What are the main methods of resolving commercial disputes in your jurisdiction?

Litigation (2nd edition)

Austria Small Flag Austria

The Austrian legal system provides two main dispute resolution methods: the ordinary court system and arbitration. In addition, other forms of alternative dispute resolution, in particular mediation, are also possible means for resolving commercial disputes.

Japan Small Flag Japan

The main method of resolving commercial disputes in Japan is litigation. However, arbitration is also used as a method of resolving commercial dispute, especially in international cases. The parties may even prefer arbitration to litigation because of confidentiality and expedition.

In the case where the place of arbitration is in Japan, the arbitration procedures are governed by the Arbitration Act, which is principally based on the UNCITRAL Model Law on International Commercial Arbitration. The parties are free to agree on the procedure to be followed by the arbitration tribunal as long as the procedure is not in violation of the provisions of the Arbitration Act relating to public policy (Article 26 (1)). Arbitration awards have the same effect as final and binding court judgments, and their enforceability is guaranteed under the Arbitration Act (Articles 45 and 46). Other methods of resolving disputes including mediations are also used.

Monaco Small Flag Monaco

The main method is judicial. However, it is possible to follow arbitration but it is not a common method to resolve disputes.

China Small Flag China

In China, if parties are not able to settle their commercial disputes by themselves through negotiation, usually they resort their disputes to either litigation or arbitration. Mediation is usually conducted by the judge or arbitrator during the litigation/arbitration proceedings, if the parties so agree.

If a settlement is reached through mediation, the court will issue a settlement agreement, which shall come into legal effect once the parties acknowledge receipt of the agreement. The agreement is confidential to the public with some exceptions, and is enforceable like a court judgment. If the mediation fails, the court will continue trying the case and finally issue a judgment. Such mediation process involving court participation is commonly used and popular in Chinese litigation practice.

Romania Small Flag Romania

In Romania, commercial disputes are mostly settled through litigation before the competent courts. During the last years, arbitration has started to be more frequently used for resolving commercial disputes, especially the most complex ones. The Romanian arbitration procedural rules qualify arbitration as ADR, this rules being broadly based on the UNCITRAL Model Law on International Commercial Arbitration 1985. The arbitration proceedings are constantly increasing and almost all commercial contracts of high value contain arbitration clauses.

There is also an alternative mechanism, consisting in mediation, but it is rarely used.

Cyprus Small Flag Cyprus

Litigation is the principal method of resolving commercial disputes in Cyprus. Arbitration and mediation are also available as alternative dispute resolution mechanisms. Domestic arbitral proceedings are governed by the Arbitration Law, Cap. 4 while international arbitral proceedings are governed by the International Arbitration in Commercial Matters Law of 1987 which is based on the UNCITRAL Model Law on International Commercial Arbitration. Although litigation remains the most frequently used method of resolving commercial disputes, parties are increasingly turning to arbitration, primarily because of the delays in the processing of court cases. With respect to mediation, despite the fact that Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters was implemented in Cyprus with the enactment of the Certain Aspects of Mediation in Civil Matters Law of 2012, mediation is not widely used as an alternative method of resolving commercial disputes.

Denmark Small Flag Denmark

The main methods of resolving commercial disputes in Denmark are court litigation and arbitration. Mediation have in recent years gained popularity, but solving commercial disputes these ways remain less prevalent. Additionally, it is not uncommon for the parties to resolve a dispute through negotiation either directly or with their legal representatives.

Egypt Small Flag Egypt

In Egypt the main pathways of resolving commercial disputes are litigation and arbitration.

The initial pathway of resolving commercial disputes under Egyptian law is Egyptian courts.

The Egyptian law has also introduced the Economic Courts in 2008. The Economic Courts have a very confined jurisdiction to resolve certain commercial disputes in a rather faster way (Including any disputes governed by the Egyptian Commercial code such as capital market disputes, financial instruments, etc…).

On the other hand, the parties may agree to resolve their commercial disputes through arbitration.

The Egyptian law also issued the Egyptian Arbitration Law in 1994. The Cairo Regional Centre for International Commercial Arbitration (‘CRCICA’) is the primary arbitration institution in Egypt.

Recently there seems to be a growing trend to resolve commercial disputes in Egypt through other methods including meditation, court-appointed experts and conciliation.

Russia Small Flag Russia

There are several statutorily regulated methods of resolving commercial disputes. The first of them is mediation, i.e. amicable pre-trial settlement reached by the parties with the assistance of a professional mediator (available also after the trial is commenced). Although this institute was introduced in Russia fairly long time ago, it is still rarely applied among companies and entrepreneurs.

Another resort for resolving business controversies available in Russia is arbitration (which shall not be confused with arbitrazh, i.e. commercial litigation administered by state courts – the subject-matter of this guide). The legal framework applicable to arbitration varies to certain extent depending on whether the case at hand is purely domestic or cross-border (involving a foreign party or foreign assets). Recently, the major changes were introduced into Russian arbitration law aimed at making the arbitration procedure more consistent with the best world practices and trends. However, there are certain limitations to the types of disputes which can be arbitrable under Russian law (e.g. some kinds of corporate disputes and all public procurement disputes are non-arbitrable, concession disputes are arbitrable with certain reservations).

The vast majority of commercial disputes arising in Russia are settled in state commercial (arbitrazh) courts. It should be noted, that in 2016, the mandatory pre-trial procedure was introduced into the proceedings before commercial courts in respect of certain categories of disputes – the claimant is allowed to apply to the court only after expiry of 30 days after sending a pre-trial complaint (see Section 7).

Mexico Small Flag Mexico

The main methods of resolving commercial disputes in México are: a) ordinary commercial trial, b) executive commercial trial, c) special proceedings, d) oral commercial trial, e) bankruptcy proceedings (concurso mercantil), f) arbitration, and g) mediation.

Germany Small Flag Germany

In Germany, parties to commercial disputes mainly resort to litigation and arbitration. In some cases, mediation offers an appropriate means of ADR for the parties involved.

                                                         

Hong Kong Small Flag Hong Kong

In Hong Kong, the main methods of resolving commercial disputes are litigation and arbitration. In addition, mediation has become the alternative dispute resolution method recommended by the court in Hong Kong since the Civil Justice Reform came into effect in 2009.

Guernsey Small Flag Guernsey

The main methods of resolving commercial disputes in Guernsey are the court system or Alternative Dispute Resolution (ADR).

The Royal Court of Guernsey (the Royal Court) is the established court for resolving all commercial disputes with a value higher that £10,000 (lower value disputes are dealt with in the Magistrates Court). The court process in Guernsey is adversarial in nature and the standard of proof for civil proceedings is on the balance of probabilities.

ADR can be conducted in conjunction with or separately from litigation. Mediation is a popular form of ADR. The Royal Court can recommend mediation, and often does, but it cannot compel parties to undertake it.

The law governing arbitration has been recently updated in the Arbitration (Guernsey) Law 2016, and it is anticipated that this will lead to more widespread use of arbitration in the jurisdiction.

India Small Flag India

Commercial disputes in India are typically resolved either by way of litigation in courts/ tribunals or by way of alternate dispute resolution, which includes arbitration, mediation and conciliation.

In litigation, commercial matters are contested before the civil courts and the High Courts of each State. For this purpose, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (Commercial Courts Act) has also been enacted, which provides for the constitution of commercial courts at district level and Commercial Division and Commercial Appellate Division in the High Courts for adjudicating commercial disputes of a specified value.

Further, certain specialised courts/tribunals along with their appellate bodies have also been created for resolving commercial disputes under various statutes, which include forums such as the National Company Law Tribunal (NCLT), Debt Recovery Tribunal (DRT), etc.

The alternate dispute resolution mechanism is governed by the Arbitration & Conciliation Act, 1996 (Arbitration Act), which provides for resolution of disputes by means of arbitration, conciliation and mediation. Section 30(1) of the Arbitration Act, in particular, authorises the arbitral tribunal to, with the agreement of the parties, use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement.

Isle of Man Small Flag Isle of Man

The Isle of Man provides a cost effective user orientated common law legal system for resolving commercial disputes. There is an independent local judiciary who recognise the importance to the island of resolving disputes justly, fairly and expeditiously. Moneyval (a Council of Europe Committee of Experts) in January 2017 confirmed that “The rule of law and an independent judiciary are all well-established… The IoM has a sound legal system… It enjoys an independent judiciary committed to the rule of law… The Deemsters of the IoM have [an] excellent reputation…”. Further details in respect of the Isle of Man Courts of Justice including judgments and the rules of court can be found at www.courts.im.

The island also has an independent and well-resourced local Bar. Cains (www.cains.im) is a leading Isle of Man law firm with a well-respected, dedicated commercial litigation department which has significant experience and expertise in dealing with commercial litigation including company and shareholder disputes, liquidations, trust disputes, asset tracing and recovery, judicial review, professional negligence, disciplinary and regulatory issues.

The main methods of resolving commercial disputes in the Isle of Man are: negotiation, arbitration, mediation and court proceedings.

Italy Small Flag Italy

The main methods of resolving commercial disputes in the Italian jurisdiction are i) proceedings before the ordinary Judge; ii) arbitration, if the contract underlying the dispute contains an arbitration clause; iii) mediation procedure, in the presence of a third-party conciliator who has the task of helping parties reach an agreement (procedure regulated by Legislative Decree 28/2010); iv) assisted negotiation procedure, which takes place in the presence of the parties and their respective attorneys, but without a third party conciliator (procedure regulated by Law 162/2014).

Philippines Small Flag Philippines

Arbitration is increasingly gaining ground as a mode of resolving commercial disputes, especially those involving multinational companies and cross-border transactions. This trend is due to the increased adoption of arbitration clauses in commercial contracts. Under Philippine law, parties to a contract with an arbitration clause must observe the mediation process stipulated in said clause; failing which, parties must proceed to arbitration.

In the absence of an arbitration agreement, disputes are resolved through litigation. Certain commercial disputes, such as intellectual property cases, intra-corporate disputes, cases involving maritime laws, and rehabilitation, are handled by special commercial courts.

Portugal Small Flag Portugal

The main method is still judicial, with the parties bringing their disputes to Court by means of different types of proceedings (Injunctions, Declaratory Actions, Enforcement Proceedings or others). However, as a result of the need for swift decisions, the demand for extrajudicial methods is increasing, with the parties using Arbitration, Mediation or Civil Courts/Justices of the Peace (that follow a simplified regime).

Slovakia Small Flag Slovakia

The Slovak law offers two main methods of resolving commercial disputes, either in a dispute before general court or in arbitration proceedings. Mediation is also an alternative.

 
 
 

Sweden Small Flag Sweden

Arbitration is the preferred dispute mechanism for commercial disputes in Sweden. However, also the general courts decide a significant number of commercial disputes each year.

United Kingdom Small Flag United Kingdom

The three main methods in the UK for resolving commercial disputes are litigation, arbitration and mediation. Litigation is ordinarily conducted in accordance with the Civil Procedure Rules (the “CPRs”). Arbitration is governed by the Arbitration Act 1996 and the New York Convention. Both are adversarial processes. Mediation is a non-adversarial structured negotiation led by a neutral mediator with a view to agreeing a settlement. It is also not uncommon for parties to resolve a matter through negotiation either directly or through their legal representatives.

Bahrain Small Flag Bahrain

The main methods of resolving commercial disputes in the Kingdom of Bahrain (‘Bahrain’) are:

a. Commercial courts: the commercial courts form part of the civil courts which are considered the general courts in the Bahraini legal system, which consists of (i) minor courts, (ii) high courts, as well as (iii) a newly introduced commercial case management system whereby the case managers prepare the commercial case before it goes to court.

b. Bahrain Chamber for Disputes Resolution (‘BCDR’): established by virtue of legislative decree No. 30 of the year 2009 (under section 2 thereof) as a designated court specialized in commercial disputes exceeding 500,000 Bahraini Dinars and including and international trade element or parties that are licensed by the Central Bank of Bahrain (‘CBB’).

c. Arbitration: arbitration is becoming a popular method of resolving commercial disputes due to the fact that Bahrain recently adopted the United Nations Commission for International Trade Law (‘UNCITRAL’) model arbitration law. Moreover, Bahrain is the domicile of two regionally recognized arbitration centers: (i) the Gulf Cooperation Council (‘GCC’) Commercial Arbitration Centre, and (ii) BCDR-AAA (established under section 1 of legislative decree No. 30 of the year 2009).

Dominican Republic Small Flag Dominican Republic

The main method to resolve commercial disputes is traditional litigation before ordinary courts. However, direct negotiation among interested parties is always present as litigation tends to become a mere means to persuade amicable settlements. Arbitration before a chamber of commerce, especially the ones located in Santo Domingo and Santiago (the two main cities), continue to evolve and mature, to the point where it is not atypical to find arbitration clauses in low to medium-stakes matters. Mediation is not quite as common in ordinary disputes and is more likely to take place when the dispute involves parties with similar backgrounds, especially if high-profile.

Indonesia Small Flag Indonesia

The main methods of resolving commercial disputes in Indonesia are:

a. litigation; and

b. alternative dispute resolution, including but not limited to, arbitration proceeding.

a. Litigation through civil courts

There are 4 types of courts in Indonesia: (a) general courts, (b) military courts, (c) administrative courts, and (d) religious courts. Each type of court has its own separate jurisdiction. General commercial disputes fall under the jurisdiction of the general courts, except for commercial disputes relating to a Sharia transaction, which must be brought before the religious courts based on the Constitutional Court Decision Number 93/PUU-X/2012.

Indonesian law also established the commercial court to handle commercial disputes relating to insolvency and bankruptcy issues.

b. Alternative dispute resolution (e.g. arbitration)

Other than the above, Law Number 30 of 1999 also recognizes the following means of alternative dispute resolution:

  1. arbitration;
  2. mediation;
  3. consultation;
  4. conciliation;
  5. binding opinion.

Please note that alternative dispute resolution is subject to an agreement between the disputing parties. As such, the decision resulting from alternative dispute resolution has absolute authority and – theoretically speaking – is not subject to any court’s jurisdiction.

Malaysia Small Flag Malaysia

In Malaysia, commercial disputes are normally resolved through court proceedings. There are also other forms of alternative dispute resolution mechanism such as arbitration and mediation.

Court proceedings are commenced in the respective Subordinate or High Courts pursuant to the Rules of Court 2012 and mediation is often directed by court before trial. Arbitration proceedings are presided by arbitrators and are governed by the Arbitration Act 2005 and are often held in Asian International Arbitration Centre (AIAC). Mediation Act 2012 (“MA”) governs mediation. A mediation under MA will not prevent commencement of any civil action in court or arbitration.

Chile Small Flag Chile

Methods for resolving civil and commercial disputes under Chilean law may be adversarial or non-adversarial.

In fact, Chilean law contemplates and even promotes in some cases the possibility that the parties to the conflict will reach an agreement to solve it. These settlement-oriented methods, called in general as "alternative dispute resolution" devices, may take place before litigation formally commences, or during the course of this.

The typical method by which the parties put a mutual ending on their disputes is the so-called settlement contract (transacción), stated in article 2446 of the Chilean Civil Code (CHCC), which allows an end to a pending litigation or to prevent eventual litigation. This contract is usually included in a document called "settlement”, which, as its name says, serves to finalize or terminate all outstanding disputes that may exist between the parts of a contract.

However, these bilateral conflict-resolution methods can also take place during a process. In fact, the Chilean Civil Procedure Code (CHCPC) establishes a hearing to for the parties to entertain prospective “settlement” talks as a compulsory stage within the civil trial. Here the judge must propose to the parties the basis for a settlement and to reach an agreement.

If the parties fail to agree on an amicable disposition of the conflict, they will have then to start or continue, depending on the timing, with the trial as the sole mean of solving their differences, either before the ordinary courts of justice or in arbitration.

Malta Small Flag Malta

Commercial disputes are generally resolved through recourse to the Civil Courts of Malta. The Laws of Malta also provide for the establishment of specialised tribunals which are vested with the jurisdiction to determine commercial disputes of a specific commercial nature relating to a particular law.

Switzerland Small Flag Switzerland

In Switzerland, commercial disputes are mainly resolved by the Swiss state courts. Four cantons (Zurich, Aargau, Berne and St Gallen) have established specialised, efficient and highly regarded commercial courts (see questions 3 and 16) which are well known both for their expertise and their high settlement rates.

Arbitration is seen as the main alternative dispute resolution mechanism to ordinary state court lit-igation. Swiss legislation and court practice are regarded as very arbitration-friendly. As a con-sequence, Switzerland is among the preferred countries chosen for conducting international commercial arbitration proceedings both with regard to ad hoc arbitration as well as institutional arbitration (for example under the Arbitration Rules of the International Chamber of Commerce or the Arbitration Rules of the Swiss Chambers' Arbitration Institution).

Mediation proceedings have gained some popularity in the recent years. Various institutions, for example the Swiss Chamber of Commercial Mediation, have issued mediation rules. In practice, mediation procedures are nevertheless of minor importance, especially as far as commercial disputes are concerned. Typically, Swiss counsel will attempt to settle a case by means of in-formal bilateral discussions (without the involvement of a mediator) before formal state court or arbitration proceedings are initiated.

Greece Small Flag Greece

The main methods of resolving commercial disputes in Greece are litigation and arbitration.

Norway Small Flag Norway

Commercial disputes in Norway are solved mainly in the ordinary court system. In addition, arbitration and mediation are well-known alternatives that are also used to some extent.

Luxembourg Small Flag Luxembourg

Litigation in front of state courts is the most common dispute resolution mechanism, although alternative dispute resolution methods are increasingly being used in Luxembourg.

The different methods of alternative dispute resolution are as follows:

  • arbitration;
  • conciliation (Articles 70 to 72 of the New Code of Civil Procedure (NCCP));
  • mediation; and
  • the ombudsman.

Regarding mediation, there exists a specific institution (the Centre de Médiation Civile et Commerciale (CMCC)), which offers a voluntary process for the amicable resolution of civil, commercial or social disputes.

United States Small Flag United States

In the United States, litigation, arbitration, mediation and informal negotiation are the primary dispute resolution methods. Mediation, in particular, has been quite popular. In a 2011 study of Fortune 1000 companies, 98 percent of respondents reported using mediation at least once in the past three years, an 11 percent increase from a similar study performed in 1997.

 
 
 
 
 

Iran Small Flag Iran

Commercial disputes in Iran may be resolved through litigation, arbitration, or alternative dispute resolution methods.

Litigation

Commercial disputes may be brought before civil courts. In general, the civil court system in Iran has three layers: courts of first instance, courts of appeal and the Supreme Court.

Moreover, for “small disputes” which are the disputes their value of which do not exceed IRR 200 million, Dispute Settlement Councils (DSCs) are the competent authorities introduced by the Law of Dispute Settlement Councils, 2016 (DSCL).

Arbitration

Commercial disputes may be resolved through arbitration, which is either ad hoc or institutional. Tehran Regional Arbitration Centre (TRAC), affiliated with the Asian-African Legal Consultative Organization, and the Arbitration Centre of Iran Chamber of Commerce, Industries, and Mines (CICCI) are two principal arbitration institutions commonly chosen in commercial disputes in Iran.

Chapter 7 (Articles 454 – 501) of the Code of Civil Procedure 2000 (CCP) (for internal disputes), the Law on International Commercial Arbitration 1997 (for international disputes), and the Law Approving the 1958 United Nations Convention (on recognition and enforcement of foreign arbitral awards) are the main legislations in relation to arbitration proceedings.

Alternative dispute resolution methods

Other forms of commercial dispute resolution such as mediation may also be used by the parties; unlike arbitration, however, these methods are not institutionally structured or statutorily regulated. Civil courts and DSCs may advise disputing parties to try to settle their disputes through alternative methods outside the court system, although there is no mandatory mediation mechanism for commercial disputes in Iran and the parties may decide to continue litigation nonetheless.

Parties to a dispute can settle at any stage during the proceeding, or request from the court to provide them with time extension to negotiate a settlement. If successful, a binding settlement agreement may be entered into before a public notary office or the court.

The Netherlands Small Flag The Netherlands

The main methods of resolving commercial disputes in the Netherlands are state court litigation and arbitration. Other forms of ADR, such as mediation and adjudication (expert determination or binding advice), are available. It is not uncommon for parties to resolve commercial disputes in out-of-court settlements.

Ecuador Small Flag Ecuador

In Ecuador, commercial disputes are resolved in judicial proceedings before the courts or in arbitration proceedings by Arbitration Centers authorized by the Council of the Judicature.

UAE Small Flag UAE

The main method of resolving commercial disputes is litigation before the local courts. However, there are other means of dispute resolution such as arbitration and the Dubai International Financial Court which is a free zone court.

Armenia Small Flag Armenia

Traditionally the primary methods are negotiations, litigation and arbitration. Recently the Government is undertaking actions to make mediation more used as well. The RA jurisdiction doesn’t envisage any court of specialised jurisdiction competent to resolve commercial disputes. Thus commercial claims are heard before the court of general jurisdiction. In what concern arbitration and mediation, those methods are of choice of the parties to a dispute. Moreover, the fact that a litigation process has started doesn’t result in the impossibility to refer the dispute either to an arbitrator or mediator.

Updated: July 3, 2019