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3 possible ways to resolve a business dispute

On Behalf of | Dec 11, 2023 | Business Law |

Business disputes are common in Minnesota, and it is important to have effective methods in place for resolution. There are three common options for addressing conflicts, which include mediation, arbitration and litigation.

Each approach has its characteristics and advantages, allowing businesses to choose the method that aligns best with their needs and preferences.

1. Mediation

Mediation is a collaborative process where a neutral third party helps disputing parties a mutually acceptable resolution. In this setting, the mediator does not make decisions. Instead, he or she guides the parties through open communication and negotiation. Mediation is often less adversarial than litigation. It also provides an opportunity for parties to maintain a relationship while working towards a resolution. It can be a more cost-effective and efficient option for resolving disputes without the formality of a courtroom setting.

2. Arbitration

Arbitration involves presenting the dispute to a neutral third party known as an arbitrator. The arbitrator makes a binding decision after considering the evidence and arguments from both sides. Unlike mediation, where the parties control the outcome, arbitration results in a decision to which both parties must adhere. Arbitration offers a faster resolution compared to litigation. The process is also generally more flexible.

3. Litigation

Litigation is the traditional legal process where parties bring their dispute to court for resolution. The U.S. Chamber of Commerce reports that the average American business spends $1.2 million a year fighting litigation. This resolution method involves a judge or jury making a final decision after considering evidence and legal arguments. Litigation is often more formal and can be lengthier and costlier than mediation or arbitration. However, it provides a structured framework for dispute resolution.

Choosing the most suitable method for resolving a business dispute depends on various factors, including the nature of the dispute, the desired level of formality and the urgency for resolution.