Dispute Resolution
Court Litigation or Arbitration? A Strategic Guide for Business Leaders
Is your company facing a commercial dispute? We compare the courts with arbitration and explain when an independent Second Opinion can determine the outcome.
Court litigation or arbitration (SCC) – four key differences
For owner-led companies, a commercial dispute is not merely a legal matter. It ties up capital, diverts focus from the core business and may affect the company's reputation. The differences between the two forums can be summarised in four points:
- 1.Publicity and confidentiality. In the district court, the statement of claim, evidence and judgment are, as a rule, public documents. Unlike court proceedings, arbitration is not open to the public. However, under Swedish case law (NJA 2000 p. 538), resolving a dispute by arbitration does not in itself impose a general duty of confidentiality between the parties. The parties should therefore include an express confidentiality provision in the arbitration clause to ensure full confidentiality.
- 2.Duration. Court proceedings often take 12–24 months at first instance, plus time for any appeal. Arbitration is normally concluded within 6–12 months, or 3–6 months under expedited rules.
- 3.Appeal. A district court judgment may be appealed on the merits, provided the Court of Appeal grants leave to appeal. An arbitral award, by contrast, is final on the merits and may only be challenged by an action to set aside or declare it invalid on grounds of procedural irregularity under the Swedish Arbitration Act (LSF).
- 4.Cost structure. In the general courts the state pays the judges' salaries, but lengthy proceedings drive up legal fees. In arbitration the parties themselves bear the fees of the tribunal and the institution.
When to litigate – and when to settle?
Before a company files a claim or commences arbitration, three parameters must be weighed against each other:
- The evidence. Is there written documentation supporting your interpretation of the contract and the loss suffered?
- The counterparty's ability to pay. Are there assets against which a judgment can be enforced?
- The opportunity cost. What will the proceedings cost in management time and focus?
The value of an independent Second Opinion
When a company faces a threatened dispute – or finds itself in proceedings that have stalled – it is easy to remain on a familiar course. Through Martiq's Second Opinion model, we offer business leaders and boards a swift, independent review of the matter. We examine the contractual documentation, the evidence and the procedural risks, and deliver a concrete recommendation: pursue the proceedings, change negotiating strategy or close the matter through a commercial settlement.
Read more about how we work or contact us for an initial assessment.