How to resolve a business disputes

Reputation is something that money cannot buy, and is one of the most important aspects of any business. A good reputation can take years to build and only moments to destroy.

This is why, it is critical to handle any business disputes correctly. It is about protecting much more than the day to day operations.

Every business is involved in agreements of one form or another, but more importantly business disputes are not just limited to large organisations. In fact a recent survey by Pay.UK reported that the amount owed to SMEs had increased to £23.4bn in 2019, whilst Xero put that figure at £131bn.

The most frequent issues identified by the Legal Services Board (LSB) were either receiving late or no payments, goods or services not being as described, or liability for tax owed. While other issues can arise with arrangements covering tenancy, shareholder, commercial or director agreements.

COVID-19

Research from the LSB in 2018, suggested that UK businesses were already losing £40 billion each year due to business disputes and bad debt; and with the pandemic affecting the way that businesses operate a surge in commercial litigation is forecasted.

To counter this, the UK government published a note on the 7th May setting out guidance and urging parties who have contractual arrangements, to act ‘responsibly and fairly’ in performing and enforcing contracts.

By publishing the guidance, the Government hopes to protect jobs and the economy, asking parties to "act in the spirit of cooperation and aim to achieve practical, just and equitable contractual outcomes that are considerate of the other party, the financial resources of both and for the protection of public health and the national interest." 

A recent paper by Supreme Court Judges, Lord Phillips and Lord Neuberger, even suggests that “the exceptional nature of the situation created by the COVID-19 pandemic may justify a degree of divergence from the historically strict common law approach."

Therefore, more consideration should be given to an outcome that is not solely based on ‘winners’ and ‘losers’, as this “will not take full account of the market/social contextualisation of the crisis."

Business Dispute Mediation

Settling a dispute in business can be a complicated and a time-consuming process, where situations can escalate quickly; which is why mediation is recommended as the first step in the reconciliation process. Mediation is the most common method of Alternative Dispute Resolution (ADR).

During mediation, an impartial mediator will facilitate discussions between both parties with a view to them resolving the disagreement between them. By trying to reach a conclusion through mediation, both parties have more flexibility for discussion than they would if the case reached court. If mediation does not reach an agreeable outcome there are other ADR methods to try. These include:

  • Conciliation – ‘Conciliation’ from the Latin ‘conciliator’ means to assemble, unite, or win over. The main difference between this process and mediation is that the third-party conciliator is able to suggest solutions and approach the party’s positions.
     
  • Arbitration – The arbitration process is not dissimilar to the procedure of going to court and the arguments are submitted to an arbitrator (or panel of).

As with any dispute or disagreement, understanding the best course of action and the options available can prevent unnecessary stress and costs. Attwells Solicitors regards litigation as a last resort, recommending mediation wherever possible.

However, if legal action is unavoidable we will advance you through the legal process and offer you practical steps to resolve your dispute.

For further information about the range of business dispute solutions please call Edward Powell on 01206 239755. Alternatively, if you have a business dispute you would like to discuss please use the button within this article.