Recovering debts and resolving disputes – without it costing the earth
The decision to commence Court proceedings can be a daunting one. Litigation is expensive, time consuming and there is no guarantee of success. There are, however, alternatives to traditional costly Court proceedings:
Mediation is an effective tool used to resolve disputes of all values and complexities at a fraction of the cost of litigation. The usual format involves a mediator (usually a lawyer) bringing opposing parties together in one location for a day or half a day. There is often an “all parties” initial meeting followed by “shuttle diplomacy” during which the mediator will shuttle between the parties who will be located in separate rooms. The aim is for the mediator to try to narrow the issues and focus the parties’ minds on the legal and commercial realities of their dispute so that they may be more agreeable to settling. Mediation can be used whether or not proceedings have been issued.
2.“Shorter Trial”/“Flexible Trial” schemes
These are currently being piloted in the High Court and are aimed at enabling business related disputes to be resolved in a shorter and earlier trial, and at reasonable and proportionate cost – for instance by limiting disclosure and/or the length of the trial. The first dispute to go to trial under the Short Trial scheme was National Bank of Abu Dhabi PJSC -v- BP Oil International Limited  EWHC 2892 (Comm) and resulted in a $68 million dispute being decided in one day, with the whole claim being resolved within 9 months from commencement.
This option is generally provided for by contract before a dispute arises. However, parties can agree to have a dispute referred to arbitration after it has arisen. Arbitration clauses are particularly common in complex international commercial contracts. Whilst arbitrations are generally no less expensive than litigation, it is possible for parties to agree a short form procedure such that the dispute must be concluded within a relatively short period of time. In addition, arbitration provides an element of confidentiality and can therefore be an attractive alternative to Court proceedings.
Where a dispute is likely to be of a particularly technical or specialist nature, parties can opt in their contracts for the matter to be determined by an independent expert. The expert’s decision will be binding and will be almost impossible to challenge.
5.Early neutral evaluation
This involves the appointment of an impartial evaluator (usually a lawyer) to give a non-binding view on the strengths and weaknesses of each party’s case. Like mediation, it can be used either before or after proceedings have been issued and the aim is to provide the parties with a realistic and objective view on their prospects of success, which can then serve as a basis for negotiations.
Informal negotiation (whether in correspondence, on the phone or at a round-table meeting) can be a very cost effective way to resolve disputes.
This route can only be used for undisputed debts. The process is usually started by serving a statutory demand, giving the debtor 21 days to pay the debt. If they do not, it may be possible to present a winding up petition (if the debtor is a company and owes £750 or more) or a bankruptcy petition (if the debtor is an individual and owes £5,000 or more). The process does not, however, guarantee that the debt will be re-paid and cannot be used simply as a means of debt recovery.
As the above indicates, there are alternatives to costly Court proceedings which may be considered in relation to any appropriate commercial dispute or claim.