Timely Cost-Effective Dispute Resolution for Businesses

In December 2020 the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) released its final report stating that the outdated court system is failing small business and called for an overhaul of the dispute resolution framework to make it less formal, quicker and more cost effective. This report promoted the use of appropriate Alternative Dispute Resolution (ADR) processes to achieve these benefits.

The first phase on which this report was based was a survey of some 1600 small businesses involved in disputes. The findings from this survey included:

  • payment times and terms remain the biggest cause of disputes
  • the average cost to resolve a dispute using formal pathways today is over $130,000
  • 22% (1 in 5) of small businesses surveyed were involved in a serious dispute in the last five years. Two out of three business relationships ended after following a formal pathway.
  • time and cost are the most significant factors when determining how far to pursue resolution of a dispute
  • when escalated through a formal process, half of small business owners considered the amount of time and effort required was unreasonable compared to the benefits.

The second phase covered by this report looked at the formal and informal pathways, our court system and explored emerging ideas for streamlining processes. The report recommendations include:

  • promoting appropriate Alternative Dispute Resolution (ADR)
  • providing businesses with access to voluntary, binding arbitration
  • greater access to tribunal and court determinations for commercial disputes.

A copy of this report may be downloaded from the ASBFEO website.

Mediation is a facilitative process which enable the parties in a dispute to work together to find interest-based solutions to their issues rather than trying to enforce their rights in Court. More than 80% of disputes are successfully resolved through mediation. A number of industries have a code of conduct which commits their members in dispute to make use of mediation to resolve their disputes. Based on the ASBFE survey, this does not appear to be the case for most businesses.

In 2009 an amendment to the Civil Procedure Act 2005 (NSW) was proposed which would have required all parties in dispute to make reasonable efforts to resolve their disputes before commencing litigation in a NSW Court. This amendment, which was strongly supported by the community and both political parties, was never passed into law. Today, the Courts will frequently refer litigants to mediation before proceeding with their claim. This timing is too late given the time, resources and costs already incurred by each party to reach this point. Our state politicians need to once again consider amending our laws to promote dispute resolution and stop costly time-consuming litigation.

Rather than wait for our state laws to be amended, commercial organisations and businesses should consider amending their contractual terms requiring the use of mediation in the event of a contractual dispute prior to litigation. Adopting this approach is most likely to not only save time and money but also the critical commercial relationship between the parties.

If you or your business is involved in a commercial dispute with another organisation contact Bridge Mediation for a discussion on how mediation may an appropriate process to enable the resolution of his dispute quickly and cost effectively.


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