After a commercial dispute arises, you have several options for resolving that dispute. Standard methods for resolving commercial disputes include mediation, arbitration, and court litigation. Each option has advantages and disadvantages that make the choice of resolving your commercial dispute dependent on the facts of your case and your needs, preferences, concerns, and goals.
Mediation: A Collaborative Approach
Mediation involves a more formal, structured format of settlement negotiations. Rather than negotiating directly with one another to reach a settlement, parties in mediation negotiate through and with the assistance of a neutral third party, known as a mediator. Mediation can take place in person or virtually via teleconferencing. At a mediation session, the parties may present their respective cases to the mediator to help them understand each side’s position. The mediator will also review the parties’ written briefs and records before the mediation session.
After the parties present their cases, the mediator may place the parties in separate rooms to discuss privately with each party the strengths and weaknesses of their case, as well as each party’s needs and objectives. The mediator may go back and forth between each party to convey settlement offers and suggest solutions that can help bring the parties closer to a settlement. Mediation may occur over one or more sessions.
Arbitration: A Private Adjudication
Arbitration offers an alternative to court litigation. An arbitration involves a less formal, private means of having a neutral third party rule on the merits of the parties’ dispute. In an arbitration, the parties must select one or more neutral third parties, called arbitrators, who serve the same role that a judge in a bench trial would. Arbitrations bear some resemblance to court litigation, as the parties may engage in limited discovery and file pre-arbitration hearing motions. At the arbitration hearing, the parties will present evidence, witness testimony, and legal arguments to convince the arbitrator or arbitration panel to rule in their favor. The arbitrator(s) will review the record presented at the arbitration hearing to issue an award resolving the dispute.
The prevailing party can take the arbitration award to court to turn it into an enforceable judgment. A party who loses in arbitration has limited appellate rights, as a court may vacate an arbitration award only upon a showing of fraud, denial of due process, overstepping of contractual authority, or disregard of material evidence.
Litigation: The Traditional Route
Parties who decline to resolve their commercial disputes through alternative dispute resolution can submit their case to the courts for a binding judgment. An aggrieved party in a commercial dispute can file a lawsuit in court to obtain financial compensation or equitable relief. In litigation, parties must file pleadings that set forth their allegations and defenses.
After submitting pleadings, the parties engage in discovery, which involves the exchange of documents and information, as well as the deposition of witnesses, to put all facts on the table and narrow down the issues in dispute for trial. At trial, the parties can present their cases to a jury (or a judge in a bench trial), who will issue a verdict resolving the parties’ commercial dispute.
Choosing the Right Path
Factors that parties should consider when choosing an avenue for resolving their commercial dispute include:
- Their amenability to negotiate a settlement of the dispute
- The need for privacy or confidentiality
- The desire for a quicker resolution to the dispute
- The willingness to incur costs for resolving the dispute
Contact a Commercial Litigation Attorney Today
When you have a commercial dispute, an experienced commercial litigation attorney can walk you through the pros and cons of mediation, arbitration, and traditional court litigation. Contact August Law, PLLC, today for a confidential consultation with our legal team to learn more about your options for resolving a commercial dispute.