Resolving Commercial Disputes: The Art of Alternative Dispute Resolution

January 2, 2024

Resolving Commercial Disputes: The Art of Alternative Dispute Resolution

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By Patrick Murphy

In the commercial world, disputes are an unavoidable risk most businesses and organisations will face at one time or another.

With so many contractual relationships – with the likes of suppliers, customers, banks, landlords, tenants, local authorities, and many more – it is inevitable that at some point disputes will arise over whether one party is keeping to their end of the bargain. When that happens, businesses and organisations can benefit from taking swift legal action to resolve the issue before it spirals out of control and starts having a major impact on day-to-day operations.

However, not all disputes need to be fought in Court, and for many businesses and organisations, the cost and time involved with taking a dispute to trial is often prohibitive, meaning valid – and valuable – claims they might have go unresolved.

Alternative Dispute Resolution (ADR) is a flexible and cost-effective approach to resolving commercial disputes which doesn’t require a claim to go to trial. Often, it allows businesses to access justice that they otherwise would not have been able to due to the cost of taking a claim to trial.

Understanding Alternative Dispute Resolution

Not every dispute requires lengthy litigation; most disputes can be – and usually are – resolved by alternative methods. ADR encompasses various methods such as arbitration, mediation, and negotiation, offering businesses the flexibility to resolve disputes outside the traditional courtroom setting.

It is important when engaging in ADR to appreciate that the parties are likely to need to compromise on their positions in order to reach an agreement. A party not willing to compromise on their position, for example by accepting a lower sum of money than the full value of their claim, is unlikely to find any success in ADR, so we encourage clients to be pragmatic when engaging in ADR.

Negotiation: Finding Common Ground

Negotiation is often the initial step in dispute resolution, as initial solicitors’ letters should always invite opposing parties to consider the terms on which they would be prepared to settle a claim. It requires astute legal knowledge and experience of strategic litigation planning, in order to leverage the strength of a party’s position and the weaknesses of an opponent’s position, with a view to achieving the most favourable outcome possible for a client.

Typically, negotiation continues in correspondence throughout a dispute, and parties to a claim should continuously consider and propose settlement terms to try and avoid the claim reaching trial.

Mediation: Collaborative Resolution

Mediation is a cooperative form of ADR, whereby a trained mediator facilitates settlement discussions between conflicting parties. Typically, each party to the dispute, along with their legal representatives and – if necessary – experts, will be in separate rooms, and the mediator will go between the parties encouraging them to find points of agreement and compromise. Many mediations are also suitable to be conducted remotely, over the telephone or on video conferencing, saving parties the time and cost of travel to a neutral venue and, for longer mediations, accommodation.

Skilled and experienced mediators can create an environment conducive to constructive negotiations, encouraging the parties to find agreeable solutions. Mediation not only expedites the resolution process but due to it being non-hostile in nature, it also helps preserve ongoing business relationships to enable disputing businesses to continue working together in the future.

Arbitration: Private, Neutral, Binding

Arbitration is a robust alternative to litigation, providing a streamlined process to a binding resolution. Parties present their cases to an impartial arbitrator or panel who gives a binding decision. It offers a quicker and more flexible resolution than court proceedings, maintaining confidentiality and allowing parties to choose an expert in the subject matter to determine the dispute. Arbitration is widely used in commercial disputes, providing a tailored approach to conflict resolution with a focus on efficiency, fairness, and privacy.

Benefits of ADR for Commercial Clients:

1. Cost-effective: ADR significantly reduces the financial burden associated with protracted litigation, resolving claims for a fraction of the costs of going to trial, thereby allowing businesses to allocate financial resources away from disputes and towards achieving their business objectives.
2. Time-efficient: ADR expedites the dispute resolution process, enabling businesses to quickly return their focus to their primary operations without prolonged disruption of a court battle.
3. Relationship Preservation: Litigation can strain business relationships, which can be particularly damaging when the dispute is between two parties who had previously enjoyed a healthy and financially-prosperous dealings. ADR aims to preserve those relationships by encouraging amicable, mutually agreeable solutions, which can be vital for ongoing collaborations.
4. Customised Solutions: ADR provides the flexibility to allow the parties to tailor solutions to their specific and unique needs and interests, so that both parties can feel like they have achieved a favourable outcome. That same flexibility cannot normally be accessed by taking a claim to trial, where the judgment usually results in a ‘winner’ and a ‘loser’.

Alternative Dispute Resolution is at the centre of the dispute resolution strategies we tailor for our clients, and is an essential part of our commitment to providing practical and client-focused solutions. We help clients navigate the often-complex landscape of commercial disputes with discretion and tact, ensuring that are not only are disputes resolved, but they become opportunities for growth. Parties which embrace ADR – where resolution meets flexibility, collaboration, and efficiency – can find business relationships not only preserved, but strengthened.

Contact us today for a reliable and professional approach to commercial dispute resolution, and to discuss with our team of litigation experts whether ADR could help resolve your business disputes in a timely, efficient and flexible manner.