In commercial disputes, the path to justice can often seem unfathomably convoluted and costly which has been criticized as being one of the major barriers in accessing justice in Australia. The reforms that led to the introduction of Civil Procedure Act 2010 (Vic) were intended to reduce these costs and promote efficiency in resolving disputes. This should give parties some assurance that cost effective and efficient settlement of disputes through litigation is the primary goal of all legal professionals including judges, solicitors, and barristers. While these changes could improve access to justice, the parties can also play a critical role in improving their prospects of success. There are three distinct opportunities for parties to ensure they have the best foot forward when facing a dispute. First and foremost, the parties should implement prudent business practices such as good record keeping to remove uncertainties and reduce issues in dispute. Secondly, parties should be aware of and get familiar with immediate steps once a dispute arises. And lastly, they should proactively manage and direct their own case as much as possible.
Prudent Business Practices
Commercial parties in a dispute more often than not have worked with one another prior to any dispute. They understand each other’s values, business practices, and interests. This information is crucial in ensuring appropriate business practices are implemented. This, for example, may mean that when negotiating initial contracts, paying attention to the other parties attitudes and style of doing business. This can usually be determined by looking at contract terms, and their history of their relationship with other parties. Once a party knows more about the other, an appropriate practice, such as the extent of collecting and preserving relevant documentation, can be put in place. Should a conflict arise, these records can be the difference between a quick and speedy dispute resolution or a lengthy and costly one. The knowledge of the opposing party’s sentiments, if documented during initial stages of relationship, can also be very useful in negotiation in the early stages of the dispute resolution in shaping a party’s strategy and appetite for compromise.
Steps for Dispute Resolution
In all the commercial roles I have been involved with, I have observed how once a commercial dispute arises, the default position is to “lawyer up”. Most businesses don’t see any issue in hiring the most expensive commercial lawyers, not only to represent them, but also to manage the dispute from the point when a dispute is a remote possibility. This is because parties assume litigation is their only option, only to realise that the courts encourage or even force the parties to engage in ‘appropriate dispute resolution’ (ADR).[1] I would suggest, the best protection against unnecessary costs is to get to know your options for dispute management by studying your contracts and ensuring they contain clauses for alternative methods of dispute resolution before litigation is ever an option. Alternative dispute resolution (ADR) mechanisms could include, but are not limited to mediation, expert determination, or arbitration. While it is always a good idea to seek legal advice about complex legal issues, ADR processes are meant to be transparent and do not necessarily need legal representation. Parties can, therefore, often avoid legal costs by following processes envisaged in their commercial contract or pursue ADR voluntarily and avoid costs associated with litigation in the first instance.
Self-managing the Dispute
Unlike lawyers, commercial disputants are savvy financial controllers. They can make decisions by considering the risks, costs, and benefits they may or may not be able to obtain from the resolution of a dispute. ADR processes outlined above are usually clearly defined in commercial terms and costs associated with them can be relatively predictable. This makes decision-making about a dispute a routine task for commercial party. On the other hand, the costs and risks associated with litigation continue to be elusive even to the most commercially savvy party or a highly learned advocate. Not only do they have to consider costs associated with legal representation such as solicitors, barristers, and expert witnesses, but also they have to accept costs for decisions made in relation to settlement offers and the opposing party costs if the judge makes a cost order against them. Therefore, it is usually in the interest of parties that they, not only seek ADR as the first avenue of dispute resolution, but actively participate in the dispute process and continually apply risk benefit analysis to each decisions.
[1] Civil Procedure Act 2010 (Vic) s 48.
QANAT 