Dispute avoidance - how to resolve a disagreement in the supply chain quickly and painlessly

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Article

01 July, 2020

The Covid-19 pandemic has caused unprecedented action to be taken by governments across the world to ensure the health and safety of its citizens. Whilst the general nature of the steps taken is similar, each nation has taken a more or less extreme approach to its neighbour. In a global market with goods being manufactured and shipped all over the world, the restrictions on working and transportation have had a significant impact on the manufacturing industry.

With most places in some form of lockdown, the effects on supply have not been felt as severely, but with restrictions being eased, the workforce returning and the demand for delivery of contracts now falling due, what happens if a business is unable to fulfil the terms of a contract because of a failure, or delay by a supplier? How do we avoid spoiling relationships that were good and beneficial pre-Covid, but still settle a dispute?

Alternative Dispute Resolution

Court proceedings are lengthy and expensive, and in a dispute with a supplier a swift resolution is preferable. There are a number of alternative options available, all of which have their individual benefits, but all of which also offer a level of control over the process not offered by litigating through the Court.

Mediation

Mediation is where an independent, qualified, third party mediator will work with the parties to find a way to resolve the conflict. Usually, the parties will bear the costs of the mediation equally and if an accord is reached, the parties will enter into a binding agreement.

There are a number of benefits to mediation: -

  • It is voluntary, so by engaging, both parties are indicating their willingness to work things out.
  • It assists with narrowing the real issues to be resolved, away from any extraneous influences.
  • It can be arranged much quicker than it takes for a matter to reach a final hearing.
  • It is significantly cheaper.
  • It can help maintain those good and beneficial relationships that had taken time to build prior to the dispute, and assist with a smooth transition back to that relationship.

In the event that a dispute reaches Court, the Courts look favourably upon parties who have tried to resolve their differences via mediation.

Arbitration

Arbitration is very similar to a Court hearing, where either a single or a panel of Arbitrators make a binding decision. Arbitration clauses are commonly used in commercial contracts as being the preferred means of settling any dispute.

A key benefit of arbitration is that the parties determine the rules and there are very limited grounds for challenging a decision. Furthermore, the parties have a degree of control over the choice of Arbitrator, and can arrange for an Arbitrator with some technical knowledge, as opposed to in the Courts where the parties have no control over who presides.

As with Mediation, the process is much quicker and the parties bear the costs of the Arbitrator, such costs are almost guaranteed to be significantly lower than litigating through the Courts.

Without Prejudice Meeting

There is also the option to conduct matters on a less formal basis by agreeing to a without prejudice meeting. The benefit of this is that all discussions are off the record and if an agreement is reached, it can be formalised into a settlement agreement. There are no binding rules about procedure, and it allows the parties to come to a mutually agreeable solution without being told what to do by someone else. Where the relationship between the parties remains on good terms, this could be a very good and inexpensive option to settle a disagreement. At the very least, it offers the parties the opportunity to narrow the issues disputed.

How can Forbes help?

A disagreement doesn't have to become a dispute. Whilst we are all keen to ensure the minimal amount of interruption to our businesses, interruption is inevitable. If recent events have taught us anything, it's that we have an unending ability to think outside the box and come up with new, and innovative solutions to problems.

Our team of Commercial Litigators can review your contracts and advise on any dispute resolution requirements contained within, and/or can recommend the most appropriate form of resolution for you and your business.

Sometimes, even with the best intentions, agreement cannot be reached and it is necessary to issue Court proceedings. We can support you from the beginning to the end of your dispute; from early stages through to issuing proceedings and a final hearing. It is crucial to remember that even when proceedings are issued, mediation and settlement meetings remain open to the parties, whether you are the Claimant or the Defendant.

For more information contact Stephen McArdle in our Manufacturing & Engineering department via email or phone on 0333 207 1142. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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