Throughout the course of our business life, we have many relationships – with suppliers, clients and other service providers. Most of the time, things go to plan, and relationships run smoothly. However, it is sadly not uncommon for disagreements to arise, which can quickly turn into commercial disputes and thereafter escalate into formal legal proceedings.
Commercial disputes can quickly absorb significant sums of money and represent a significant distraction from a business’ day-to-day activities, so it is in a business’ interest to reach a resolution as soon as possible.
Often Litigation via the formal route, i.e. the institution of proceedings at Court, is avoidable. So, what are the alternatives?
Alternative Dispute Resolution
First, you should attempt to negotiate a solution with the other party (or parties). If you don’t know what you’re doing, instructing a litigation solicitor to act on your behalf from an early stage is wise. The first moves are often critical. This not only ensures that you take the most suitable immediate course of action but additionally, instructing legal representation sends a clear message to the other side that you are taking matters seriously. Occasionally, this can lead to an agreement being reached sooner, which can rescue an otherwise threatened business-to-business relationship.
If negotiation by way of solicitor negotiation breaks down, several different options are still available to try and reach an agreement outside of the courts. The first of these is mediation – a private process during which a neutral third party helps uncover the needs and wants of both parties to help try and reach a solution based on a degree of compromise for both parties. Mediation is voluntary; either party can withdraw from the process at anytime. Additionally, neither is bound to accept any proposed solution. Alternatively, if the dispute is not overly complex, the parties may wish to dispense with the formal appointment of a mediator and simply agree to meet between themselves with legal representation to talk through the dispute on an entirely without prejudice (off the record) basis.
Another option is arbitration. This shares some features of mediation in that it is still private, but is an adjudicative process, so a decision is made by someone else, and that decision is binding, more like litigation. Essentially, the parties involved in the claim instruct a neutral third party – the arbitrator – to decide on the outcome of the claim. Once entered into, the arbitration process must be followed through. The other thing to note is that an arbitration award is enforced as if it were a court judgement.
Similar to Arbitration is Adjudication, which is a quick process often used in construction disputes. There are subtle distinctions between adjudication and arbitration. Generally, adjudicators do not have the power to award costs (other than their own fees and expenses). Adjudication must adhere to strict timescales and typically takes up to 28 days.
Although the choice of alternative dispute resolution method is usually agreed upon between the parties, some commercial contracts will contain a dispute resolution clause laying out how any disputes will be resolved.
Navigating the courts
If alternative dispute resolution fails and it becomes necessary to issue formal legal proceedings in court, there are several things you need to consider. Depending on the size of the claim, it will be allocated to a different ‘track’ – small claims track (under £10,000), fast track (£10,000 – £25,000), or multi-track (over £25,000). Different rules and fee structures apply to different claims tracks. It is worth noting that for ‘small claims’, costs are not recoverable from the other side, even by the eventual winner. As the cost of attending court can quickly mount up, you will need to weigh up your options carefully – there is no point pursuing a claim that it will ultimately cost you more in fees than it is possible to recover. This is why it is worth trying to reach a resolution outside the court. There is always a need to consider the raw economic and commercial risk in bringing or defending any claim in conjunction with considering the legal argument(s) ‘s merit.
Keeping a level head
Becoming embroiled in a commercial dispute can quickly get stressful, consume you, and it can be all too easy to lose perspective. Try to keep a level head and always have your commercial objectives at the forefront of your mind.
O’Donnell Solicitors has a great deal of experience representing clients involved in commercial disputes. We pride ourselves on providing commercially astute, straight-talking advice whilst aiming to reach a resolution at an early stage where possible.
To access our Commercial Dispute services, don’t hesitate to get in touch with James O’Donnell or Suzzanne Gardener on 01457 761 320 or email James O’Donnell at email@example.com or Suzzanne Gardener at firstname.lastname@example.org.