SCC Arbitration Institute

SCC Guide: Difference between litigation, arbitration, and mediation

When a commercial or legal dispute arises, the method chosen to resolve it can significantly influence time, cost, enforceability, and ongoing business relationships. Whether you are negotiating an international contract, managing a dispute with a commercial partner, or seeking to enforce your rights, understanding your options is essential.

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This guide provides an overview of the three principal dispute resolution methods: litigation, arbitration, and mediation. Each has distinct features and may be suitable for different types of disputes. The guide also provides information on a unique method of dispute resolution, SCC Express.

At the SCC Arbitration Institute, we administer arbitration and mediation proceedings on an international and domestic level. We recognise, however, that different disputes call for different solutions. This guide aims to provide clear, practical information to support informed decision-making.

Overview: three paths to resolving disputes

When parties cannot resolve a dispute through negotiation, three principal methods are available:

Each differs in terms of formality, privacy, enforceability, and party control.

High-level comparison 

Aspect Litigation Arbitration Mediation
Decision-maker Judge (and possibly jury) appointed by the court Arbitrator(s) appointed by or for the parties Neutral mediator (facilitator only)
Outcome Binding judgment Binding award Non-binding, parties may agree on a contractually-binding settlement
Basis Court jurisdiction Party agreement, binding Party agreement, voluntary
Process Public and formal Private and flexible Confidential and informal
Control Court controls process Parties and arbitrators share control Parties control outcome
Finality Subject to appeal Very limited review Final if parties settle

How do you choose the right method? The answer depends on the nature of the dispute, confidentiality needs, enforceability requirements, time considerations and the relationship between the parties. No single method is universally preferable. 

Litigation: resolving disputes through the courts

What is litigation?

Litigation involves bringing a dispute before a national court. A judge determines the outcome according to applicable law and procedural rules. In some jurisdictions a jury may act as the fact finder, deciding what really happened in the case. 

The process typically includes written submissions, exchange of evidence, hearings and, where necessary, a trial. Courts serve a public function, resolving disputes and developing legal precedent to inform future decisions. 

Key characteristics of litigation

Public proceedings
Court hearings are generally open to the public and judgments are usually published. This promotes transparency but may expose sensitive information.

Formal procedures
Litigation follows established procedural and evidentiary rules. While designed to ensure fairness, these rules can make proceedings complex.

Right of appeal
Most legal systems provide one or more levels of appeal. This offers an additional safeguard but can prolong the process.

Enforcement through state mechanisms
Courts have strong enforcement powers within their jurisdiction. Cross-border enforcement, however, may depend on treaties or reciprocal arrangements.

Advantages of litigation

Potential drawbacks of litigation

When litigation may be appropriate

Litigation may be suitable where:

Arbitration: private dispute resolution with binding outcomes

What is arbitration?

Arbitration is a private dispute resolution process based on agreement. The parties agree to submit disputes to an arbitral tribunal comprised of one or more independent arbitrators, waiving their right to turn to the national courts.

The arbitral tribunal issues a binding arbitral award. 

Arbitration is rooted in party autonomy, procedural flexibility and finality.

Contractual basis

Arbitration requires an arbitration agreement, typically included in a contract. The agreement may specify:

Key characteristics of arbitration

Private proceedings
Arbitration hearings are not public. Many institutional rules contain provisions addressing confidentiality, although their nature and effect may be subject to the applicable rules and governing law.

Party autonomy
Parties may influence the composition of the tribunal and key procedural elements.

Final and binding award
Awards are final and binding, with only limited grounds for challenge.

International enforceability
Arbitral awards are widely enforceable under the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), adopted by more than 170 states.

Limited review
Courts generally cannot review the substantive questions of the arbitration. Challenges are confined to narrow procedural or jurisdictional grounds.

Types of arbitration

Institutional arbitration

Administered under established rules by an arbitral institution.

Founded in 1917, the SCC Arbitration Institute administers arbitrations under its own rules, providing procedural oversight, appointment services and administrative support.

Institutional arbitration offers a structured framework and administrative assistance throughout the proceedings.

Ad hoc arbitration

Conducted without institutional administration. Parties and arbitrators manage procedural matters directly, often under a national legal framework or established ad hoc rules such as those of the United Nations Commission on International Trade Law.

Ad hoc arbitration offers flexibility but requires parties to manage administrative and procedural matters themselves. 

Advantages of arbitration

Potential drawbacks of arbitration

When arbitration may be appropriate

Arbitration is often suitable where:

The SCC arbitration process

The SCC administers arbitration proceedings under the SCC Arbitration Rules. The process typically includes:

  1. Filing of a Request for Arbitration
  2. Constitution of the tribunal
  3. Written submissions
  4. Hearing (where required)
  5. Issuance of a reasoned award

The SCC provides administrative support and oversight to ensure efficiency and procedural integrity. Further information is available in the SCC Rules and guidance materials.

Mediation: collaborative problem-solving

What is mediation?

Mediation is a voluntary process in which a neutral third party assists disputing parties in reaching a negotiated settlement.

The mediator does not impose a decision. The parties retain control over whether, and on what terms, the dispute is resolved. 

In our SCC Spotlight Talk with Gert Nilsson Eldrimner, he points to a notable statistic: 92% of commercial mediations lead to an agreement, meaning only 8% will need to resort to litigation or arbitration. Moreover, in Sweden mediation costs on average 11% of the cost of litigation, and 7% of arbitration. 

Key characteristics of mediation

Voluntary and non-binding
Parties may withdraw at any time. A binding outcome arises only if the parties conclude a settlement agreement.

Flexible and informal
The process can be tailored to the dispute and the parties’ needs.

Confidential
Discussions in mediation are generally confidential and conducted on a without prejudice basis.

Party control
The outcome is determined by the parties themselves, allowing commercially practical solutions.

Advantages of mediation

Potential drawbacks of mediation

When mediation may be appropriate

Mediation may be particularly suitable where:

SCC mediation services

The SCC administers mediations under its Mediation Rules and assists parties in appointing experienced mediators. Mediation may be used as a standalone process or combined with arbitration through multi-tier dispute resolution clauses.

Side-by-side comparison

Feature Litigation Arbitration Mediation
Formality Highly formal Formal structure but flexible Informal and flexible
Privacy Generally public Private proceedings Confidential
Speed Can be lengthy Often more time-efficient Generally swift
Cost Can be high Varies with complexity Generally lower
Finality Subject to appeal Limited challenge Binding only if settled
Party control Limited Moderate to high High
Third-Party Neutral Judge assigned Parties may select arbitrator Mediator facilitates only
International enforcement May require additional procedures 170+ jurisdictions under the New York Convention Can be contractually binding; international framework under Singapore Convention
Compulsory powers Strong More limited None

SCC Express

SCC Express Dispute Assessment (SCC Express) offers a streamlined, timeefficient route to dispute resolution under the SCC framework, designed for parties who prioritise speed, proportionality, and pragmatic outcomes. 

What is SCC Express? 

SCC Express provides rapid access to SCC administered dispute resolution services, grounded in the same principles of neutrality, party autonomy, and institutional credibility that underpin SCC arbitration and mediation, but with a lighter, more flexible procedural structure. 

SCC Express offers a fast, fixed‑fee process, with a procedural timeline of three weeks, focused on the essentials only, with minimal submissions and a streamlined procedure, resulting in a non‑binding assessment by an independent neutral. The parties may agree to make the neutral’s assessment contractually binding. 

It has often been described as a “halfway house” between arbitration and mediation, a deliberately “quick and dirty” option for resolving disputes where parties want a structured process and neutral involvement, without the formality, time, or cost of full arbitration. 

SCC Express ensures the parties have sufficient certainty as well as flexibility in the process. 

How SCC Express fits among dispute resolution options 

When SCC Express is particularly suitable 

SCC Express may be a good fit where: 

Key Takeaways 

Making your choice: practical considerations

Selecting the appropriate method requires consideration of:

Nature of the dispute
Technical disputes may benefit from arbitration. Relationship-driven disputes may be well suited to mediation or SCC Express. Novel legal issues may favour litigation.

Relationship between the parties
Where ongoing cooperation is important, mediation or SCC Express may offer advantages.

Confidentiality
Arbitration, mediation and SCC Express provide greater privacy than court proceedings. 

International elements
Arbitration offers neutrality and strong cross-border enforceability.

Time and cost
Mediation is often the quickest and most cost-effective option. SCC Express provides speed with a more formalised procedure. Arbitration is typically faster than litigation, though complexity matters.

Enforceability
Arbitral awards benefit from the New York Convention framework. Court judgments may face greater hurdles internationally. Mediation and SCC Express are generally only contractually binding.

Industry practice
Standard dispute resolution clauses in certain sectors may influence the choice. 

Parties are encouraged to consider dispute resolution mechanisms at the contract drafting stage. 

Find the SCC’s dispute resolution clauses in a variety of languages here

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