Arbitration vs Adjudication: Difference and Comparison

Arbitration and Adjudication apply to two methods for resolving disputes between the parties. They are similar resolution methods for disputes; however, these helpful procedures in both cases differ. The required process between Arbitration and Adjudication is determined based on monetary factors.

Key Takeaways

  1. Arbitration is a private, consensual process for resolving disputes, whereas adjudication is a formal, legally binding decision by an independent third party.
  2. Arbitrators are chosen by the parties involved, whereas an external authority appoints adjudicators.
  3. Arbitration decisions are final and binding, while adjudication decisions can be appealed to a higher authority.
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Arbitration vs Adjudication

Arbitration is a form of alternative dispute resolution where a neutral third party resolves an issue between two or more parties outside of court. Adjudication is another alternative dispute resolution form which involves resolving a problem between two parties by a judge through the formal and legal processes and reaching a decision.

Comparison Table

Parameter of comparisonArbitrationAdjudication
DefinitionIt is a form of ADR and a dispute process, where the court is not involved.The court’s involvement makes a final judgment event in a dispute resolution process.
DecisionBoth parties must bind the decision, but it must be made with the mutual consent of both parties.The decision is made by the court and binding to both parties.
NatureThe nature of the process is voluntary, where the consent of both parties is taken.The nature of Adjudication is compulsory, where consent of both parties is not the concern.
ConfidentialityThe proceeding type is private, and no third party is involved in the case.It is a public proceeding, which means any person can view the process.
CostsIt demands lower expenses compared to Adjudication.It involves many things that are the reason it is costly.

What is Arbitration?

Arbitration is a method of settling any dispute where an independent third party gets involved in the parties, and because of that, the third party has the decision-making power about the raised situation. Both parties are binding to accept the decision taken by the third party.

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By choosing the arbitration process, both parties agreed not to take the complaint to the court of Law. In most cases, this process is preferred to settle any contract-related dispute.

The main principle of the Arbitration procedure is that it is consensual and neutral. In the process, conflicts can be settled only when both parties agree on something. For future purposes, usually, both parties add some clause in the contract.

In Arbitration, none of the parties enjoys any home court. Both parties choose the Law, language, and venue of everything selected by both parties.

The Arbitrator pays attention to both sides, every detail by both parties, and the evidence and the decision depend on these. The decision always taken by the Arbitrator is known as the award, and both parties are legally bound to it.

arbitration

What is Adjudication?

Adjunction is a court-based dispute resolution method carefully governed by the provisions and laws. The judgment given in the procedure is considered a decision that both parties are bound to.

It is a process involving a court hearing, which comes just after notice and the evidence related to the case. It can be referred to as the process of settling down a dispute with the help of a legal claim or the involvement of a court of Law.

Adjudication also presents the final judgment about any case and helps to determine the last course of action. In this process, the court’s judge gets involved and resolves the issue between the two parties.

The hearing process of Adjudication is somewhat similar to the hearing process of Arbitration. Both parties come under the involvement of rights and obligations. As a result, the hearing process includes money or any nonviolent infraction.

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The process of adjudication results in a legally binding judgment. The legal process is different from any other court case that is evidence-based. Adjudication is a form of settling down any dispute that arises between two individual parties.

Main Differences Between Arbitration and Adjudication

  • The person who decides in the case of Arbitration is known as the Arbitrator, whereas the authority that decides Adjudication is called the judge.
  • Constitution plays a more significant role in Adjudication, which is not mandatory for the Arbitration process.
  • The decision made in Arbitration is binding on the parties, but it is made on mutual consent. Contradictorily, in Adjudication, the decision is binding on both parties.
  • Both parties choose the place of suing in the case of Arbitration, whereas, in Adjudication, the site is decided only by the court.
  • The proceeding is voluntary in Arbitration, whereas the proceeding is compulsory in Adjudication.
  • The arbitration process can resolve a dispute in less time, whereas Adjudication is lengthy.
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References
  1. https://journals.sagepub.com/doi/pdf/10.1177/1365712720943333
  2. https://cadmus.eui.eu/bitstream/handle/1814/67990/LAW_2020_10.pdf?sequence=1&isALlowed=y 
  3. https://academic.oup.com/jiel/article-pdf/24/1/157/38841017/jgab001.pdf

Last Updated : 14 October, 2023

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