How to Resolve a Commercial Dispute Without Going to Court
A commercial dispute does not automatically have to end in court proceedings. Disagreements over contracts, unpaid debts, the supply of goods or services, business relationships and other commercial arrangements can often be resolved through negotiation or alternative dispute resolution.
For a business, avoiding court can have significant advantages. Court proceedings can take time, incur substantial costs and require management attention that could otherwise be spent running the business. There may also be a commercial relationship worth preserving.
AFG Law's Dispute Resolution team provides dispute resolution services to businesses involved in commercial disagreements. We can assess the dispute, advise on your legal position and help identify whether there is a realistic route to resolving the matter without issuing court proceedings.
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Start by understanding your legal position
Before entering negotiations, it is important to understand the strength of your position. A commercial disagreement can arise from something relatively straightforward, such as an unpaid invoice, or involve complicated questions about contractual obligations, performance or loss.
The first step should therefore be to gather the relevant documents and establish exactly what has happened. Depending on the dispute, this could include contracts, terms and conditions, invoices, emails, meeting notes and correspondence between the parties. A solicitor can review this information and advise on the strengths and weaknesses of your position.
This can make the subsequent resolution process much more effective. You can negotiate knowing what you are realistically entitled to rather than making decisions without understanding what could happen if the dispute proceeds further.
Can you negotiate a commercial dispute directly?
Negotiation is often the simplest starting point for resolving a commercial dispute. The parties can discuss the disagreement directly or negotiations can take place through their solicitors.
The aim is to identify whether there is a solution both sides can accept. That does not necessarily mean simply compromising on the amount of money involved.
A commercial settlement could involve payment by instalments, changes to contractual arrangements, completion of outstanding work, the return of goods or an agreement to bring an existing commercial relationship to an end.
Using solicitors to negotiate does not mean that court proceedings are inevitable. In many cases, correspondence between solicitors can clarify the issues and create an opportunity to reach an agreement before litigation becomes necessary.
Using mediation to resolve a commercial dispute
Mediation is one of the most commonly used forms of alternative dispute resolution. An independent mediator works with the parties to try to help them reach a negotiated settlement.
The mediator does not decide who wins or loses. Instead, they help the parties explore the issues, identify areas where compromise may be possible and consider potential solutions.
Mediation can be particularly useful in commercial disputes because it gives the parties considerable flexibility over the outcome.
A court is generally limited to the legal remedies available to it. During mediation, businesses can potentially agree more practical or commercially creative terms. It can also be useful where the parties want to preserve an ongoing business relationship.
If an agreement is reached, the terms can be recorded in a settlement agreement which is legally binding.
What is a round-table or joint settlement meeting?
A commercial dispute can also be discussed through a round-table meeting or joint settlement meeting. This is similar in some respects to mediation but does not necessarily involve an independent mediator.
The parties and their legal representatives meet to discuss the dispute and explore whether settlement is possible. These meetings can be particularly useful where both sides understand the issues and there appears to be some prospect of agreement, but previous correspondence has failed to resolve matters.
Having a dedicated meeting can focus attention on the areas that actually remain in dispute and allow possible settlement terms to be explored.
Can arbitration avoid court proceedings?
Arbitration is another form of alternative dispute resolution, although it works differently from mediation. Rather than helping the parties negotiate their own settlement, an independent arbitrator considers the dispute and makes a decision.
The arbitrator's decision, which is usually referred to as an award, is generally binding on the parties and can usually be enforced.
Some commercial contracts already contain an arbitration clause requiring disputes to be dealt with in this way rather than through the courts.
Arbitration can offer greater privacy than ordinary court proceedings and the parties may be able to choose an arbitrator with particular expertise relevant to the dispute. However, arbitration can still involve significant legal costs and formal procedures. It should not automatically be assumed to be the quickest or cheapest option.
Your solicitor can review the contract and circumstances to determine whether arbitration is available and appropriate.
Why should businesses consider resolving disputes outside court?
Cost is an obvious consideration when it comes to dispute resolution, but it is not the only one.
Commercial litigation can require directors, managers and employees to spend significant amounts of time dealing with documents, evidence, solicitors and hearings. Resolving a dispute earlier can allow the business to concentrate on its normal operations.
Confidentiality can also be an important element. Businesses may prefer commercially sensitive disagreements to be resolved privately rather than through public court proceedings.
There is also the issue of relationships. A dispute with an important supplier, customer, shareholder or other commercial partner does not necessarily mean that the relationship needs to end. An agreed resolution may allow the parties to continue working together.
Perhaps most importantly, settlement gives the parties some control over the result. Once a dispute reaches trial, the decision is placed in the hands of the court.
What if the other business refuses to negotiate?
Avoiding court requires some willingness from both parties to engage. If the other side refuses to respond, rejects reasonable attempts to settle or there is simply too much disagreement between the parties, court proceedings may eventually become necessary.
Even after proceedings have started, however, settlement remains possible. The courts generally expect parties to consider appropriate forms of alternative dispute resolution. Refusing to engage with ADR without good reason can also have consequences when the court later considers costs.
The fact that a dispute has become serious enough for proceedings does not therefore mean that opportunities to settle should be abandoned.
How AFG Law can help resolve a commercial dispute
AFG Law's Dispute Resolution team advises businesses involved in a wide range of commercial disputes, including contractual disagreements, unpaid debts and disputes arising from commercial relationships.
We can review your contracts and evidence, explain your legal position and advise on the most appropriate way to approach the dispute.
Where there is an opportunity to resolve matters without court proceedings, we can assist with direct negotiations, mediation, settlement meetings and other forms of alternative dispute resolution.
If it is possible to reach an agreement, we can also ensure the settlement is properly documented so that the terms are clear and, where appropriate, legally binding.
Where settlement is not possible and court proceedings become necessary, our Dispute Resolution team can advise and represent you through the litigation process.
If your business is involved in a commercial dispute, contact AFG Law's Dispute Resolution team to discuss your options and whether the matter can be resolved without going to court.