Tips To Settle Business Disputes

If you take your business seriously, this will mean dealing with difficult things from time to time. No matter how diligent you are, there will always be disputes and problems of some kind that arise from time to time, where the parties can’t reach an agreement and solve the problem through negotiation. When this happens, you might need someone from outside the situation, who is unbiased and not involved in the disagreement, to help you to reach the best solution for your business.

The most common way for business disputes to be resolved is through court litigation. In many cases, this is the best choice for both parties involved, but there are some other alternatives that might be preferable for you, depending on the needs and interests of the different parties involved. What’s the difference between these options, and what should you keep in mind when you are deciding whether to take a dispute to court, perhaps to small claims court?

Litigation

All business-related disputes can be resolved in court if the dispute cannot be settled in any other way and the disagreement does get to this point. The right to turn to the court to settle disputes comes from the constitution and is always an option if you cannot solve the problem in an alternative manner.

In the case of business disputes, the type of court that is the correct one for you to turn to is often already established within the initial contract that you are disputing. If not, the law can give you some answers about which court is the correct one to deal with each kind of dispute. In most cases, it is possible for you to turn to the court in your local area if you are the defendant, but there are other options that are provided by the law in cases of issues that arise within your contractual relationships.

Taking a dispute to court might be the best option, if:

Both the parties involved in the same dispute are based in the same country, speak the same language, and share the same cultural background
It is important to you that the cost of the claim won’t become too high
The possibility of contesting the verdict is more important to you than reaching a solution as fast as you can
The business relationship is small to medium and mutual claims probably won’t be too large
The nature of the business relationship is common

Arbitration

If the court has the right to decide on disputes between parties based on the law, then the authority of an arbitral tribunal comes from the agreement of the parties who are involved in the dispute. The dispute cannot be referred to arbitration to be solved unless both parties are in clear agreement about taking this step. The big advantage of using arbitration to settle a difficult business dispute is the fact that the decisions that are reached will more likely be enforced outside the European Union/European Free Trade Area. About three-quarters of the world’s countries mutually recognize the arbitral awards that have been rendered in other countries, so you could be saved from having the same dispute again, or getting a verdict that cannot be enforced. Neither of these outcomes solves your problem, which is where arbitration can make a lot of difference and really help you and your business.

You should carefully weigh up the arbitration agreement that is reached with what kind of arbitration intuition you want to choose, what the place and language of the arbitration should be, and how many arbitrators should be brought in to fix the dispute. Arbitration institutions do offer standard provisions, but it is a much better idea to talk to an experienced specialist about the best phrasing for your arbitration agreement. Not all disputes can be settled with the arbitration, which is something to keep in mind before you start the process. Check if it is a feasible option for your issue, as regulations on what can be settled this way can differ between different countries.

Subjecting the dispute to arbitration is the best choice, if:

one of the parties is located outside the EU/EFTA;
it’s important that the proceedings would be held and that the evidence could be submitted in English;
parties want to keep information about the dispute confidential;
parties are invested in a fast resolution;
the dispute settlement body needs to have a good understanding of economic relationships and the bigger picture.