OPTIONS FOR DISPUTE

RESOLUTION
MODULE 1 PART 4

Dispute Resolution
Disputes

◦ Businesses cannot avoid conflicts

◦ Legal risks need to be managed, with the goal
of
◦ preserving desirable long-term commercial
relationships
◦ avoiding time-consuming and costly litigation
By the end of this lesson,
you should be able to:

Describe

• Describe the basic

features of the four
most common dispute
resolution mechanisms

Analyze Identify
• Analyze which dispute
Identify what business
resolution
activities may lead to
mechanism(s) is most
legal disputes
appropriate in different
circumstances
PROVIDE AN EXAMPLE
OF A BUSINESS DISPUTE
What kind of business
activities can lead to
disputes?
◦ Damaged goods
◦ Dissatisfied customers
◦ Problem employees
◦ Motor vehicle accidents
◦ Hacking attempts
◦ Bylaw changes
◦ Delinquent customers
 Civil court cases, by level of court and type of case, Canada and
Practical Fact: Alberta

More than 95% of all civil

lawsuits (contract, negligence,
etc. ) do not go to trial.
◦ Why?
◦ Because: Alternative Dispute
Resolution methods are
effective in resolving disputes
short of litigation

Source: Statistics Canada, Civil court cases, by level of court and

type of case, Canada and selected provinces and territories,10, 01,
2021
https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3510011201
 Alternative Dispute Resolution

ADR involves settling a dispute by a method other than with a decision from a
Court

3 main approaches:

Negotiation

Mediation

Arbitration
Negotiation
Negotiation:
◦ Most common ADR method
◦ Cost-effective
◦ Private & quick
◦ Customizable to the parties’ needs
◦ Can be used to resolve virtually any type of dispute
◦ A process of deliberation and discussion intended to
reach a mutually acceptable resolution to a dispute.
◦ Lawyers can be of assistance
Mediation
Mediation: main
features
An ADR process whereby a neutral person, called a mediator,
assists the parties in reaching a settlement of their dispute
◦ Mediation can be used for most disputes
◦ Parties choose the mediator
◦ Mediators DO NOT make decisions
◦ Less expensive and quicker than formal methods
◦ Private and confidential
◦ Helps preserve the relationship between parties
◦ Resolution can be tailored to the needs of the parties
Arbitration
 Arbitration: main features

A method for resolving a dispute Usually involves a hearing where

whereby a third person (or the parties or representatives Arbitration may be less
persons), called an arbitrator, make submissions; resolution is expensive and faster than
appointed by the parties makes a outside of the control of the litigation
decision. parties (similar to litigation)

Arbitration award is binding,

Private, confidential & relatively Binding: Final and enforceable
similar to the judgment of the
slow in the courts
court
LITIGATIO
N
 Litigation: main features

Litigation arises when

Slow, expensive, Diverts operations from
one party brings a legal Public
unpredictable business activities
action against another

Procedural rules govern

No guarantee of how the claim is Stressful and often
success carried through the antagonistic
system
Nature of the dispute
◦ Is the issue relatively simple or does it go to the heart of the agreement between the parties and is complex?
◦ How much money is at issue in the dispute?
◦ Are confidential matters at stake?
◦ Is it important for the business to send a message to others who may be considering the same course of action in the future?

The Importance of preserving the relationship between the parties

◦ Does the business depend on this contract/relationship?
◦ How long has the business been in this relationship?

Time & Cost

◦ Is the issue time and money sensitive?
◦ Does the business have the resources to dedicate to resolving the dispute?

Strength of position, evidence and law

◦ Does the contract dictate which law will apply to the dispute? If so, does the specific law favorably apply to the dispute?
◦ How much direct evidence does the business have to prove its case?
 Consider this:
◦ An Albertan company, ABC Ltd. (“ABC”) has been an exclusive distributor for ten years of XYZ Inc’s (“XYZ”) custom engines and
suspensions in Canada. ABC’s business depends on XYZ’s products. XYZ’s headquarters and manufacturing plant are in California. XYZ Inc.
decided to terminate the distributorship agreement with immediate effect.

◦ ABC Ltd. was enraged by the unilateral decision of XYZ and its failure to first negotiate a reasonable change and takes the position that XYZ
is in breach of its obligations. The without notice termination of the agreement puts ABC in a precarious position financially as it is likely to
go out of business if it can no longer sell XYZ’s products.

◦ No comparable products are immediately available; however, ABC has enough inventory to satisfy its current orders from third parties.
Following notice of the termination, ABC repeatedly attempted to contact its XYZ counterparts to no avail.

◦ ABC has heard a rumour that XYZ has decided to open its own subsidiary in Canada and sell its products directly.

◦ Consider the dispute resolution methods and explain what would be the most appropriate and least appropriate dispute resolution method for
the scenario