COMMERCIAL DISPUTES – HOW TO RESOLVE THEM

A dispute can be understood as a conflict or disagreement between parties. Moreover, according to the provisions of the Commercial Law 2005, commercial activities are defined as the activities of buying and selling goods, providing services, and engaging in other business activities for profit.

► Therefore, a commercial dispute refers to conflicts or disagreements regarding rights and interests arising from commercial activities, either between traders or between traders and non-traders.

1. Methods of Resolving Commercial Disputes

Pursuant to Article 317 of the Commercial Law 2005, the forms of dispute resolution in commerce are regulated as follows:

a. Negotiation between the parties:

Negotiation is the simplest method of dispute resolution, whereby the parties engage in direct dialogue with each other to reach a consensus without the intervention of a third party. This method helps save costs and maintain business relationships between the parties.

• Advantages: Freedom to control the process and outcome; saves time and costs; easier to maintain confidentiality of information.

• Disadvantages: Depends on the goodwill of the parties; not enforceable; the outcome is not legally binding.

b. Mediation:

Mediation is a method in which a neutral third party (the mediator) assists the disputing parties in negotiating and finding a solution. The mediator does not have the authority to make decisions but only facilitates communication and supports the negotiation process.

• Advantages: The mediator can help the parties understand each other’s positions; the final decision depends on the consent of both parties; better confidentiality compared to litigation.

• Disadvantages: Non-binding if the parties do not reach an agreement; may be time-consuming if the parties are uncooperative.

c. Commercial Arbitration:

Commercial arbitration is a method in which the dispute is submitted to an arbitration panel or arbitrator. The decision of the arbitrator is binding and enforceable, similar to a court judgment. This method is commonly used in contracts containing an arbitration clause.

► Principles in Arbitration:

• The agreement of the parties shall be respected by the arbitrator, provided it does not violate prohibitions or social morality.

• Arbitrators must be independent, objective, impartial, and comply with the provisions of the law.

• The arbitration panel is responsible for ensuring that the disputing parties are equal in rights and obligations.

• Unless otherwise agreed by the parties, arbitration proceedings are not public.

• The arbitration award shall be final and conclusive.

d. Court Litigation:

Resolving disputes through the court is the most traditional and widely used method. The court has jurisdiction to resolve the dispute, and the court’s judgment has the highest legal value. This method is typically used when the parties cannot resolve the dispute themselves or when enforcement by a state authority is required.

• Advantages: Court decisions are highly enforceable; protects the legal rights of the parties through state authorities.

• Disadvantages: Court procedures are complex and time-consuming; litigation costs are high; information about the dispute may be public.

2. Other Alternative Methods:

Besides the above methods, there are other alternative dispute resolution methods such as dialogue negotiation, use of intermediary organizations, or third-party agreements to assist in resolving disputes.

CONCLUSION

The choice of dispute resolution method depends on the nature of the dispute, the parties’ preferences regarding time, costs, and confidentiality. Methods such as negotiation and mediation may be suitable for minor disputes, while arbitration and court litigation are generally used for larger and more complex disputes. Each method has its own advantages and disadvantages; therefore, the parties must carefully consider to ensure the protection of their rights and interests.