What are the different ways of resolving business/corporate disputes in India?

The best thing would be to resolve through negotiation. However, for that the parties need to find a middle way where there is a possibility to reach an agreement or find a solution with the help of someone unbiased. In India, the most common way for resolving disputes still remains through court litigation. Though litigation may in many cases be the best choice, there are alternatives available to parties struggling to settle a dispute such as arbitration and mediation. The suitability of these alternatives will depend on the needs and interests of the parties.

The best way to resolve business disputes would be through negotiation. However, for that the parties need to find a middle way where there is a possibility to reach an agreement or find a solution with the help of someone unbiased. In India, the most common way for resolving disputes still remains through court litigation. Though litigation may in many cases be the best choice, there are alternatives available to parties struggling to settle a dispute such as arbitration and mediation. The suitability of these alternatives will depend on the needs and interests of the parties.

Let’s discuss the differences between the available remedies and what one should keep in mind while choosing one of them.

Litigation

Business/corporate disputes can be resolved in the court.  The court concerned may usually be agreed upon by parties in a contract the collaboration is based on. In the absence of such a clause, the Indian laws provide for a court. In most cases, it would be the court the city/town the defendant is based at.

When should you subject the dispute to the court?

  • if both parties are located/reside in India, speak the local language and have the same cultural background;
  • if the cost for litigation can be borne;
  • if the possibility to contest outweighs reaching a fast solution;
  • if one is not fearing huge claims;
  • etc.

Arbitration

Parties can also agree to refer the dispute to an arbitral tribunal.  While incorporating arbitration into a collaboration contract, parties should keep the following in mind: the kind of arbitration institution, the place and the language of the arbitration, the number of arbitrators that should solve the dispute etc. Although the arbitration institutions may provide for standard provisions, it is advisable to consult with a specialist while composing the arbitration agreement.

Resolving disputes through arbitration is the best option:

  • if one of the parties is located outside of India;
  • if the evidence could be presented in the chosen language, mostly in English;
  • if the parties want to keep the dispute confidential;
  • if parties are looking for a fast resolution;
  • etc.

Mediation

Instead of the court or arbitration, parties may agree to settle their dispute through mediation.  In mediation, a mediator settles the dispute by identifying the needs of both the parties and helps them reach a resolution. In case parties fail to reach an agreement through mediation, they can turn to court or arbitration.

In contrary to litigation and arbitration, mediation is fairly simple. Although many international arbitration institutions offer mediation services, parties can choose not to be administrated by a certain institution. They can go for an independent/unbiased mediator, a person they trust and who can carry out the mediation with the principles agreed upon. If one wants to settle a dispute through mediation, it is important to discuss it with a specialist, who can also advise about the content of the mediation clause.

Resolving disputes through mediation can be the best option:

  • if parties are concerned about  maintaining and retaining a healthy and effective business relationship after the dispute has been settled;
  • if both parties wish to have some sort of control about the way the dispute is settled and influence its outcome.
  • etc.

Contact Miss Legal India if you wish to know more about the different ways to resolve disputes in India or you need help with how to phrase the dispute settlement clauses in different contracts!

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