Legal practitioners often assist clients to review all kinds of contract documents, and one of the problems that can't be avoided in the review process is how to agree on the "contract dispute resolution method". Although some customers do not understand the difference between litigation and arbitration, they still subconsciously feel that arbitration is more lofty and in line with the high-end positioning of the enterprise. In fact, it is precisely because the arbitration mechanism is not well understood, sometimes the choice of arbitration as a contract dispute resolution method has affected the protection of their own rights and interests, which is regrettable. Therefore, this paper will focus on the characteristics of litigation and arbitration analysis, and then provide a reference for the choice of enterprise dispute resolution methods.

1. Confidentiality comparison between litigation and arbitration

It is not difficult to see from the above table that both the trial and the final judgment of litigation are open to the public as the norm, while arbitration has a high confidentiality, in addition to the parties, it is difficult for the outside world to understand the situation of the parties and the arbitration results. For many enterprises or individuals, the exposure of litigation information (especially as a defendant) often has a negative impact on the reputation of enterprises or individuals, and then affects the subsequent cooperation between enterprises and other entities, such as bank loans, equity financing, business cooperation and so on. Therefore, when it comes to some contracts with high confidentiality requirements and which are prone to breach by the party, the advantages of arbitration are obvious.

2. Comparison of trial efficiency between litigation and arbitration

It is not difficult to see that a complete litigation process is like running a marathon, consuming a lot of time and energy, even if the final victory of the judgment may not have much meaning. Compared with the lengthy and tedious litigation, arbitration is a final decision, and generally it will be shorter than the litigation and go through the whole procedure, which can accelerate the "end of disputes" to a certain extent, with higher efficiency.

It should be reminded that although the final arbitration saves time and trouble, the ruling means that it is difficult to have a way to overturn. If the parties are not satisfied with the arbitration result and believe that the arbitrator is biased against the other side or has not ascertained the facts, they can only apply to the court for cancellation. However, according to the Arbitration Law and other relevant provisions, the court generally mainly reviews whether there is a problem in the arbitration procedure, and usually does not review the entity content, so it is very difficult to revoke the award that the entity content is wrong, and the remedies are very limited. Fu Zhenghua, the current Minister of Justice, said publicly at the 2019 National Arbitration Work Conference: "By the end of 2018, 255 arbitration commissions had been set up across the country, and the proportion of awards made in recent years that have been revoked or not enforced by the people's courts has always been less than 1%."

Therefore, if the party wishes to delay the trial time and procedure of the case, and expects that there may be a large dispute due to the performance of the contract, it should carefully choose arbitration.

3. Comparison of property and evidence preservation in litigation and arbitration

    As far as legal knowledge is concerned, because the judges of the court have been dealing with the same kind of cases for a long time, they usually have a more detailed grasp of the punishment basis of such cases. However, we also need to see that some cases require experienced arbitrators to consider business facts, business regulations, trading practices, etc., which will form a certain degree of difference from the judge in fact determination, and then have a significant impact on the final award/judgment result. Some cases due to their special nature or involve a large amount of money, if the agreed court litigation, will be subject to the level of jurisdiction and territorial jurisdiction, the actual trial of the judge may not have the corresponding business knowledge, it is difficult to make a satisfactory judgment. Different from court decisions, some arbitrators in arbitration institutions with professional legal knowledge and strong industry authority can sometimes balance the interests of all parties and make the parties more convincing.

    However, it should be pointed out that only in the case of understanding or familiarity with the agreed arbitration institution and its arbitrators, this will become an advantage for the enterprise to choose arbitration, otherwise it may be used by the other side of the contract.

4. Professional comparison between litigation and arbitration

    As far as legal knowledge is concerned, because the judges of the court have been dealing with the same kind of cases for a long time, they usually have a more detailed grasp of the punishment basis of such cases. However, we also need to see that some cases require experienced arbitrators to consider business facts, business regulations, trading practices, etc., which will form a certain degree of difference from the judge in fact determination, and then have a significant impact on the final award/judgment result. Some cases due to their special nature or involve a large amount of money, if the agreed court litigation, will be subject to the level of jurisdiction and territorial jurisdiction, the actual trial of the judge may not have the corresponding business knowledge, it is difficult to make a satisfactory judgment. Different from court decisions, some arbitrators in arbitration institutions with professional legal knowledge and strong industry authority can sometimes balance the interests of all parties and make the parties more convincing.

   However, it should be pointed out that only in the case of understanding or familiarity with the agreed arbitration institution and its arbitrators, this will become an advantage for the enterprise to choose arbitration, otherwise it may be used by the other side of the contract.

5. Comparison of the validity of litigation and arbitration

    From a practical point of view, if the contract has foreign-related factors, then the dispute resolution method will generally recommend arbitration, which is mainly considered from the enforceability of the judgment result. The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), to which my country is a party, has 156 States parties. The main purpose of the Convention is the recognition and enforcement of foreign arbitral awards in this country. For domestic customers, an effective arbitration award document can be more effectively and conveniently recognized and enforced by foreign courts, which is difficult to achieve in court judgment documents.

6. Comparison of fees between litigation and arbitration

    By comparing the amount of litigation cost and arbitration fee in the table above, it is not difficult to see that the amount of arbitration fee is much higher than the litigation cost. It should also be noted that according to the current provisions, after filing a lawsuit to the court, as long as the two parties settle the case or withdraw the lawsuit before the judgment is made, you can refund half of the litigation fees paid in advance, and if the arbitration has been opened, it is not refundable. Taking into account the objective situation that many enterprises' demand for capital flow is always "not satisfied", if the method of "war and peace" is adopted, that is, only by resorting to law to exert pressure on the other side and then withdraw the lawsuit or mediation, reconciliation, litigation can also reduce the operating costs of enterprises. Although the cost of dispute resolution is not the most important concern when signing a contract, it needs to be properly considered.

    For enterprises and their legal personnel, only on the basis of understanding the respective characteristics of litigation and arbitration, comprehensive consideration should be given to the confidentiality of the facts of the case and the degree of social impact, the time and cost that enterprises are willing to pay for this, whether the case may involve security, whether the case has strong professionalism, whether there are foreign-related factors in the case, and the size of the subject matter of the case. In order to make a reasonable decision on the choice of dispute resolution method.