U.S. companies pay more than $20 billion a year to litigators – an alarming fact that distracts us from other, often larger, costs associated with commercial litigation. Legal fees and other direct costs attract the most attention because they are easy to measure. But perhaps just as important are the indirect commercial costs of litigation, the cost of distracting key personnel from productive activities, or the cost of destroying a profitable relationship with a former trading ally. From a business perspective, they may be more important. Community Legal Education Association of Manitoba 501-294 Portage Avenue Winnipeg, MB R3C 0B9 Telephone: (204) 943-2382 Fax: (204) 943-3600 Email: firstname.lastname@example.org In the case of interstate or foreign commerce, the U.S. Arbitration Act of 1925 makes the agreement legally enforceable, and most states have similar laws for agreements not covered by federal law. When a tribunal is asked to review a decision, it can only hear complaints about fundamental procedural fairness or the conduct of the adjudicator, but not about the merits of the case. Whatever the veracity of these arguments, the U.S. legal system has some pretty obvious and painful flaws. There are too many lawsuits – the burden of falling risks strangling the courts – and they cost too much. Many frivolous requests are not rejected early enough. We are doing a poor job of dealing with valuable small claims.
While the use of jurors in civil cases has some clear benefits (e.g., ongoing citizen involvement in defining community values and limited oversight of the judiciary), it also contributes to perceived flaws in the system. Juries probably misunderstand topics more often than we would like to admit. They are certainly more prone to courtroom histrionics than judges or other trained and experienced decision-makers. And many procedural rules and evidence that prolong and complicate prosecutions exist only to accommodate an untrained and inexperienced investigative body. Many people who run their own business may wonder what a business dispute entails. The answer is both simple and complex. The simple answer is that a trade dispute is a dispute between two business entities. However, this short answer does not capture the complexity that can surround trade disputes. Trade disputes can arise for a number of reasons and vary incredibly in complexity. Let`s look at some of the most common types of trade disputes. Texaco and Borden, for example, were involved in a lawsuit involving a $200 million antitrust and infringement lawsuit. After several years of legal maneuvers, during which about a third of the preliminary investigation process had been completed and half a million documents had already been compiled, the two defense lawyers decided to attempt a mini-trial.
Surprisingly, the case was settled in three weeks. By giving the litigants their first balanced view of the dispute, the mini-trial catalyzed a creative solution focused almost exclusively on business objectives. It is hard to believe that a judicial solution could have worked. Mini-litigation has significantly reduced litigation time, reduced legal costs and reduced business productivity. In the disputes between Texaco-Borden and IBM-Fujitsu, as well as in many other notable ADR success stories, participating executives and lawyers agreed that building trust and commitment were key to avoiding further bitterness. There is a similar consensus on the need to create a knowledge base on alternative dispute resolution within the organization. In most early ADR applications, managers and lawyers acquired this knowledge through the experimental application of ADR techniques. A more systematic and comprehensive advance review of ADR outside of a case-specific context should be part of every manager`s agenda. It is always great that disputes, if they arise, can be resolved through negotiation. However, there will always be disputes where the parties cannot agree and they need someone to help them find a solution.
It is advisable to carefully consider the arbitration agreement: what type of arbitration institution to choose, what should be the place and language of the arbitration, how many arbitrators should resolve the dispute, etc. Arbitration institutions offer standard provisions, but it is a good idea to consult a specialist when drafting the arbitration agreement. Not all disputes can be submitted to arbitration, regulations differ from country to country. A breach of fiduciary liability is a third common type of commercial dispute. Fiduciary refers to a relationship that involves trust or responsibility. There are many fiduciary duties that are relied upon on a daily basis in a business environment, including the duty to act in good faith, maintain confidentiality or fully disclose information. A breach of fiduciary responsibility can involve a wide range of activities, but at its core, all of these breaches focus on a party`s failure to perform the duties and responsibilities it is legally or contractually bound to fulfill. For example, if two shareholders of a corporation do not treat each other fairly, there may be a breach of fiduciary responsibility. The most common way to resolve disputes is through court proceedings. And in many cases, it`s also the best choice. However, there are alternatives that may be more appropriate depending on the needs and interests of the parties. If two trading companies have a dispute, it is possible that some form of alternative dispute resolution (ADR) may be attempted to provide a solution agreed upon by both parties.
If a business company has a dispute with another, it may choose to sue the other party. Litigation can be extremely costly for both parties, making ADR an attractive choice in commercial litigation. In addition to cost savings, there are other tangible benefits to pursuing ADR rather than advancing complex litigation. When resolving disputes, the parties involved will be able to participate more fully than would be the case with traditional legal methods. Through this participation, the parties involved in the dispute have more influence in shaping the outcome of the dispute resolution procedure. When and how mediation is used: If you and the other person are unable to negotiate a resolution of your dispute yourself, you can seek the help of a mediator who will help you and the other party find ways to resolve your disputes. You can choose to go to mediation with or without a lawyer, depending on the type of problem you have. You can consult a lawyer at any time before entering into an agreement to make sure you have made informed decisions and that all your rights are protected.
Sometimes mediators suggest that you do this. Mediation can be used in most disputes, ranging from disputes between consumers and merchants, landlords and tenants, employers and employees, family members in areas such as divorce, custody and visitation, elder care and estate, to simple or complex commercial disputes or personal injury. Mediation can also be used at any stage of the conflict, for example to facilitate the resolution of an ongoing dispute. In 1982, IBM claimed that Fujitsu had illegally copied software from IBM`s mainframe operating system. The two reached an agreement in 1983, but there have been repeated disputes, largely because of the technological complexity and legal uncertainty of many issues. In 1985, IBM requested arbitration under the 1983 agreement. Two arbitrators were selected to form a committee, one a law professor with experience in dispute resolution and the other a retired IT industry manager. The arbitrators soon realized that without innovative thinking, the trial would find itself stuck in the same quagmire of technical details and blame that blocked the previously negotiated resolution.
They refused to hear more specific complaints. Instead, they issued an injunction requiring Fujitsu to submit a full statement of accounts for the use of programs covered by the 1983 agreement and required both companies to participate in mediation proceedings covering programs not included in the previous agreement. In theory, arbitration rules fall within the jurisdiction of the disputing parties, but in practice most adopt the procedures recommended by the American Arbitration Association (AAA). Essentially, the disputing parties elect either a sole arbitrator or an arbitral tribunal (usually three), which then hears the evidence and arguments of counsel and issues a legally binding decision. In the private assessment, the parties hire an expert in their dispute to resolve the issue. The parties appoint a private judge, often a former judge or lawyer. The parties take turns presenting their case to the judge, after which the judge issues a legally binding decision. A well-known case of a successful mini-lawsuit involved Allied Corporation and Shell Oil.
After five or six years of litigation over a contractual dispute, Shell finally filed a lawsuit. Four years later, legal fees had consumed hundreds of thousands of dollars and pre-trial discovery was still ongoing. Lawyers for both companies decided to use the mini-trial to resolve the case without trial. After a brief hearing, the parties settled the decade-old dispute almost immediately. We can only guess how much time, money and grief could have been avoided by a mini-trial years earlier.