Three good reasons why parties should try to settle disputes

06 May 2021

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No matter how hard we try, sometimes we come across a problem in life which we just cannot resolve without the intervention of a third party, and it often has to be decided by either judicial intervention or by a form of alternative dispute resolution (usually by arbitration if the parties want the decision to be binding).

However, it is also often in everyone’s interest for that dispute to be resolved by way of a compromise between the parties and by acting in good faith with each other to resolve the dispute amicably, for the following reasons:

1. Legal Costs – litigation and even alternative dispute resolution are very costly. In some jurisdictions, the majority of legal costs are recoverable by the successful party against the losing party, but very rarely are all of the legal costs recovered. In some jurisdictions, none of the lawyer’s fees (or only a nominal amount) are recoverable and therefore even if a party succeeds (either in bringing or defending a claim) they are still going to incur legal fees which they cannot hope to recover.

2. Time – litigation and arbitration are extremely time intensive for the parties, both in terms of the process itself and the disruption it can cause to one’s personal life. It can also be more cost effective to settle a dispute (e.g. if it is a dispute over payment for goods or services) for a lower amount than to face the consequences of months (or even years) of time spent on dealing with a claim in court or through an arbitral tribunal. A party may well be better served on focusing on the core business itself to replace the business/money it has written off, which may well take a fraction of the time that a court/tribunal would take to reach its decision (and any subsequent appeals which may happen).

3.  Maintaining Business Relationships – Even when parties have a dispute it may be that they still want to continue to trade/do business with one another. Therefore, negotiating a settlement and/or compromise is a much better way of preserving the status quo between the parties.

Even as an experienced litigation and dispute resolution lawyer, in my opinion it is always worthwhile at least exploring the prospect of a settlement between the parties before ploughing straight into litigation or arbitration. A consultation or mediation between the parties may very well prove to be the best solution for them both, and in a country where so much emphasis is placed on parties acting in good faith, it is something which I will always try to raise with my clients at the outset of our professional relationship.

For any further information on settlement of disputes by alternative methods, please contact Nichola Reece-Burton.