Q: As a growing business, we have recently faced a complex business dispute that has led us to reevaluate our approach to resolving disputes through the court process. While litigation appears to be a conventional route, we are concerned with the high costs and lengthy timelines involved. Our business and customer relations teams are also concerned about the confrontational nature of the court process and its impact on our valuable business relationships. What alternatives are available for us to resolve the dispute out of court?
A: You can resolve your business dispute out of court through various dispute resolution mechanisms including negotiation, mediation and arbitration. These mechanisms are alternative to dispute resolution through litigation. Resolving certain disputes out of court can be more efficient or cost effective compared to the court process. Negotiation and mediation, in particular, allow parties to maintain amicable business relationships by fostering cooperative solutions tailored to their capabilities
Further, litigation is obligatory and leads to mandatory outcomes which may strain a business relationship further. Out of court resolution of a dispute through mechanisms such as negotiation or mediation can allow for a flexible process and voluntary outcomes which take into account the capability of the parties to the dispute.
When considering resolving a business dispute out of court, it is necessary to compare the cost and time associated with the court process. Further, it would be prudent to consider the effect of the potential outcome of the court process to the business relationship with the opposing party.
The timeline for resolving disputes out of court varies based on complexity and party cooperation, while costs can fluctuate depending on the chosen method (negotiation, mediation, arbitration).
Costs associated with resolving a dispute out of court can vary depending on the method chosen (negotiation, mediation, or arbitration) and the complexity of the dispute. Generally, negotiation is invariably more cost effective to the parties compared to mediation and arbitration which involve a third party who is remunerated to resolve the dispute between the parties. Some of the costs involved in resolving a dispute out of court include;
- Arbitrator’s or mediator’s fees: Arbitrators and mediators generally charge professional fees for their services depending on their level of experience and expertise over the subject matter of the dispute. The professional fees are charged based on an hourly rate. However, parties may negotiate a flat fee for determining the entire dispute with the mediator or the arbitrator.
- Administrative fees: Out of court settlement of disputes may involve certain administrative fees for managing the dispute including fees for appointing arbitrators, filing fees, venue fees, costs associated with transcription of the proceedings and disbursements incurred by the arbitrator or mediator to attend to the proceedings.
- Legal Fees: Legal advisors to the parties also raise professional fees for their services when handling disputes out of court.
In some cases, the expenses involved in extended mediation or arbitration proceedings can surpass those of court proceedings, where administrative and official fees are typically capped. By understanding these costs and processes upfront, businesses can strategically manage their disputes. Therefore, it is advisable to seek guidance from a legal advisor before selecting a dispute resolution method. This ensures you make an informed decision that aligns with your specific circumstances and goals.
Should you have any queries or require any further information, please contact us at info@cfllegal.com.
