Commercial Disputes and Resolutions

"My Dad is tougher than your Dad". Replace "my Dad" with "my lawyer" and the argument sounds just as silly. For commercial disputes, the better primary school lesson is to remember your ABCs: Always Be Cool.

Another good lesson to remember is "play the ball, not the man". Focusing on resolving differences without assigning blame promotes a more constructive discussion about handling a shared difficulty.

Hurled accusations and threats of legal action make for good TV drama but often translate into wasted time and needless costs. Nobody likes to be bullied or made to feel like a bad guy, so resistance can be expected.

Such resistance may have more to do with emotion than the rights and obligations at issue, but still hinders progress toward a resolution. Hurt feelings can sometimes become an additional complicating factor that is difficult to identify and address in a commercial context. The good news is that this factor is potentially avoidable, but not everything can be resolved at an early stage.

Lawyers are often contemplated when disputants seem to have reached an impasse. However, costly and prolonged litigation is by no means an inevitable consequence. Lawyers owe a fundamental obligation to protect the interests of their clients, so advice on efficient solutions is to be expected. These may include alternatives to litigation such as negotiation, conciliation, mediation and arbitration.

Negotiation is usually considered first because it can resolve disputes more quickly and cheaply than other options. It often begins with a conversation between lawyers who communicate each client’s position and suggest settlement terms. The lawyers then revert to their clients for instructions and sometimes that is all it takes to reach mutual agreement.

Some kind of preliminary negotiation is an obvious and sensible step that judges expect to have occurred before litigation is commenced. Missing this would not necessarily affect any ruling on the dispute itself, but may factor in a decision on costs. Legal costs are often awarded to a successful party, but the award is discretionary and may not be given if litigation was avoidable.

Conciliation involves a neutral intermediary who meets disputants separately to discuss their story, the other side, common ground and possible settlement terms. This collaborative exercise can help to defuse strong emotions and reconcile differences by way of concession. Mediation incorporates elements of negotiation and conciliation. The disputants meet before a mediator who assists them to negotiate a settlement. They are often separated at some point for the mediator to hold private discussions on possible settlement terms as a conciliator would.

Arbitration is an adversarial process similar to court. An arbitrator hears both sides of the dispute and makes a binding decision. Disputants may find cost savings by agreeing to tailor rules of procedure and evidence as appropriate to their case, but may still end up before a court if the arbitrator’s decision is appealed.

Disputants are increasingly resorting to these alternatives to litigation, and courts make use of them also. A judicial settlement conference may be required before a civil case can progress to trial, and similar mediation components often feature in cases before the Family Court and Tenancy Tribunal.

Litigation remains an important and necessary facility, but the alternatives can save time, costs and commercial relationships at times as well. They can therefore produce better overall results and should not be discounted as soft options for that reason.

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Published: Tue, Jul 30th, 2013

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