A Commercial Dispute Has Escalated – What To Do When Initial Negotiations Fail

At the stage you have attempted to reach an amicable solution with another business party but unfortunately there has been no resolution, what are the options available to your business?

Escalating a business dispute

Instruct a solicitor

Depending on the value and complexity of the dispute, you may want to instruct a solicitor to act on your behalf. If it is your business with the claim and it is worth £10,000 or less you may want to lodge a claim with the small claims Court on your own behalf. The small claims forum is intended to be used by businesses and individuals without the need to instruct legal representatives, which is why the usual stance is that you cannot recover solicitor’s fees from the unsuccessful party.

If the dispute is complex and of significant value to the business, you may want to seek legal advice. At this stage, upon review of the correspondence between the parties, the solicitor may want to write a pre-action protocol letter (if a protocol applies to the dispute) or ensure that one of the letters you have written to the other party fulfils the obligations set out in the Civil Procedure Rules (CPR). The solicitor will be looking to ensure that at least one of the letters sent to the other party sets out:

  • The basis of the claim;
  • Summary of the facts; and
  • What you want from them.

It is also important to have disclosed to the other party any key documents which are relevant to the dispute and upon which you intend to rely upon to establish your claim or defend the other party’s claim.

Engage in a form of Alternative Dispute Resolution (ADR)

A. Terms of the Contract

In some contracts there will be a clause which states that the parties must/should engage in a specific type of ADR before a claim form can be issued. For example, the general conditions set out in the IChemE Form of Contract (“the Red Book”) 2013, provides for disputes (as defined within the clauses) to be referred to either an Expert, Adjudication or Arbitration and excludes any right to appeal under the Arbitration Act 1996.

B. Under the CPR

If you have instructed a solicitor, they will also discuss your obligation under the CPR to consider a form of Alternative Dispute Resolution (ADR) which may assist with the settlement. For example:

  1. Mediation – negotiation assisted by an independent third party.
  2. Arbitration – formal process which leads to a decision which is binding and enforceable on the parties.
  3. Adjudication – third party provides decision on the dispute which is usually binding pending a reference to Court for final determination.

If the dispute is still not resolved at this stage, the next step is to issue a claim form.

How Nelsons Can Help

Lynsey Burke is an Associate in our Dispute Resolution team specialising in a wide range of commercial disputes.

If you would like advice in relation to escalating a business dispute or any other related matters, please contact Lynsey or another member of the team in DerbyLeicester or Nottingham on 0800 024 1976 or via our online form.