Arbitration offers several advantages over litigation.
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Typically, it is less expensive than litigation, since fewer legal professionals are required. It is also perceived to lead to a speedier resolution of disputes due to decreased formality, the removal of the need to schedule around the timetable of the formal court system, and, typically, the absence of a right of appeal (Schmitthoff, 2007). Arbitration allows the parties to control a number of variables in the dispute resolution process through prior agreement (Mustill & Boyd, 2008). These include the choice of an arbitrator with specialist knowledge of the relevant area, the scope of the arbitration, the location of arbitration and the choice of law. In addition, arbitration is a private rather than public procedure and therefore will not be subject to public record: this is likely to be advantageous if the subject matter is particularly damaging to public image of company. By contrast, many of these same factors may prove disadvantageous to the parties in a different factual scenario. The lack of a right to appeal may become a disadvantage if the arbitrator makes an error of fact, or the arbitrator appointed is not as impartial as the parties would wish. In addition, arbitration is disadvantageous because it lacks formal mechanisms for the enforcement of arbitral awards or attendance at the arbitration, and cannot compel third parties to attend. Litigation offers potential advantages over arbitration. It is, in principle, totally impartial as to the outcome of the case. It determines cases according to a fixed substantive law without reference to the general principles of fairness that an arbitrator might refer to (Moses, 2008). It also provides for an appeal procedure, should that be perceived as an advantage. In addition, there are fewer variables for the parties to control or anticipate in advance of the dispute arising, and litigation is supported by formal enforcement mechanisms, including contempt of court and proprietary remedies. By contrast, judges may not be specialists in the given dispute area, which my be deemed more important than their appearance of impartiality to the litigation process. Formal litigation is associated with delays, inflexible timetabling and higher costs, although it should be noted that the costs of any given dispute resolution mechanism are dependent on the facts of the case (particularly its complexity, length and the number of legal professionals employed). It is also important to discuss the possible limitations that domestic laws may place on the nature of the arbitration,
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