Commercial disputes are an unfortunate but common part of doing business. They can arise from unpaid invoices, breaches of contract, failed partnerships or disagreements over performance. While disputes can be disruptive, having a clear and structured approach to resolving them can help businesses protect their interests, manage costs and minimise disruption.
In this guide, we explain the dispute resolution process step by step, from identifying a problem through to formal resolution if required. We also outline how to access a free 30 minute consultation with a solicitor if you need advice tailored to your business.
Step one: identifying the dispute
The first step in any dispute resolution process is understanding exactly what the dispute is about. This may sound obvious, but disputes often escalate because the underlying issue hasn’t been clearly identified.
Businesses should review the relevant contract, correspondence and any agreed terms to understand what obligations exist and where the alleged breach has occurred. It’s important to distinguish between legal issues and commercial frustrations, as not every disagreement amounts to a legal claim.
Clarifying the facts and the legal position at an early stage helps businesses decide whether the dispute is worth pursuing and what outcomes are realistic.
Step two: internal resolution and early negotiation
Before taking formal action, many disputes can be resolved through internal discussions or early negotiation. This may involve direct communication with the other party to understand their position and explore possible solutions.
Early negotiation can save time and cost and may preserve valuable commercial relationships. In some cases, misunderstandings or administrative errors can be resolved quickly once they are identified.
Businesses should approach early discussions carefully and avoid making admissions or commitments without understanding the legal implications. Keeping a written record of communications can also be helpful if the dispute later escalates.
Step three: taking legal advice
If a dispute can’t be resolved informally, taking legal advice at an early stage can be invaluable. A contract law solicitor can assess the strengths and weaknesses of the case, identify risks and advise on the most appropriate next steps.
Legal advice can also help businesses understand potential costs, timescales and likely outcomes. This allows informed decisions to be made about whether to pursue the dispute and how far to take it.
Crucially, early advice can sometimes prevent disputes from escalating unnecessarily by identifying practical solutions or alternative approaches.
Step four: alternative dispute resolution
Alternative dispute resolution, often referred to as ADR, includes processes such as mediation and structured negotiation. These methods aim to resolve disputes without resorting to arbitration or court proceedings.
Mediation involves an independent third party helping the parties reach a mutually acceptable settlement. it’s confidential and non binding unless an agreement is reached, making it a flexible and low risk option.
Courts increasingly expect parties to consider ADR before issuing proceedings and unreasonable refusal to engage in ADR can have cost consequences later.
Step five: formal dispute resolution
If alternative dispute resolution doesn’t resolve the dispute, the next step is usually formal dispute resolution. This may involve arbitration or litigation, depending on what the contract says and what is most appropriate for the dispute.
Where a contract includes an arbitration clause, the parties will usually be required to resolve the dispute through arbitration rather than the courts. Arbitration is a private process and results in a binding decision known as an arbitral award.
If there’s no arbitration agreement, litigation through the courts may be the appropriate route. Court proceedings are more formal and follow strict procedural rules. While this can involve greater time and cost, court judgments offer strong enforcement powers and clear legal outcomes.
The choice between arbitration and litigation should be made carefully, taking into account factors such as cost, confidentiality, enforcement and the nature of the dispute.
Step six: enforcement and compliance
Resolving a dispute doesn’t always end with a settlement or decision. It’s important to ensure that any agreement, court judgment or arbitral award is properly implemented.
This may involve payment of sums owed, performance of contractual obligations or taking steps to enforce the outcome where the other party doesn’t comply. Enforcement options vary depending on the type of resolution and where the other party’s assets are located.
Prompt compliance helps avoid further disputes and additional costs.
Managing cost and risk throughout the process
Cost and risk management should be considered at every stage of the dispute resolution process. Businesses should regularly review whether the dispute remains commercially viable to pursue and whether the likely outcome justifies the expense involved.
Clear communication, realistic expectations and proportional decision making can help keep disputes under control. In some cases, revisiting negotiation or settlement discussions later in the process can still be beneficial.
Having a clear strategy from the outset helps businesses stay focused on achieving a practical and cost effective outcome.
Taking a strategic approach to disputes
Disputes don’t have to derail a business. With a structured approach and early advice, many disputes can be resolved efficiently and with minimal disruption.
Understanding the steps involved in dispute resolution allows businesses to act decisively, protect their interests and move forward with confidence.
Please note that this article is for informational purposes only and isn’t a substitute for legal advice. We encourage readers to contact Osbourne Pinner for case specific guidance.
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