What Can Businesses Do To Resolve Disputes?

In business, as much as no one wants it to happen, it is often the case that disputes will occur.

- Ong Xiang Hong

Whether it is about a highly technical issue, about performance of a contract, or simply about payment, disputes are inevitable when running a business.

While 99 per cent of disputes are easily resolvable, a most serious dispute may need to be resolved in court. However, over the past decade or so, more and more businesses have opted to resolve their disputes via alternative dispute resolution (ADR).

In a business and legal context, ADR is a collective term for methods of resolving disputes without resorting to litigation in court. The most common types of ADR used in commercial disputes are mediation and arbitration. Specialised bodies dealing in these forms of ADR have been set up in the region, with the aim of facilitating ADR as well as spreading the word among businesses. Such bodies include the Asian International Arbitration Centre (AIAC), Singapore Mediation Centre, and many other statutory ADR bodies that deal with specialised matters.

ADR has gained widespread acceptance among both businesses and the legal profession in recent years, with many standard contracts stipulating some form of ADR as the principal form of dispute resolution. In particular, many contracts executed between companies located in different countries often contain an arbitration clause.

WHY ADR?

ADR processes are generally quicker and cheaper than equivalent litigation. Court litigation is a long and drawn out process, often involving enormous sums of money in complex cases. The rules of court that set out procedure can be inflexible, unsuited to SMEs that are used to business dealing in a flexible manner. Highly technical disputes may also not be readily understandable by an ordinary judge, which may lead to unsatisfactory judgments.