Over the last few decades, commercial transactions have become increasingly complicated. Whereas simple bilateral contracts were once the norm, contemporary commercial practice sees numerous instances of interlocking contractual commitments. Although many of these contracts appear bilateral on their face, various agreements often form a web of overlapping obligations that can create a cascade effect of defaults and breaches should one relationship go amiss.

Parties to a complex transaction occasionally attempt to simplify matters by creating a master agreement that involves all interested parties. Though helpful, this approach does not resolve all potential issues.

These changes in commercial practice have had a variety of effects, not the least of which is a rise in multiparty disputes. Traditional (meaning non-class) multiparty disputes typically involve three to five parties and often do not seem all that different from standard two-party matters.

The perceptual bias in favour of two-party paradigms is understandable, given that most lawyers have been trained to look at dispute resolution exclusively through a bilateral lens. However, lawyers who treat multiparty disputes as nothing more than variations on a bilateral model will likely see increased litigation costs and missed opportunities for settlement, regardless of whether the matter is heard in litigation, arbitration or mediation. As a result, it is critical for counsel to understand the unique challenges associated with managing multiparty disputes.

Apr-Jun 2014 issue

Center for the Study of Dispute Resolution