4 Ways To Settle Business Disputes
When you're in business, it's inevitable to have disputes between you and your partners, shareholders, suppliers, customers, and practically anyone who has a stake in your enterprise. In fact, from the moment you establish your business, you must prepare yourself for possible legal problems along the road. You must learn to get through disagreements if you want your business to succeed.
There are many reasons which may give rise to business conflicts. Sometimes, just delivering the wrong product or reprimanding an erring employee may lead to legal action. The good news is, there are many ways to settle business disputes.
Some of these legal processes have overlapping steps that ordinary people think of them as the same. For instance, take the case of arbitration and litigation. Many people believe that these have the same meaning, but they’re entirely different legal actions. So, what is the difference between arbitration and litigation? It’ll be answered below, along with other lawful means of dealing with business disputes.
Before anything else, you must know that you can resolve all conflicts arising from business activities through the courts. Moreover, anyone has the constitutional right to file a lawsuit or to reach a settlement if they feel they have been taken advantage of. So, while you don't want any legal problems to arise in your business dealings, it pays to know how to deal with conflicts.
Here is a rundown of the five most common ways of resolving legal issues in a business setting:
Arbitration has become one of the most popular go-to methods for resolving legal disputes in business. For example, when there's a conflict between companies and employee unions, or a bank and its borrowers are locked in disagreement, you can expect the parties to file for arbitration.
You may view arbitration as a last-ditch effort to provide a win-win solution for all parties concerned. It's also considered an alternative form of dispute resolution because, while there may be hearings, the process typically works outside of a court battle. Litigation, on the other hand, means going to court. That said, arbitration also costs less compared with litigation.
When you enter an arbitration, a neutral third party called an arbitrator would be appointed or chosen by the parties involved to hear all the sides pertinent to the case. There may be a single person or a team of arbitrators. Here are some scenarios wherein arbitration is preferable to litigation:
- When parties want to keep details about their dispute in private
- To avoid long-drawn-out legal process to reach a resolution
- When one of the parties involved is located outside the jurisdiction of the deciding court
- Parties want a mutually beneficial resolution of the dispute
When the courts are involved in resolving disputes, the process is called litigation. Under this setting, the outcome of the conflict will be determined by the judge or the jury. Because it’s a court procedure, the place or jurisdiction where the litigation occurs will be based on where the lawsuit was filed.
Litigation is what often comes to mind whenever people think about legal action. It’s often portrayed in courtroom dramas in movies or television shows. When compared with arbitration, litigation is a more formal legal proceeding held in the confines of a court. Also, the judge and jury will be appointed by the court, and the parties involved will have no say in the process. While dispute resolution may come quickly in an arbitration, the same cannot be said about litigation. Parties involved will have to wait until the court has scheduled the hearing for the dispute, and it can take anywhere from months to years.
Litigation or a court resolution may be preferable under these conditions:
- Both parties reside in the same location or court jurisdiction
- Confidentiality of the dispute details isn’t crucial for the parties
- Verdict outcome is more important than the speed at which a resolution is reached
It’s truly important to know the process of filing a lawsuit. That way, expectations on this method will be clear along the way.
In many cases, the disputing parties have already engaged the services of lawyers. Right at the onset of the conflict, each side is determined to settle the differences in court. But, along the way, they realize that no one wants a drawn-out court battle.
This is where negotiation comes in. Often, a face-to-face meeting between the parties via their lawyers is effective in reaching an agreement. Unlike in an arbitration where the parties involved have mutually selected an arbitrator to settle their differences outside of court, a negotiation happens typically at any point during an ongoing litigation or settlement procedure.
It’s common for disputing parties to call for negotiation as the trial date approaches. The reasons may be varied, but mostly it's because the parties realize they don't want their private lives dragged into the court for everyone to see. Plus, litigation will also eat up a big chunk of their time and financial resources.
While it may appear like arbitration, mediation has its unique features. Some legal experts would put this procedure right in the middle of arbitration and negotiation. The involved parties will meet with a mediator who will act as a neutral or independent party to offer options for a mutually equitable dispute resolution. But, usually, there’s no legally binding decision on both parties to accept such options, especially if they find that the suggested solutions are unfavorable.
Like arbitration, mediation can resolve disputes faster than litigation. But, the outcomes can be varied. For example, if one of the parties rejects the suggested settlement, then the mediation fails. This process relies on the willingness of both parties to sit together at the table and negotiate. A significant factor to consider would be how much they’re willing to compromise for the sake of resolving their issues.
Business disputes are bound to happen. But, it doesn't mean you and the opposing party have no chance of resolving your issues. There are four dispute resolution methods that you can elect. Arbitration, litigation, negotiation, and mediation all aim to resolve business conflicts. While each of these procedures has its nuances, all can ultimately help you and the other party reach a settlement. Always remember to consult an attorney or seek legal representation to protect yourself in a dispute resolution.
Do You Need An Attorney?
If so, post a short summary of your legal needs to our site and let attorneys submit applications to fulfill those needs. No time wasted, no hassle, no confusion, no cost.