Meaning
Formal procedure is used to settle disagreements between parties without resorting to traditional court litigation. Using dispute resolution in a commercial contract provides a faster and more confidential way to handle breaches or quality claims. This process typically involves mediation or binding arbitration.
Conflict Mitigation
Alternative methods for settling arguments allow the business relationship to continue while the specific issue is addressed. A well-defined dispute resolution clause specifies the location, the governing law and the language of the proceedings. This clarity prevents a secondary argument about where the case should be heard.
Contractual Finality
Reaching a decision through an arbitrator usually results in a binding award that is difficult to appeal. This aspect of dispute resolution brings an end to the uncertainty that can paralyze a large construction or manufacturing project. Both parties agree in advance to accept the findings of a neutral third party.
Settlement Process
Documentation of the facts and the exchange of evidence occur in a more streamlined environment than a public courtroom. Effective dispute resolution depends on the expertise of the individual overseeing the case. Choosing an arbitrator with a background in the specific industry ensures that the technical details of the disagreement are understood.
The final agreement often remains private to protect the reputations of the companies involved.
