A commercial dispute arises when two or more parties involved in a business relationship find themselves in disagreement. These disputes can cover a wide range of issues but frequently stem from an alleged failure by a party to meet the terms and conditions outlined in a business contract. To mitigate the risk of such disputes, it is always prudent to seek legal advice before entering any contract.
The below outlines some of the essential steps and processes you can take to navigate and resolve commercial disputes as efficiently and effectively as possible.
Commercial dispute resolution
Dispute resolution encompasses the various methods available to settle disagreements, ranging from formal court proceedings (litigation) to less adversarial approaches. While many might assume that litigation is the only avenue for resolving a commercial dispute, numerous alternative methods exist that are often faster and more cost-effective. These alternative methods are collectively known as ‘Alternative Dispute Resolution’ or ‘ADR’. Generally, initiating court proceedings should be considered a last resort after all other reasonable options have been explored.
Alternative Dispute Resolution (ADR)
ADR is an overall term used to describe the different processes through which an impartial person (an ADR practitioner) assists parties in a dispute to resolve the issues between them. The four main types of ADR are negotiation, mediation, facilitation, and conciliation.
Arbitration and expert determination are also methods used to resolve disputes and may be used instead of court proceedings or if the ADR processes mentioned above are unsuccessful.
Negotiation
Negotiation is almost always the initial step in addressing a dispute between two or more parties. It involves direct communication between the parties, either verbally or in writing, with the aim of reaching a mutually acceptable and negotiated agreement. Parties may conduct negotiations themselves or through their appointed legal or other representatives.
Mediation
Mediation involves an impartial third party, the mediator, who helps the disputing parties try to negotiate a settlement. The mediator does not determine the matter, but takes a facilitative approach, encouraging parties to reach an amicable resolution. Any agreement reached through mediation can be formally documented and made legally binding.
Facilitation
Facilitation is like mediation but more commonly used for groups that are in conflict, for example local planning matters or body corporate disputes. Facilitation can also be used as a forum for differing points of view to be discussed and considered in reaching an agreement. Facilitation is led by an impartial person called a facilitator.
Conciliation
Conciliation is a process where an impartial third party, the conciliator, assists the parties in a dispute to reach an agreement by offering advice and guidance. The conciliator often possesses expertise in the subject matter of the dispute and can inform the parties of their respective rights and obligations.
Arbitration
The arbitration process involves parties to a dispute presenting their case to an independent third party, the arbitrator, who makes a binding decision on the dispute. The parties are bound by the arbitrator’s decision. Arbitration is mostly used in situations such as industrial relations or contractual disputes.
Expert Determination
If your commercial dispute revolves around technical issues, it may be referred to an expert for determination. An expert refers to someone with specific expertise in a particular subject and can help parties come to a decision regarding their dispute, not only with the evidence before them, but also with the expert’s own personal experience. For example, you may opt for expert determination for the valuation of a specific asset belonging to a business such as intellectual property or the value of gaming machine entitlements.
Civil and Administrative Tribunal proceedings
The Civil and Administrative Tribunal (CAT) resolves legal disputes and cases in all states and territories, NCAT is the relevant tribunal in NSW. NCAT has a less formal process than a court and hears and decides cases according to the law. NCAT’s main purpose is to provide an accessible, efficient and low-cost tribunal which focuses on the handling and mediation of disputes.
NCATs can hear a range of matters including disputes concerning goods and services, residential tenancies, building and construction, equal opportunity, owners’ corporations and planning.
To commence NCAT proceedings, you typically complete an online application through the NCAT’s website. Following this, a conciliation or hearing date will be allocated. In some cases, such as building disputes, parties may be required to attempt conciliation with a Tribunal member before a hearing is scheduled. If the parties fail to reach an agreement, they will then be referred to a hearing. You do not need legal representation at a NCAT, however it is not uncommon for parties to be legally represented.
NCAT orders are treated the same as court orders.
Commercial litigation
Litigation refers to the process of commencing formal legal proceedings in a court to resolve a dispute. If all other methods of dispute resolution have failed, parties may file an application to have their commercial dispute heard in court.
Courts handle a diverse range of complex commercial disputes arising from commercial transactions, contract law, and misleading or deceptive conduct under the Australian Consumer Law. The nature and value of such matters can vary significantly and accordingly, different courts (and tribunals) have been established based on specific categories of disputes and the monetary value of a claim.
A cause of action must be based on a breach of legislation or the common law which must be properly identified in proceedings. Evidence may be led by documents, statements, video or the like, to support the alleged breach and the strength of each parties’ evidence will be tested in the court proceedings. Witnesses may be called to provide testimony in support of your case or the opposing party’s.
Court proceedings run to a strict timetable and litigation requires thorough preparation.
Conclusion
Being involved in a commercial dispute can be stressful, expensive and time consuming. However, a commercial dispute does not necessarily have to result in court proceedings and it is generally recommended to you explore any avenue for resolution before commencing proceedings.
This is general information only and you should obtain professional advice relevant to your circumstances. If you are in a commercial dispute, our expert lawyers can provide legal guidance to help you protect your rights and resolve your dispute.
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