How To Solve Business Disputes

It’s always great when disputes with a business if they do occur, can be solved through negotiation. Inevitably there will always be disputes and problems of some kind, where the parties can’t reach an agreement and will need someone from outside the situation who is unbiased to help you to reach a proper solution.

How To Solve Business Disputes

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The most common way for business disputes to be resolved is through court litigation. In many cases, this is the best choice, but there are other alternatives that might be more suitable, depending on the needs and interests of the parties involved. What’s the difference, and what should you keep in mind when deciding whether court filing is the way to go?

 

Litigation

All business-related disputes can be resolved in court if it comes to that. The right to turn to the court to settle disputes comes from the constitution. 

In the case of disputes, the type of court to turn to is often already established within the initial contract. If not, the law can provide answers about which court will deal with which kind of dispute. In most cases, it is possible to turn to the court in the local area of the defendant, but there are other options provided by the law in cases of problems within contractual relationships. 

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

  • Both parties reside in the same country, speak the language, and share the same cultural background
  • It is important to you that the cost of the claim won’t be too high
  • The possibility of contesting the verdict outweighs reaching a solution quickly
  • 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 involved. The dispute can’t be referred to arbitration unless both parties are in agreement about doing this. The big advantage of using arbitration 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. 

You should carefully weigh the arbitration agreement with what kind of arbitration intuition to choose, what the place and language of the arbitration should be, and how many arbitrators should be brought in to solve the dispute. Arbitration institutions do offer standard provisions, but you should talk to a specialist about phrasing the arbitration agreement. Not all disputes can be settled with the arbitration. Check, as regulations on this differ between 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.

 


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