A commercial dispute occurs when two or more parties have a disagreement in relation to a business matter.
The subject of a commercial dispute varies however many arise due to a party’s alleged failure to perform contractual terms and conditions, which is why it is important to always seek legal advice before signing a business contract.
Below is a discussion of the steps and processes you can take to ensure you resolve your business dispute as efficiently and effectively as possible.
Commercial dispute resolution
Dispute resolution is a way of settling disputes either by litigation or through other available means. Many people believe that going to court is the only way to resolve their commercial dispute, however there are other methods of dispute resolution available which are often quicker and more cost effective than going to court. These methods are often grouped under ’Alternative Dispute Resolution’ or ‘ADR’. Commencing court proceedings should generally be the method of last resort.
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 is usually always the first step involved in resolving a dispute between two or more parties. It involves parties communicating directly, either speaking with each other or in writing, to try to reach an agreement. The parties may also communicate through their legal or other nominated representatives.
This type of dispute resolution involves an impartial person (a mediator) assisting parties to negotiate a settlement to their dispute. The mediator does not determine the matter, but takes a facilitative approach, encouraging parties to reach an amicable resolution. Any agreement reach can be documented in legally binding terms.
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 is a process in which the parties to a dispute try to reach an agreement with the help and advice of an impartial person, referred to as a conciliator. The conciliator usually has some experience of the matter being disputed and can advise parties of their respective rights and obligations.
The arbitration process involves parties to a dispute presenting their case to an independent third person (the arbitrator). The parties are bound by the arbitrator’s decision. Arbitration is mostly used in situations such as industrial relations or contractual disputes.
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 establishment of royalty rates.
Civil and Administrative Tribunal proceedings
The Civil and Administrative Tribunal (CAT) resolves legal disputes and cases in all states and territories, such as the NCAT, VCAT, SACAT, NTCAT, TCAT, QCAT, ACT CAT and SAT. It has a less formal process than a court and hears and decides cases according to the law. The CAT’s main purpose is to provide an accessible, efficient and low-cost tribunal which focuses on the handling and mediation of disputes.
CATs can hear a range of matters including disputes concerning goods and services, residential tenancies, building and construction, equal opportunity, owners’ corporations and planning.
You can fill out and online application on your respective CAT’s website after which you will be allocated a conciliation or hearing date. Some matters, such as building disputes, will require parties to settle their dispute through conciliation with a Tribunal member. If the parties fail to reach an agreement, they will then be referred to a hearing. You do not need legal representation at a CAT, however if you wish to have a lawyer represent you, you will need to notify the other party beforehand.
CAT orders are treated the same as court orders.
Litigation refers to the commencement of legal proceedings with the aim of resolving a disputed matter with assistance from a court. If parties are unable to resolve their commercial dispute using other means, they may lodge an application for their matter to be heard in the relevant court of their state.
Courts manage a diverse range of complex commercial disputes, such as those arising from commercial transactions and dealings, 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 room. Witnesses may be called to support your case or that of your opponent’s.
Court proceedings run to a strict timetable and litigation requires thorough preparation.
Being involved in a commercial dispute can be stressful, expensive and time consuming. However, a commercial dispute does not necessarily have to end up in court and it is generally recommended to exhaust every avenue available before commencing proceedings.