Chapter 4: Dispute resolution
It is not in the best interest of a business to avoid all legal conflict at all costs
The best approach is to:
o Avoiding timeconsuming and expensive litigation
o Preserving desirable longterm commercial relationships.
II. Alternative dispute resolution: a range of options for resolving disputes as an alternative to
Negotiation: a process of deliberation and discussion intended to reach a mutually
acceptable resolution to a dispute.
o When to negotiate:
Negotiation can be used to virtually resolve any type of dispute if parties
are willing to negotiate.
However, there are cases when negotiation is not the proper way to
o How to negotiate: most often carried out by the parties to the dispute
In some cases, lawyers or counselor are hired to help with the process
• Investigate the situation to determine the nature and extent of the
• Involved individuals should be asked carefully to clarify
• The process of negotiation is not governed by technical rules but
runs in whatever way the parties wish.
• Apology legislation: is advantageous in a way that parties are
closer to agreeing with negotiation. Disadvantageous in a way that
it is seen as an acceptance of liability which not every province
protects businesses from it.
Success of negotiation depends on:
• The willingness of parties to compromise
• The nature and significance of the dispute
• The priority the parties give to its resolution
• Effectiveness of those involved in the negotiations
o When negotiations end:
Parties may reach agreement after negotiating
An impasse is reached where neither party is prepared to compromise
Mediation: a process in which another party is involved to help resolve the dispute.
o Similar to negotiation in a way that:
Less expensive and quicker than formal methods
Private and confidential if the parties choose
Preserve the relationship between parties Result in a favorable solution to both parties.
o When mediation is used:
When parties are interested in considering each other’s position with the
goal of compromising and settling the dispute
There are provinces, which require noncriminal cases civil to be referred
to mediation before a trial can be scheduled.
o How mediation works:
Parties agrees to choose a mediator
There are no mandatory qualifications for ADR practitioners
If parties cannot agree on mediator, the national roster of mediators will
assign a mediator.
o When mediation ends:
At the end of a successful mediation, parties enter into a settlement
agreement setting out the essential terms of their agreement (an
When mediation fails, the matter has to be brought to court to solve.
Arbitration: the method that involves an appointed third party, which makes a decision
to solve the dispute.
o Similar to litigation:
Involves a hearing where parties make submissions, and the
resolution is out of their control.
o Different from litigation:
Parties get to choose the rules for conducting the arbitration (formality,
privacy, finality of decision, timing,…)
Parties get to investigate the arbitrator’s background
Cheaper, faster (in some cases, it may be more expensive because the
parties do not constraint the arbitrator)
o When arbitration is used:
When parties agree to take the dispute to arbitration