Editorials: 2025 Vol: 28 Issue: 3
DISPUTE RESOLUTION IN BUSINESS: ARBITRATION VS. LITIGATION EXPLAINED
Linda Sudiono, East China University of Political Science and Law, China
Decentralized Finance (DeFi) has emerged as a disruptive force in the global financial ecosystem, challenging traditional centralized institutions with promises of transparency, autonomy, and inclusivity. However, its rapid growth has triggered intense regulatory scrutiny, raising questions about consumer protection, financial stability, and systemic risk. This article explores the core principles of DeFi, contrasts them with centralized financial systems, and examines the evolving regulatory landscape. It highlights the challenges regulators face in balancing innovation with oversight and considers potential frameworks for harmonizing decentralized technologies with centralized governance.
INTRODUCTION
In the dynamic world of business, conflicts are bound to arise. Whether it's a breach of contract, a disagreement between partners, or a dispute over intellectual property, resolving these issues efficiently is crucial. Two primary avenues for dispute resolution are arbitration and litigation. While both aim to deliver justice, they differ significantly in process, cost, speed, and confidentiality.
Litigation is the traditional method of resolving disputes through the court system. It involves filing a lawsuit, presenting evidence, and arguing the case before a judge (and sometimes a jury). The outcome is legally binding and subject to appeal. Litigation is ideal when a party seeks a precedent-setting decision or wants the dispute to be publicly acknowledged. However, the adversarial nature and prolonged timelines can strain business relationships and resources.
Arbitration is a form of alternative dispute resolution (ADR) where parties agree to resolve their conflict outside of court, typically through a private tribunal. An arbitrator or panel hears both sides and issues a binding decision.
Arbitration is commonly used in international business, construction, and employment contracts. It offers a streamlined process and preserves confidentiality, which is often critical for corporate reputation and sensitive information.
When deciding between arbitration and litigation, businesses should consider: Is it technical or legal? Arbitration may be better for industry-specific issues.
Arbitration can preserve relationships due to its less adversarial nature. International contracts often favor arbitration due to enforceability under the New York Convention. Sensitive disputes may benefit from arbitration’s privacy. Many contracts include dispute resolution clauses that specify arbitration or litigation in advance. Businesses should carefully draft these clauses to reflect their strategic priorities.
CONCLUSION
Both arbitration and litigation have their place in business law. Arbitration offers speed, privacy, and flexibility, while litigation provides structure, transparency, and the possibility of appeal. The choice depends on the nature of the dispute, the relationship between parties, and the desired outcome. By understanding the strengths and limitations of each method, businesses can make informed decisions that protect their interests and foster long-term success.
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Received: 02-Jan -2025 Manuscript No. JLERI -25-15611; Editor assigned: 03-Jan -2025 Pre QC No. JLERI -25-15611(PQ); Reviewed: 17-Jan -2025 QC No. JLERI-25-15611; Revised: 21-Jan -2025 Manuscript No. JLERI-25-15611(R); Published: 28-Jun -2025