Commercial Dispute Resolution

Dispute Resolution in Commerce

The process through which courts or other tribunals and services (such as alternative dispute resolution [ADR] mechanisms) resolve commercial disputes, for example those concerning the interpretation and enforcement of contracts, the liquidation or rehabilitation of a business, the settlement of property rights disputes, or general adherence to the commercial law.

Commercial Dispute Resolution plays a critical role in the economic growth of developingUganda commercial dispute resolution countries. Increasingly, empirical evidence supports a direct link between a country’s ability to fairly and effectively resolve disputes and increased foreign investment, trade, and domestic economic development. Furthermore, the ability of courts to settle disputes fairly and efficiently, without exorbitant costs or delays, determines the likelihood of fulfilled business obligations. Businesses act lawfully when there are real legal consequences to acting against the law.

In many developing countries, however, judiciaries function poorly. Courts are inaccessible, slow, inconsistent, biased, unduly formalistic, corrupt, and procedures are cumbersome and opaque. Although there is no quick remedy, prevention and resolution through informal means ought not to be overlooked in the Commercial Dispute Resolution process. In many cases, pre-transaction risk assessment and planning can prevent the occurrence of business disputes. A simple written contract, as opposed to an oral agreement, can prevent unnecessary misunderstanding and noncompliance. But when a business problem does arise, resolution can be reached through fast and informal means such as written warnings, negotiations, and payment suspension. Only when a problem surpasses the reach of informal methods should state-sanctioned forums be used.

The World Bank Doing Business Report has identified reforms that have been shown to improve the commercial dispute resolution process in many countries (see right). At the heart of meaningful reform and an effective Commercial Dispute Resolution system are institutions that support the creation and enforcement of commercial relationships. The commitment of courts and judges to high standards of judicial practice and case management, consistency in treatment of commercial obligations, quality rulings and judgments, understanding of their roles in reviewing execution documents, and willingness to enforce obligations, greatly increases the public’s confidence in a country’s Commercial Dispute Resolution process. Supporting institutions such as judge associations, bar associations, and law schools can also contribute to an effective dispute resolution environment.

The World Bank Doing Business Report identify nine types of reforms that have been shown to improve commercial dispute resolution:

• Establishing information systems in courts.
• Taking non-dispute transactions out of the hands of judges.
• Reducing procedural complexity.
• Eliminating the requirement for “legal justification” of the complaint.
• Establishing small claims courts.
• Establishing specialized commercial courts.
• Introducing case management.
• Reducing delays by limiting opportunities to abuse appeals.
• Providing better incentives for enforcement.

Contents of Dispute Resolution in Commerce

Contents of this subject matter include:

• Commercial problem definition; domestic and international context
• Dispute Management
• Dispute Management System design
• Complaint Handling
• Contractual issues, model clauses and standards
• Risk analysis
• Legislated Dispute Resolution schemes and processes
• Industry funded dispute resolution schemes
• Government services for small business disputes
• International commercial dispute resolution
• Process development mediation and conciliation models
• Non-adversarial and quasi-adversarial determinative processes: expert appraisal, expert assessment, expert determination arbitration and arbitral hybrids
• Decision Analysis and Decision making
• Further developments: DR in eCommerce
• Collaborative Law in the commercial environment

Further Reading

Schroeter Ulrich , Arbitration unter the Rules of the Chicago International Dispute Resolution Association (CIDRA) , J. int’l Dispute Resolution (2005), 106-114
Goode Royston M. , Litigation or Arbitration? The Influence of the Dispute Resolution Procedure on Substantive Rights , 19 Pace International Law Review (Spring 2007/1); available online at: https://cisgw3.law.pace.edu/cisg/biblio/goode.html
Finazzi Agro E. , The Impact of the UNIDROIT Principles in International Dispute Resolution: An Empirical Analysis , in: 44 Uniform Commercial Code Law Journal (2011) vol. 1, 77-122
Rozenberg Mikhail Grigorievich , International Sales of Goods: Commentary to the Legal Egulation and Practice of Dispute Resolution – [in Russian] , Moscow, the Statute (2010) 447 p.