Business owners and managers familiar with the court litigation system understand that high litigation costs and long delays make it difficult and expensive to resolve business disputes in court. They also understand that most civil cases that go to court are settled before trial. They are solved after spending considerable amount of time and money in the complex pre-trial phase, but just in time to avoid the risk of trial. Mediation and commercial arbitration provide superior solutions that help in resolving business disputes. Mediation puts the parties immediately in control of the situation and helps them get desirable outcomes without expending vast resources on litigation procedures (Berg, Permanent Court of Arbitration. International Bureau, International Council for Commercial Arbitration, 2005).
Litigation is the process that involves bringing, maintaining and defending a lawsuit raised by the plaintiff against a business or organization or a person understood as defendant. Litigation is thorny, time-consuming, costly, and involves a risky process that must comply with complex set of rules.
The risks that businesses and other organizations encounter while dealing with litigation are several. First, they face a probability of winning or losing. This is because it is not certain that one party must win. Secondly, the amount of money to be won or lost is not defines. Businesses organizations or people have the risk of getting little money than they expect. In fact, they could get little money than they have sent in the litigation process. The fees required by attorneys and other costs of litigation make the process considerably expensive. Another risk involves loss of productive time of the managers and other personnel as they participate in the litigation process. In addition, the effect on reputation and relationship of businesses organizations and aggravation and psychological costs make litigations undesirable for business entities and individuals (Antonio Buti, 2001).
With increased regularity, businesses have chosen alternative dispute resolution (ADR) procedures of mediation and arbitration instead of the traditional litigation system for resolving legal disputes. Businesses have brought in qualified mediators in the dispute resolution process, to help them come up with preferable resolutions instead of spending excessive resources on pre-trial court litigation processes. In case businesses anticipate disputes that might not be resolved through...