When trade dispute occurs, which is the better choice between arbitration and litigation?

Since the outbreak of the COVID-19, the world has entered a state of emergency. As of April 20, there were over 2.39 million confirmed cases worldwide. The long-lasting, large-scale and harmful virus disaster quickly consumed the stock of medical supplies in various countries, which makes medical supplies in great demand. Many countries now are searching for the importer. The lack of communication when importing can easily lead to disputes. In this situation, litigation or arbitration is unavoidable. So which is the best way to protect rights?

Litigation is the way in which courts exercise jurisdiction on behalf of the state. It is also a way to resolve disputes through the judiciary. One party filed a lawsuit in the court, the other party involved has to respond after the court accepted the case. Therefore, the lawsuit is more formal, strict, and mandatory, which has a certain deterrent effect on disputes that cannot be well communicated and resolved.

One of the major advantages of litigation is its standardized and rigorous second instance and final judgment system. If the parties have objections to the judgment of the first instance, they can appeal to the upper court for trial. The method of appeal and retrial gives both more opportunities to communicate with each other.

Compared with litigation, arbitration is more “free”. Both parties are voluntary and have the autonomy. Not only can they independently choose the arbitration institution, arbitrators, arbitration venue, language, but also can choose the arbitration method and applicable law. This system makes the process of protecting rights more flexible. And it is also more friendly to foreign companies and businesses that want to resolve disputes. The parties are more likely to further negotiate in the harmonious arbitration atmosphere, and finally reach in “win-win”.

Arbitration is not only “free”, but also can greatly reduce the cost of time and money invested. especially for the parties who file commercial arbitration, time is very precious. The commercial arbitration award shall be final and binding. Once an award is made, it is in legal effect immediately.  In this way, disputes between the parties can be resolved in the shortest time. And the utilization rate of funds can be increased.

In addition, another advantage of arbitration is its confidentiality. Litigation procedures are generally conducted in public, and the process can be sit on by the public, and the judicial process and results can also be checked online. But the fact is that disputes between companies or individuals may be related to their credibility and image, which may not be willing to be exposured. The strong confidentiality of arbitration is its spiritual advantage, which is also one of the reasons why most businesses prefer to choose arbitration.

Back to the question, which is the benefit one between arbitration and litigation?

As a matter of fact, there is no specific answer to this question. The process may involve costs, trade secrets, professional judgment, etc., which all depends on the needs of the enterprise. This process has often plagued many businesses, which brings time and financial inconvenience. So now, looking for HiGlobal to provide you with procurement services is the best choice. HiGlobal International Consulting now is devoted to studying the global value chain and high-quality supply chain. We not only guarantee quality certification for you, but also provide you with the lowest cost, highest efficiency, and safest medical supplies. HiGlobal helps you in product sourcing, price negotiation, factory audit, QC, legal support and after service. Making you more resilient in the global value chain and protect your business and family from beginning to end is what we are doing. Get in touch with us to start a profitable business NOW!