Commercial Disputes Settlement

WHAT IS A DISPUTE
 Any conflict, disagreement or dissatisfaction.

 A misunderstanding between two or more parties
It can be either commercial or non-commercial
WHAT CAUSES COMMERCIAL DISPUTES

• Technical problems/defective products.
• Poor services
• Impact of third parties/force majeure
• Failure to fulfill/ perform an obligation
• Wrongful act/ omission
• Causing loss
• Breach of rights
COMMERCIAL DISPUTES SETTLEMENT

Disputes settlement methodologies refer to those mechanisms used to end
misunderstandings which exist between two or more parties.
Normally there are various options available for the settlement. These are
such as: Negotiation, mediation, conciliation, arbitration and adjudication
(Litigation or Lawsuit). ADR or alternative dispute resolution- are the most
well-known.
They are often the more appropriate methods of dispute resolution and can
result into a fair, just, reasonable answer for both/all parties in dispute.
Dispute resolution techniques assist the resolution of antagonisms between
parties that can include citizens, corporations, and governments.
In fact, many courts require parties to consider some form of ADR before
going to trial. The following processes describe ways to resolve disputes.
Negotiation
Definition: Negotiation is the form of dispute settlement whereby
disputants settle the dispute themselves. It is the most basic means of
settling differences. It is back-and-forth communication between the
parties of the conflict with the goal of trying to find a solution. This form
doesn’t involve neutral third party rather it is disputants or their recognized
attorney.
The Process: One may negotiate directly with the other person. One may
hire an attorney to negotiate directly with the other side on his/her behalf.
Negotiation allows a person to participate directly in decisions that affect
him/her. In the most successful negotiations, the needs of both parties are
considered. A negotiated agreement can become a contract and be
enforceable.
When and How Negotiation Is Used: Most people negotiate every
day. Negotiation is the first method of choice for problem-solving and
trying to reach a mutually acceptable agreement. If no agreement is
reached, one may pursue any of the other options for settlement. This
process can be appropriately used at any stage of the conflict - before a
lawsuit is filed, while a lawsuit is in progress, at the conclusion of a trial,
even before or after an appeal is filed.
Advantage of Negotiation:
 Voluntary
 Private and confidential
 Informal and unstructured
 Parties control the process, make their own decisions and reach their
own agreements (no third party decision maker)
 Negotiated agreements can be enforceable
 Can result in a win-win solution
 Time saving
 Less cost
 Agreement is reached in a friendly way
CONCILIATION
• Is an alternative dispute resolution mechanism when parties want to
repair their commercial differences by using a third party known as
conciliator.
Normally Parties choose the conciliator and most acceptable conciliation
procedures and rules to be followed.
A conciliator meets with the parties both separately and together in an
attempt to resolve their differences with mutual acceptable outcome.
A conciliator assists each of the parties to independently develop a list of all
of their objectives (the outcomes which they desire to obtain from the
conciliation).
The conciliator then has each of the parties separately prioritize their own
list from most to least important.
ADVANTAGES OF CONCILIATION
 Conciliation is time saving
 cost efficient (less cost).
 Conciliation ensures confidentiality.
 Maintains relationship.
MEDIATION
Definition: Mediation is a form of dispute settlement whereby there is
neutral third party (mediator) who assists parties/disputants to reach at the
solution. It is a voluntary process in which an impartial person (the
mediator) helps with communication and promotes reconciliation between
the parties which will allow them to reach a mutually acceptable agreement.
Mediation often is the next step if negotiation proves unsuccessful.
The Process: The mediator manages the process and helps facilitate
negotiation between the parties. A mediator does not make a decision nor
force an agreement. The parties directly participate and are responsible for
negotiating their own settlement or agreement.
At the beginning of the mediation session, the mediator will describe the
process and the ground rules. The parties or their attorneys have an
opportunity to explain their view of the dispute. Mediation helps each side
better understand the other’s point of view. Sometimes the mediator will
meet separately with each side. Separate “caucusing” can help address
emotional and factual issues as well as allow time for receiving legal advice
from your attorney. Mediations are generally held in the office of the
mediator or other agreed location.
When and How Mediation Is Used: When disputants are unable to
negotiate a resolution themselves, they may seek the assistance of a
mediator who will help them reaching the settlement. Mediation can be
used in most conflicts ranging from disputes between consumers and
merchants, landlords and tenants, employers and employees, family
members in such areas as divorce, child custody and visitation rights,
eldercare and probate as well as simple or complex business disputes or
personal injury matters. Mediation can also be used at any stage of the
conflict such as facilitating settlements of a pending lawsuit.
Advantage of Mediation:
 Promotes communication and cooperation

 Provides a basis for parties to resolve disputes on their own
 Voluntary, informal and flexible
 Private and confidential, avoiding public disclosure of personal or
business problems
 Can reduce hostility and preserve ongoing relationships
 Allows parties to avoid the uncertainty, time, cost and stress of going
to trial.
 Allows parties to make mutually acceptable agreements designed to
meet their needs.
 Can result in a win-win solution
Arbitration
Definition: Arbitration is the submission of a disputed matter to an
impartial person (the arbitrator) for decision.
Or A private process where disputing parties agree that one or several
individuals can make a decision about the dispute after receiving evidence
and hearing arguments.
The Process: Arbitration is typically an out-of-court method for resolving
a dispute. The arbitrator controls the process, will listen to both sides and
make a decision. Like a trial, only one side will prevail. Unlike a trial,
appeal rights are limited.
In a more formal setting, the arbitrator will conduct a hearing where all of
the parties present evidence through documents, exhibits and testimony.
There can be either one arbitrator or a panel of three arbitrators. An
arbitration hearing is usually held in offices or other meeting rooms.
The result can be binding if all parties have previously agreed to be bound
by the decision. In that case, the right to appeal the arbitrator’s decision is
very limited. An arbitrator’s award can be reduced to judgment in a court
and thus be enforceable. In nonbinding arbitration, a decision may become
final if all parties agree to accept it or it may serve to help you evaluate the
case and be a starting point for settlement talks.
How and When Arbitration Is Used: Many contracts have clauses
which require that disputes arising out of that contract be arbitrated. If one
agrees to arbitrate or sign a contract with an arbitration clause, one should
understand that he/she is subject to arbitration in case a dispute occurs.
Advantage of Arbitration:
 Can be used voluntarily

 Private
 May be less formal and structured than going to court, depending on
applicable arbitration rules
 Usually quicker and less expensive than going to court, depending on
applicable arbitration rules
 Each party will have the opportunity to present evidence and make
arguments
 May have a right to choose an arbitrator with specialized expertise
 A decision will be made by the arbitrator which may resolve the
dispute and be final
 Arbitrator’s award can be enforced in a court
 If nonbinding, one still have the right to a trial
LITIGATION (ADJUDICATION, TRIAL)
Definition: Litigation is the use of the courts and civil justice system to
resolve legal controversies. Litigation can be used to compel opposing party
to participate in the solution.
Or Litigation is a process of handling disputes in the court system.
Is the process whereby a dispute is referred before courts of law of which
gives a judgment/decision after thorough determination.
Or Process of determining disputes before court of law
The Process: Litigation is begun by filing a lawsuit in a court. Specific

rules of procedure, discovery and presentation of evidence must be
followed. There can be a number of court appearances by parties or their
lawyer.
A trial is a formal judicial proceeding allowing full examination and
determination of all the issues between the parties with each side
presenting its case before court of law. The decision is made by applying the
facts of the case to the applicable law. That verdict or decision can conclude
the litigation process and be enforceable; however, if appropriate, the loser
can appeal the decision to a higher court.
How and When Litigation Is Used:
If disputants cannot settle their differences through negotiation, mediation,
conciliation, arbitration or some other means, then they can pursue
litigation through the courts personally or with their lawyer.
Advantage of litigation:
• Public record
• Formal procedures
• Precedent value
• Appeals
Characteristics of Litigation:
 Involuntary - a defendant must participate (no choice)

 Formal and structured rules of evidence and procedure
 Each party has the opportunity to present its evidence and argument
and cross-examine the other side - there are procedural safeguards
 Public - court proceedings and records are open
 The decision is based on the law
 The decision can be final and binding
 Right of appeal exists
 Losing party may pay costs
***THANK YOU***
Prepared by:
Tajiri, A, Esq
The Institute of Finance Management
Faculty of economics and management sciences
Mobile: +255 714 432 111
Email: [email protected]
DISCLAIMER:
The information contains in this Document is prepared for educational purpose. They
may be used by the students, faculties, independent learners or any other person with
interest. They should not be considered as final and conclusive.

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WHAT IS A DISPUTE

 Any conflict, disagreement or dissatisfaction.

WHAT CAUSES COMMERCIAL DISPUTES

COMMERCIAL DISPUTES SETTLEMENT

 Promotes communication and cooperation

 Can be used voluntarily

The Process: Litigation is begun by filing a lawsuit in a court. Specific

 Involuntary - a defendant must participate (no choice)

The Institute of Finance Management

Faculty of economics and management sciences

Mobile: +255 714 432 111

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