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Using mediation for contractual disputes - How does alternative dispute resolution compare to litigation?
It is not uncommon, in business dealings, to encounter contractual disputes. These can occur because of disagreements about processes, transactions and ownership, among many other things. There are several methods for resolving a contractual dispute, such as court proceedings, arbitration and mediation.
Here, we explain the difference between mediation, arbitration and litigation. We also look at when mediation might be the best option, and how it works. We will also examine how to protect your business from contractual disputes.
These can occur because of disagreements about processes, resources and ownership, among other things. There are various ways of resolving contractual disputes, such as court proceedings, arbitration and mediation.
Here we outline some of the common types of commercial contract disputes and explore the difference between mediation, arbitration and litigation. We also look at the benefits of the different options and which be the best option, depending on the dispute and how they work. Finally, we examine how to protect your business from contractual disputes and how Giambrone & Partners corporate and commercial lawyers can help you.
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Some common types of commercial contract disputes.
Find out the key differences between the main options for resolving disputes.
The key benefits of using mediation.
When mediation may be the best option for your situation.
What can be expected from mediation.
How to protect your business from contract disputes.
How Giambrone & Partners’ litigation and dispute resolution team can assist you in your dispute.
We answer common queries about commercial contract disputes.
Types of commercial contractual disputes
There are types of contractual disputes which commonly occur. These can include concerns around ownership of goods at certain points during the course of a contract, issues arising from errors discovered in a contract. Also, you may encounter disagreements over the meaning of the terms found in a contract or disputes involving one party failing to honour their part of a contract. If one party makes an undertaking in a contract that is not followed through; this can be perceived as misrepresentation.
Read more about misrepresentation claims here.
Some commercial contractual disputes revolve around reclaiming unpaid goods. A supplier may assume that they have a right to reclaim unpaid goods under a retention of title clause, but the debtor claims to know nothing about its existence or refuses to acknowledge the clause.
Read more about retention of title disputes here.
What is the difference between mediation, arbitration and litigation?
Mediation
With mediation, both parties will meet an appointed independent mediator, who provides an impartial presence and is trained to facilitate a calm and productive discussion which is heard in private. The mediator will hear both sides and help you to come to a mutually beneficial agreement which can be accepted or rejected by either party.
Arbitration
An arbitrator performs a similar role in broadly similar circumstances but has the power to come to a final decision on your behalf, which is legally binding.
Litigation
Litigation is conducted in a court of law and can take longer that arbitration or mediation. It is also often more expensive. One party will initiate a legal action and both parties will proceed to court where either side’s legal representatives will put forward an argument and a judge will hear both parties out, before reaching a legally binding decision on the matter.
Find out how Giambrone can help you with your contractual dispute here.
What are the benefits of using mediation over and above other methods of dispute resolution?
Mediation can be a highly effective dispute resolution option, particularly where feelings run high. It is flexible and you will be able to comment and be more involved in the process. In general, a mediated discussion is less confrontational. Mediation often takes less time, which can be invaluable in business dealings. It also is influential in preserving the business relationship between the parties.
Read our full guide to the benefits of mediation here.
Which type of dispute is mediation most suitable for
Mediation is often the best option for resolving a contractual dispute that is based on miscommunication, confusion or misunderstanding over the terms of a contract. One party may be unsure the contractual expectations of the other party. Mediation is useful when you wish to maintain your business relationship and continue to work together. Using this ADR procedure also helps to protect the reputation of both parties.
How does mediation work?
Mediation is a fairly straightforward process. Mediation can be carried out either in person or remotely via video conferencing platform. The mediator will prevent the situation from becoming heated, providing a neutral presence to assist the parties to discuss the matter calmly and fairly. Through these discussions, the mediator will help you to reach a mutually agreeable conclusion. While the mediator can lead the discussion and guide the parties as to a reasonable resolution, the decision to accept or reject the mediator’s solution rests with the parties involved. If the mediator’s solution is accepted your legal advisors will then take steps to make the decision legally binding
Contact us to find out whether mediation could be suitable for your dispute.
Protecting your business from contractual disputes
It is far better to prevent contractual from arising. Protecting your business from contractual disputes can be achieved by meticulous drafting of the initial contract and reviewing your contracts on a regular basis to ensure that they are still fit for the purpose.
Including detailed clauses that outline all aspects of the transaction from start to finish and outline staging points throughout the contact where your expectations must be met, such as dates for interim payments where appropriate, time scales for the provision of services or goods, transfer of ownership of goods, jurisdiction clauses, retention of title and method of dispute resolution.
If you are signing a contract you have not drafted, you should ensure that your legal advisors check every agreement carefully before you sign. Another precaution is to research a new business partner.
Read our guide to writing a dispute resolution clause here.
How can Giambrone help?
Having experienced expert legal advisors is essential. Giambrone & Partners’ litigation and dispute resolution teams have years of experience in resolving commercial disputes, including cross-border disputes. Our multi-jurisdictional, multi-lingual lawyers can assist in a wide range of contentious business issues.
Get in touch with us via our callback service to see how we can support you with contract disputes and more.
Frequently asked questions
Do your lawyers need to be involved in mediation?
It is advisable to include legal representation in your mediation.
Who should attend the mediation process?
Yourself, the other party involved in the dispute, and the mediator. It is strongly advised to have your legal representative present.
How long does alternative dispute resolution take?
The length of mediation depends on how complicated the matter is, in some cases it may only take two or three days if all parties are prepared to make concessions to come to an agreement.
When is alternative dispute resolution (ADR) particularly suitable?
ADR helps to limit time and costs in contractual disputes. When feelings are running high, ADR provides a less contentious environment and often some level of working or personal relationship can be maintained with the opposing party.
Related content
Dispute resolution clauses in contracts
Handling a retention of title dispute