Corporate Dispute Resolution – Negotiation, Arbitration, Mediation, or Litigation
In today’s complex business environment, corporate and commercial disputes are almost inevitable. However, these disputes disrupt the business and threaten its continued growth and success. For this reason, it is important to sort them out quickly and cost-effectively. This article will explain the most popular modes of contractual and commercial disputes which are mediation, arbitration, and commercial litigation, and how a commercial litigation lawyer can assist in resolving your contractual and commercial dispute.
Common Types of Business Disputes
- Breach of contract;
- Intellectual property rights infringement;
- Breach of fiduciary duty;
- Employment disputes;
- Shareholder and partnership disputes; and
- Conflicts related to the sale and purchase of goods.
When commercial and contractual disputes arise, the parties usually adopt one of the following modes of dispute resolution:
- Commercial Litigation
Each dispute resolution method has its pros and cons. Many companies appoint a chief legal officer (CLO) or a general counsel to head their legal department. A CLO reports to the company’s chief executive officer and advises the company regarding its business disputes.
A CLO’s job description includes providing extensive legal services, such as:
- Advising the company’s board of directors about legal and regulatory compliance;
- Advising on the most appropriate dispute resolution process;
- Assisting the commercial litigation lawyer with ongoing litigation; and
- Helping senior management develop workplace policies.
Commercial Dispute Resolution Options
Mediation is a collaborative dispute resolution process. During mediation, the conflicting parties attempt to resolve their differences with the assistance of a ‘mediator’.
The mediator is an unbiased third party who facilitates dispute resolution through discussion. They encourage the parties to settle their dispute while discussing the merits and faults of each position. However, a mediator cannot make a binding decision – only the parties may choose to enter into a binding settlement agreement.
Mediation can be compulsory under a statute or terms in a commercial contract. The parties to the dispute may choose to engage in private mediation at any time.
While a party may participate in mediation without legal representation, a commercial litigation lawyer can help during mediation in the following ways:
- Take part in the mediation for the company;
- Give legal advice on the matter;
- Advise on the possible settlement options;
- Prepare and review the settlement agreement before it becomes binding; and
- Help enforce the terms of the settlement agreement.
Arbitration is an alternative dispute resolution method. Like mediation, a neutral third party called an ‘arbitrator’ facilitates arbitration.
However, arbitration differs from mediation in many aspects. Arbitration is a more formal process governed by federal and provincial statutes, such as Ontario’s Arbitration Act, 1991.
In arbitration, the parties can decide the terms of arbitration among themselves prior to a hearing. These terms dictate the number of arbitrators, the seat, the date and time of the arbitration, and the process to be adopted.
On the date, time and place mentioned in the arbitration agreement, parties appear before the arbitrator and present their case. They may also engage in a limited form of discovery. However, they do not need to follow the rules of evidence applicable in court.
The arbitrator hears both sides, considers their evidence, and renders its decision, otherwise known as the ‘arbitral award’. Depending on the arbitration terms, the arbitrator’s decision can be binding or non-binding.
Like mediations, arbitrations also do not require parties to use a lawyer. However, a commercial litigation lawyer can prove to be an asset during arbitration proceedings. They can help:
- Determine whether arbitration is the best way to resolve the dispute;
- Assess the strengths and weaknesses of their client’s case;
- Guide the client through the arbitration process;
- Engage in the discovery process;
- Present their client’s case before the arbitrator;
- Help enforce the arbitral award.
Negotiation, as an option for commercial dispute resolution, involves parties in a dispute coming together to discuss and potentially reach a mutually agreeable solution without involving a neutral third party like a judge, mediator, or arbitrator.
In Ontario, as in many jurisdictions, negotiation is a commonly used method for resolving commercial disputes. Parties are encouraged to explore negotiation as an initial step in dispute resolution before considering more formal processes like litigation or arbitration. It allows for a collaborative approach to finding solutions that can preserve business relationships and save time and resources.
Though not required in the negation process, a corporate dispute lawyer assists their client during negotiation by providing legal guidance, strategy, and representation to achieve the best possible outcome, ensure legal compliance, manage risks, and facilitate productive communication with the opposing party.
Commercial litigation is the process of using Court processes to resolve commercial and contractual disputes. The commercial litigation process is riddled with technicalities and complexities. A thorough understanding of legal issues is essential for success.
A commercial litigation lawyer has the necessary expertise and advocacy skills to ensure the litigation process addresses critical legal issues and the party understands the whole process.
A civil lawsuit begins when a party files, issues, and serves a statement of claim or application. Thereafter, the opposing party serves their defence or response. The suing party can serve and file a reply to address any new facts raised in the defence.
The pleading stage is one of the most crucial stages of a civil lawsuit. If a party fails to plead relevant facts or their claim is deficient in some respects, the court can give an adverse judgment without a full hearing on the merits.
How a Commercial Litigation Lawyer Can Help
A commercial litigation lawyer understands the importance of pleading a case properly. They can help ensure their client’s case is complete and all the pleadings are drafted, served and filed in accordance with the Ontario Rules of Civil Procedure.
For commercial litigation in Toronto, Ottawa or the Windsor-Essex court regions, the parties must set the matter for mediation within 180 days from the first filing of defence. During mediation, a commercial litigation lawyer ensures that the client understands the mediation process and advises them on their settlement entitlements.
If the matter does not settle at mediation, parties engage in a discovery process. During the discovery process, the parties exchange documents and question each other under oath to get relevant admissions. A commercial litigation lawyer uses their legal knowledge and advocacy skills to extract relevant information from the other side.
After discoveries and mediation, one of the parties sets the matter down for trial by filing a trial record. The court schedules a pre-trial conference after a party files the trial record.
At the pre-trial conference, a judge tries to get the parties to settle the dispute or at least some issues. The judge acts as a neutral facilitator and advises the parties about the strengths and weaknesses of their case. At this stage, a commercial litigation lawyer tries to ensure the client takes full advantage of the process and resolves some outstanding issues, if possible.
The court schedules a trial date if the parties cannot settle the dispute at the pre-trial conference. At the trial or hearing, both parties give their opening statements, present their evidence and witnesses, and give their closing arguments. The judge or jury considers the case presented by both parties along with their evidence and gives its decision.
At the trial, a commercial litigation lawyer presents all the necessary facts, evidence, and legal arguments to the judge to help them make an informed decision.
Every stage of the commercial lawsuit is a battle to be won. Hiring a commercial litigation lawyer early in the process ensures you go into each battle with your best weapon.
Each commercial and contractual dispute is unique, with its own factual and legal issues, which must be sorted. Many companies have a legal team headed by a CLO. The CLO advises the company’s senior management on business disputes and helps choose the most appropriate method of resolving commercial disputes. Mediation and arbitration are the preferred alternative modes of dispute resolution.
If the parties cannot resolve the dispute using the alternative dispute resolution process, they may have to engage in commercial litigation.
A commercial litigation lawyer can assist with all stages of the litigation process, including conducting the initial assessment of the case, drafting pleadings, conducting the discovery process, and representing their clients before the court.
Contact Achkar Law
If you need assistance resolving your contractual and commercial dispute, our Commercial Litigation Lawyers at Achkar Law can help.