Court proceedings can be expensive, time-consuming and stressful. It is entirely possible to resolve a commercial dispute without seeking recourse from the Court. In fact, the majority of cases are settled either before Court proceedings are issued, or out of Court once proceedings have already been issued.
Negotiation
Most cases are resolved by negotiation and agreement, in which case they do not run their full course. This will take the form of correspondence between the parties, often referred to as ‘pre-action correspondence’ where each party sets out the full particulars of their case. Following this exchange, it may be appropriate to make a formal offer for settlement or arrange a meeting on a without prejudice basis. If a conversation or correspondence is ‘without prejudice’, the statements made cannot be put before the Court if proceeding are issued, provided that the statements are made in a genuine attempt to settle the dispute.
Part 36 Offer
Throughout every matter, consideration should be given as to whether a ‘Part 36 offer’ should be made. A Part 36 Offer can be a very important tactical step as it can protect your position on costs. This is because if a reasonable Part 36 offer is not accepted, and the matter proceeds to Court, there are potential cost consequences for the party who fails to accept. In summary, if an offer is made by the Claimant and a judgment is obtained that is equal to or more advantageous than the offer, the Defendant will be ordered to pay the Claimant’s costs, together with interest on the sum awarded. Likewise, if an offer is made by the Defendant, and they obtain a judgment that is less than or equal to the offer, the Claimant will be ordered to pay the Defendant’s costs, together with interest on those costs.
Alternative Dispute Resolution (ADR)
There are other more cost-effective alternatives to Court proceedings such as mediation, early neutral evaluation, adjudication and arbitration (collectively referred to as “ADR”). In any contractual dispute, you would be well advised to check whether the contract specifies a certain method of ADR that must be followed prior to the issue of Court proceedings. For example, in the case of construction contracts, you will likely find a clause specifying that any dispute must be referred to arbitration or adjudication.
The most common method of ADR is mediation. Mediation is a process whereby the parties meet with an independent and impartial mediator, who will assist them in the negotiation of their differences. This process is entirely confidential and will not be binding unless both parties agree. Often mediation will result in a settlement, which will be drawn up into a settlement agreement and will be legally binding once signed by the relevant parties.