Anyone involved in a business disagreement has a number of options to try and patch up matters before heading for the courts.
If you have a contract or agreement with the other party, you need to check it and see what it says you need to do in the event of a dispute. A robust contract drafted properly should lay out what to do, and will often start by advising you to negotiate with the right person in the other party, before escalating to mediation, then to arbitration or the courts.
But even if you don’t have a contract you can still be guided by the following steps.
Businesses often don’t try to negotiate. Or they think that to negotiate shows weakness and means that you need to be aggressive and immediately fall out with the other party. But, carried out properly between the right people, it can nip the dispute in the bud before it escalates out of control.
Far too often at mediation I have seen business owners meet for the first time, wondering how things had got this far and settling quickly. For the first time they are aware of the real issues at play and are amazed they weren’t included earlier.
Mediation is an excellent tool to resolve business conflict before it escalates.
The mediator doesn’t make a decision; they help facilitate a resolution you can both live with. Mediation is all about compromise and seeing the larger picture, taking steps to avoid the dangerous financial and reputational pitfalls of litigation.
It is confidential and without prejudice, so any offers referred to at mediation cannot be used at court if the dispute doesn’t settle. Around 70-80 per cent of mediations result in settlement on the day or shortly afterwards.
Arbitration is also a great way to resolve disputes, but is more formal than negotiation or mediation.
The arbitrator makes a decision legally binding in the court and in 120 countries signed up to the New York Convention, with very strict rules of appeal.
As arbitration can be set up more quickly than going to court, and because it is private, it carries the same benefits of mediation in that it can save money, time and business secrets.
It is not as good as mediation in preserving and rebuilding the relationship, as it is in effect like being in a private court.
The nuclear option. Don’t make the mistake of going straight to litigation. Speak to your lawyer or a legal advice line about alternatives such as mediation and arbitration.
Lawyers are now obliged to discuss alternative dispute resolution (ADR).
If you are a business in a dispute with a consumer, you have other obligations in relation to consumer ADR regulations and the Consumer Rights Act.