Pursuing a commercial dispute: what are my options?

People in business always have a lot on their plate. Suppliers, logistics, human resources, marketing, accounting and general administration are just some of the daily considerations for company executives or business people. Nobody in their right mind wants to add a commercial dispute to their burdens. Nonetheless, commercial disputes happen and, sometimes, they are unavoidable.

If you do become embroiled in a commercial dispute, what are your options?

Seriously consider mediation

“I’ll see you in mediation” does not, admittedly, have anywhere near the emotional impact of “I’ll see you in court” but it is often the far more sensible route to resolving a dispute than slugging it out in front of a judge. Mediation is a voluntary process by which a professional, trained mediator endeavours to assist both parties in reaching some manner of agreed settlement. It is one branch of what is known as ‘ADR’ or Alternative Dispute Resolution and an increasingly popular one for commercial dispute resolution.

The idea behind mediation is that you may not get everything you want but both parties get something they can live with. Some flexibility and a willingness to compromise are necessary. Any concerns about not getting everything you want need to be balanced against the risk and enormous expense of going through the traditional method of litigation. In any event, the courts nowadays require the parties to at least consider mediation before commencing litigation.

Arbitration may be a better option

Arbitration is another option under ADR for commercial dispute cases. Unlike mediation, arbitration is an adversarial process which works very much like a traditional, state court, only it is an entirely private process. The same rules of evidence generally apply and an arbitrator pretty much acts as a judge would in a litigation matter.

Arbitration is often preferable to the state procedures because it is generally a lot quicker. Commercial cases in the traditional courts can take many years to resolve, while private arbitration can dispose of the matter in a much faster order.

Besides, you may have no actual choice in the matter. A great many modern commercial agreements contain a provision that, in the event of a dispute, the parties are obliged to seek a resolution by means of arbitration. If this is not the case, then you should only consider arbitration if there is no credible prospect of reaching any agreed settlement by means of mediation or negotiation.

Financial considerations

Pursuing a commercial dispute claim requires more than consideration of the methods or venues; there are also financial aspects that you need to think about before you do anything else. Does the party against whom you intend to make a claim actually have any money or assets? If the answer is ‘no’ then there is little point in pursuing a claim against them, regardless of how meritorious that claim may be. Obtaining a court judgement against a ‘man of straw’, to use the arcane legal idiom, is just throwing good money after bad. An exception to this is where the party you intend to claim against has an insurance policy that will meet a judgement. This is something that you must research beforehand.

Similarly, check your own insurance policies, assuming you have any. Running litigation or a dispute is an expensive business, but legal costs and expenses may be included as a part of any insurance policy you may have. But carefully check the terms and conditions.

You may be able to obtain financial help to pursue a claim, known as third-party funding. But you must satisfy the funder that your claim has merit, is likely to succeed, the party you are claiming against have the wherewithal to meet any judgement and that the amount involved makes it worthwhile. Remember that, if you succeed, the funder’s reward will usually be around one-third of any sums that you are awarded by the court.

Above all, keep a clear head, an objective mind and avoid making emotional decisions. Be clear in your commercial objectives and don’t overlook the opportunity costs of commercial disputes as well as the financial ramifications.

Avoiding disputes wherever possible

Of course, the best way to win a commercial dispute is by not getting involved in any. It is impossible to make yourself immune but there are a couple of things you can do to reduce the risk. First of all, make sure that your commercial contracts are well and tightly drafted; that they provide for most foreseeable contingencies and, above all, are free of ambiguities. This may mean paying a lawyer to draft your contracts but the cost of doing so is trivial compared to the cost of a commercial dispute.

Secondly, practice good record-keeping and document storage. Things such as contracts, emails, letters, invoices and order forms should all be preserved in good order and easily accessible when needed. Courts work on evidence, and it is sometimes the case that the party which keeps better records wins the day.

While there are no guarantees, you can avoid many disputes by the simple measure of leaving no room for them to appear or grow. However, if you are considering embarking on a commercial dispute, or you may be on the receiving end of a claim, your best course of action is to seek experienced legal advice and guidance sooner rather than later. A commercial disputes lawyer can steer you towards the best solution for your case and one which you may have considered or realised if left to your own devices.

For further information and trusted legal advice regarding commercial disputes, get in touch with us at Carlsons Solicitors.