In an ideal world, disputes, either commercial or otherwise, would not happen. However, we do not live in an ideal world and disputes arise regularly, despite our best intentions.

It is not possible to identify all the reasons for commercial disputes. It may be due to loss of confidence by either side, breach of a commercial arrangement or even to a simple misunderstanding. Whatever the reason, the consequences can be harmful for the businesses involved. If a dispute is allowed to continue, it could break an organisation. At the end of the day, there is no winner in a commercial dispute. So, there is a need to avoid any dispute in the first instance and if any dispute occurs, efforts should be made to resolve it as soon as possible. Ultimately, if a dispute is allowed to continue, it may drive away customers or joint venture partners, which will be harmful to the disputing parties.

Dispute resolution policy

Why do businesses need a dispute resolution policy (DRP)? As noted, efforts should be made to resolve a commercial dispute and not let it escalate. In a large organisation, it can be difficult to deal with a dispute across an organisation in a systematic way, unless there is a DRP in place. A DRP is a written policy which tells business managers and others how to behave in a dispute situation. The policy need not be lengthy, but it should be able to give some guidance on how to deal with the dispute from the outset. This is what is called an ‘early warning signal’ (EWS).

Oct-Dec 2018 issue

Hinduja Group