The cost of litigation in commercial disputes can be significant for companies around the world. In many cases, the financial burden of going through the legal process can be damaging to a company’s bottom line, and can even lead to bankruptcy.
$870 billion is the direct costs of commercial claims resolved through litigation
http://www.instituteforlegalreform.com/uploads/sites/1/ILR_NERA_Study_International_Liability_Costs-update.pdf
This is why alternative dispute resolution systems, such as arbitration and mediation, have become increasingly popular in recent years.
One of the major costs of litigation is the fees associated with hiring lawyers and other legal professionals. These fees can quickly add up, especially in complex commercial disputes. In addition to the fees themselves, there are also other costs to consider, such as court costs, expert witness fees, and the cost of any settlements or judgments that may be awarded.
Another cost of litigation is the amount of time and resources that a company must devote to the legal process. This can be especially detrimental for small and medium-sized businesses, which may not have the same financial resources as larger companies. The time and resources spent on litigation can take away from a company’s ability to focus on its core operations and can even lead to a loss of market share.
In Italy the average time to sort a dispute through a court is about 2200 days.
https://www.adrcenterfordevelopment.com/wp-content/uploads/2018/06/Survey-Data-Report.pdf
How alternative dispute resolution systems can mitigate the cost of litigation
Alternative dispute resolution systems can help companies avoid the high cost of litigation by providing a more streamlined and efficient way to resolve commercial disputes. These systems typically involve the use of a neutral third party, such as an arbitrator or mediator, to help the parties come to an agreement.
Arbitration is a process in which the parties to a dispute agree to have their case heard and decided by a neutral third party. This can be a faster and less expensive way to resolve a commercial dispute than going through the courts. In many cases, arbitration can be completed in just a few months, whereas litigation can take years.
Mediation is another alternative dispute resolution system that can be used to resolve commercial disputes. In mediation, a neutral third party helps the parties to a dispute come to an agreement through facilitated negotiation. Unlike arbitration, mediation does not result in a binding decision. Instead, the parties to the dispute are able to reach a mutually-agreed upon resolution.
There are many benefits to using alternative dispute resolution systems in commercial disputes. In addition to being faster and less expensive than litigation, these systems can also help to preserve relationships between the parties to the dispute. This can be important in the business world, where maintaining good relationships is crucial to success.
Furthermore, alternative dispute resolution systems can provide companies with more control over the outcome of their dispute. In litigation, the outcome is decided by a judge or jury, whereas in arbitration or mediation, the parties to the dispute are able to come to an agreement that is mutually acceptable to both sides.
Overall, the cost of litigation in commercial disputes can be significant for companies around the world. Alternative dispute resolution systems, such as arbitration and mediation, offer a faster and less expensive way to resolve these disputes, and can help to preserve relationships between the parties to the dispute. By using these systems, companies can avoid the high costs of litigation and focus on their core operations.
Which can be the downside of arbitrators in commercial litigation?
One potential downside of using arbitrators in commercial litigation is that the decision of the arbitrator is final and binding, which means that the parties do not have the right to appeal the decision unless there is evidence of misconduct on the part of the arbitrator. This can make it difficult for a party to challenge a decision they believe is incorrect or unfair. Additionally, arbitration can be more expensive and time-consuming than other forms of dispute resolution, such as mediation or negotiation. Finally, arbitration is not always as transparent as a court proceeding, which can make it more difficult for the parties to understand the basis for the arbitrator’s decision.
The Uniscrow proposal for dispute management
First and foremost, the very use of escrows in B2B transactions already induces a radical mitigation of fraud opportunities for potential misbehaving parties. That being said, should a dispute yet appear inevitable, Uniscrow’s procedure includes an attempt at amicable mediation with the goal of letting the parties settle the dispute autonomously after reaching a consensus. If such a consensus is not reached the dispute is escalated to an institutional chamber of arbitration. For more details about Uniscrow dispute management please check the following resources:
[1] Article on ADR in Uniscrow