Business in Dispute? What Options Do You Have?

Is your business in dispute? Here are your options

In any business, disputes can arise from a variety of situations concerning commercial transactions. Your business needs to be aware of the different forms of dispute resolution available.

The appropriate form of dispute resolution will depend on:

• The nature of the dispute; and
• The objectives of your business.

Whether you are facing a frivolous claim or legitimate commercial dispute, there are many dispute resolution methods available. We recommend you consider a variety of options relative to the objectives of your business. 

What do I need to consider before I decide on how to resolve my dispute?

Before deciding on a course of action, you must ensure that your business has not already agreed to a specific form of dispute resolution. (For example: you may have signed a contract with the other party which contained a dispute resolution clause stating the dispute must first be referred mediation).

On the assumption that there is no existing dispute resolution procedure in place, you need to consider:

• Do I wish to preserve the relationship with the disputing party?
• Do I want a binding outcome or to reach an informal agreement?
• How much am I prepared to spend in pursuit of settling this dispute?
• How much time am I prepared to spend in pursuit of my desired outcome?

It is important to plan out your objectives for the dispute resolution process so that when you decide on a course of action, you know what to expect. You don’t need to sit idly while a dispute drags on. Use different forms of dispute resolution to get the process moving in your favour.   

Self-resolution (Negotiation)

Self-resolution (also known as: Negotiation) involves a process where the disputing parties attempt to resolve the conflict between themselves. In many situations, disputing parties will require the assistance of lawyers to keep negotiations unemotive. A key advantage of involving lawyers throughout the process is that negotiations will remain centred on reaching agreement rather than focusing on assigning blame.

Negotiation is commonly used process to resolve a dispute without to having initiate court proceedings or the use of third party facilitators. Advantages of negotiation include:

• A less formal and flexible process
• Efficient form of communication for parties
• May preserve your relationship with the other party to the dispute.

If the value of the dispute is significant, we recommend the involvement of solicitors to ensure you have the correct understanding of your legal position throughout the negotiation process. 

Mediation

In some disputes, standard negotiation will not suffice. As such, parties may elect to enter mediation by involving an independent third party mediator to guide negotiations toward reaching an agreement. Mediation allows parties to focus on their mutual interests promoting solutions that may be of benefit to both parties.

Key advantages of mediation include:

• Less expensive than arbitration/litigation. 
• Flexibility as to outcome. 
• Confidential.
• May preserve the relationship between the parties.
• Greater control as to the outcome as both parties have to agree to a solution. 

Arbitration

For serious commercial disputes, parties simply may not be able to agree on a solution. In these situations, the disputing parties may refer their dispute to arbitration.

Arbitration involves the assistance of an independent third party arbitrator to deal with the specific facts and issues in question. Unlike negotiation and mediation, arbitration will lead to a determinative result as the arbitrator will have the authority to impose a binding outcome on both parties.

The advantages of arbitration include:

• Certainty as to outcome as a binding decision will be imposed. 
• Efficiency as to result as arbitration may typically arrive at a binding decision within a fraction of a time relative to that of obtaining a result through litigation. 
• The disputing parties are able to choose the arbitrator.
• Confidentiality as to the result of the dispute.

If you are looking for a determinative outcome to a dispute, arbitration should be considered to achieve a binding result without the potential delays of civil litigation.

Litigation

If you believe your commercial dispute should be taken to court, it is important that you know what to expect. Prior to commencing litigation, we suggest reviewing the objectives of your business to ensure your expectations are suited to litigation as a course of action.

Litigation typically should be considered once other methods of dispute resolution have been exhausted. However, under certain circumstances, it will be the most appropriate course of action to achieve a binding result.

Some advantages of litigation include:

• Costs can be claimed back if you are the successful party; 
• Finality as to outcome.

Main Points

• Key forms of dispute resolution include negotiation, mediation, arbitration, and litigation. 
• Different methods of dispute resolution will have different advantages. 
• Before deciding on a course of action to resolve a dispute, you need to be aware of different dispute resolution processes available.
• The appropriate form of dispute resolution should be decided in light of your business objectives.

If you find yourself (and your business) in a spot of strife, then it pays to seek out some good advice as early as you can. The team at Turner Hopkins can assess your situation, the options available and help you navigate the process to try and achieve the best possible resolution.