts, parties specify arbitration clauses pre-emptively, deciding the forum (and choice of law) before any dispute arises. Where no such clause exists, litigation is usually the default.

In summary, while litigation provides a structured, public process with established rules and judicial oversight, arbitration offers a private, flexible, and potentially faster alternative, particularly suited for international and technical disputes. The choice (assuming there is no binding contractual arbitration clause) between the two depends on the specific needs and priorities of the parties involved.

At Collins Benson Goldhill LLP, our disputes team advises clients across high-value civil and commercial disputes, both domestically and internationally. We help clients evaluate the most effective route, whether through the courts, arbitration, or a hybrid strategy including negotiation or mediation, with a focus on commercial outcomes rather than conflict for conflict’s sake.

Key Contacts

For more information about how we can help you in relation to disputes or costs recoverable in civil litigation please contact Mark Brassey on 020 7462 6027 or Jessica Fitzgerald on 07917891164.