What is Arbitration

Arbitration is a form of alternative dispute resolution in which the two parties agree not to take their dispute to court, but instead to resolve the dispute by hiring an arbitrator to hear both sides. Arbitration is used in labor disputes, business and consumer disputes, and family law matters. Arbitration as a process is very different from the process of litigation (trying cases in court), for business disputes. Most people are probably familiar with the litigation process, but they may not be familiar with arbitration.

Differences Between Arbitration and Litigation

Litigation is a very old process that involves determining issues through a court. In this case, we're talking about civil litigation - disputes between two parties (as opposed to criminal litigation, which involves the state against a law-breaker).

Arbitration, on the other hand, involves two parties in a dispute who agree to work with a neutral third party in an attempt to resolve the dispute. In arbitration, there may be one or more arbitrators who hear both sides of the issue and who make a decision.

Here are some differences between litigation and arbitration:

Public/Private, Formality

The arbitration process is private, between the two parties and informal, while litigation is a formal process conducted in a public courtroom.

Speed of Process

The arbitration process is fairly quick. Once an arbitrator is selected, the case can be heard immediately. In a civil litigation, on the other hand, a case must wait until the court has time to hear it; this can mean many months, even years, before the case is heard.

Cost of the Process

The costs for the arbitration process are limited to the fee of the arbitrator (depending on the size of the claim, expertise of the arbitrator and expenses) plus attorney fees.

Costs for litigation include attorney fees and court costs, which can be very high.

Selection of Arbitrator

The parties in the arbitration process decide jointly on the arbitrator; in a litigation, the judge is appointed and the parties have no say in the selection. Arbitration rules enables parties to choose the persons who will resolve their dispute in the light of their particular characteristics and specialisation. Thus, as arbitrators may be appointed, besides lawyers, persons of various professional backgrounds, such as engineers, economists, doctors, etc.

Use of Attorneys

Attorneys may represent the parties in an arbitration, but their role is limited; in civil litigation, attorneys spend much time gathering evidence, making motions, and presenting their cases; attorney costs in a litigation can be very high.

Evidence Allowed

In arbitration there is a limited evidence process, and the arbitrator controls what evidence is allowed, while litigation requires full disclosure of evidence to both parties. The rules of evidence do not apply in arbitration, so there are no subpoenas and no interrogatories or depositions.

Availability of Appeal

In arbitration, the parties usually have no appeal option. However, an arbitration decision may be reviewed by a judge and may be vacated (removed), in whole or in part, on the grounds provided for in art. 897 of the Hellenic Code of Civil Procedure.

Litigation allows multiple appeals at various levels.

Arbitration clauses

Most contracts assume that any disagreements will be dealt with in the litigation process. The contract will list the jurisdiction in which the case is to be heard. Many contracts in 21st century have a mandatory arbitration clause, which states that all disputes must be handled by arbitration. In most of these contracts, litigation is specifically ruled out as a possibility. 

Arbitration has experienced great growth internationally over the past years with parties from different countries resolving disputes arising from international transactions. Regarding arbitrations conducted abroad, execution of a decision res judicata is ensured by the provisions of art. 903-906 of the Hellenic Code of Civil Procedure and the international conventions ratified by Greece, such as the 1958 New York Convention, Legislative decree 4220/61 and the Law 2735/1999 on International Commercial Arbitration.

In conclusion, arbitration ensures settlement of trade disputes fast with decisions announced within a very short time (usually takes 3 months approximately) after the hearing, at a fraction of the cost of litigation. The amount of the total fee for arbitrators and referees is calculated as a percentage of the value of the claim/dispute in accordance with the special table of the art. 882 of the Code of Civil Procedure.