A commercial dispute does not have to end up in court. Negotiation, mediation and arbitration all sit alongside litigation as recognised routes to resolving a disagreement, and under the Civil Procedure Rules the courts expect businesses to have considered one of them before a claim is even issued. As commercial dispute solicitors acting for businesses across London and nationwide, we help clients choose the right route for their situation, rather than defaulting to litigation because it is the option most people have heard of.
This guide sets out the realistic options for resolving a business dispute, what the courts expect you to try first, and how a business dispute solicitor can help at each stage, whether you are a supplier chasing an unpaid invoice, a landlord in a rent dispute, or a shareholder facing a boardroom deadlock.
What Counts as a Commercial Dispute
“Commercial dispute” is a broad term, and it covers most of the disagreements that come up in the ordinary course of running a business. The most common types we see include:
- Contract disputes, including breach of contract, non-payment, and disagreements over what was actually agreed. See our contract dispute solicitors page for more on this.
- Commercial lease and property disputes, such as rent arrears, disputed service charges, dilapidations claims, break clause disagreements and lease renewals. Our commercial lease solicitors and landlord and tenant solicitors teams deal with these regularly, acting for landlords and tenants alike.
- Shareholder and partnership disputes, including boardroom deadlocks, unfair prejudice claims and disagreements over the direction of the business.
- Debt recovery, where a customer or client will not pay and formal steps are needed to recover what is owed.
- Supplier and distribution disputes, where the terms of a commercial relationship break down.
Whatever the subject matter, the same question applies at the outset: what is the quickest, most proportionate way to resolve this without damaging a relationship you may still need, or spending more on legal costs than the dispute is worth?
Business Dispute Solicitor: Why Early Advice Matters
Most businesses only bring in a business dispute solicitor once a disagreement has already escalated. By that point, positions have often hardened, and something that could have been resolved with a well-drafted letter now needs a formal response. Getting advice early, as soon as a dispute looks likely rather than once it is already underway, gives you more options and usually a better outcome.
A business dispute solicitor can help you at three distinct stages:
- Before a dispute arises, by reviewing contracts, leases and agreements for weak points, and making sure dispute resolution clauses, break rights and payment terms are clear enough to avoid an argument over interpretation later.
- As soon as a disagreement surfaces, by setting out your legal position clearly, assessing the merits and risks realistically, and identifying the most proportionate route to a resolution.
- If the dispute cannot be resolved without formal process, by representing you through negotiation, mediation, arbitration or court proceedings, whichever the situation calls for.
We act for both sides of commercial disputes: businesses bringing a claim and businesses defending one, landlords and tenants, and both parties to a contract or partnership. That gives us a realistic view of how the other side is likely to approach a dispute, which shapes the advice we give from day one.
Negotiation: The First and Often Fastest Route
Negotiation is the least formal way to resolve a dispute, and in most cases it is the first step, whether that happens directly between the parties or through solicitors acting on their behalf. There is no third party involved, no fixed process, and no cost beyond the time spent reaching an agreement.
Done well, negotiation can resolve a dispute in days rather than months, and it keeps the outcome entirely in the parties’ hands. It works best where both sides have a genuine interest in preserving the commercial relationship, such as a long-standing supplier arrangement or a landlord and tenant who expect to be dealing with each other for years to come.
Where direct negotiation stalls, a formal letter before action, setting out your legal position, the outcome you are seeking and a reasonable deadline to respond, is often enough to move things forward. It also starts the clock on the pre-action conduct expected under the Civil Procedure Rules, which we cover below.
Mediation and Alternative Dispute Resolution (ADR)
Where direct negotiation does not resolve things, Alternative Dispute Resolution, usually shortened to ADR, is the next step before considering court proceedings. ADR covers a number of processes, but the one used most often in commercial disputes is mediation.
In mediation, an independent, trained mediator meets with both parties, usually over the course of a single day, and helps them work towards a settlement they can both accept. The mediator does not decide the outcome or take sides. Their role is to help each side understand the other’s position, test the strength of their own case realistically, and find common ground. Mediation is confidential, and anything discussed cannot generally be used later if the matter does still end up in court.
Mediation tends to work well for commercial disputes because it can preserve a relationship that litigation would otherwise end. A landlord and tenant who mediate a rent or dilapidations dispute can often carry on the tenancy afterwards. Two shareholders who mediate a disagreement over the direction of the business may still be able to work together, or agree an orderly exit, without the damage a contested court case would cause.
The courts actively encourage this. Following the Court of Appeal’s decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, handed down on 29 November 2023, judges in England and Wales have the power to order parties to engage in ADR, or to stay proceedings so that ADR can take place, provided doing so does not impair a party’s right to a fair trial, pursues a legitimate aim and is proportionate. In practice, this means a court can require you to at least attempt mediation before a contested commercial dispute is allowed to proceed to trial.
There are costs consequences for ignoring this too. The Practice Direction on Pre-Action Conduct and Protocols states that a party’s silence in response to an invitation to mediate, or an unreasonable refusal to take part, can be treated as non-compliance with the pre-action process. Where that happens, the court can order the party at fault to pay some or all of the other side’s costs, including on the more punitive indemnity basis, regardless of who ultimately wins the underlying dispute.
A business dispute solicitor can advise on when mediation is genuinely likely to work, help you choose an appropriate mediator, and prepare your position paper so the day is used effectively rather than as a first airing of the issues.
Arbitration: A Binding Alternative to Court
Arbitration sits between mediation and litigation. Like mediation, it takes place outside the court system and is private. Unlike mediation, the outcome is not something the parties agree between themselves. An independent arbitrator, or a panel of arbitrators, considers the evidence and arguments from both sides and makes a binding decision, known as an award.
Arbitration in England and Wales is governed by the Arbitration Act 1996, which sets out how arbitration agreements are enforced and how an arbitral award can itself be enforced through the courts if the losing party does not comply voluntarily. Many commercial contracts, particularly in construction, shipping, insurance and international trade, include an arbitration clause requiring any dispute to go to arbitration rather than court. If your contract contains one, it will usually need to be followed, so it is worth having this checked as soon as a dispute looks likely.
Arbitration tends to suit disputes where technical or industry-specific expertise matters, since the parties can choose an arbitrator with relevant experience, and where confidentiality is a genuine priority. It is generally faster than litigation, though usually slower and more expensive than mediation, since the process still involves formal evidence and submissions.
Litigation: Taking a Commercial Dispute to Court
Court proceedings remain the right route for some disputes, particularly where the other side will not engage, where an injunction is needed urgently, or where a binding, enforceable judgment is the only way to protect your position. Litigation is also the only route among these that produces a public judgment, which matters where a point of principle, rather than just the immediate dispute, is at stake.
Before issuing a claim, the parties are expected to follow the pre-action conduct set out in the Civil Procedure Rules. The Practice Direction on Pre-Action Conduct and Protocols requires parties to exchange enough information to understand each other’s position, and to consider whether negotiation or another form of ADR might resolve the dispute without the need for proceedings at all. Skipping this step, or refusing point blank to engage with it, is one of the more common and avoidable reasons a claim ends up costing more than it should, regardless of the eventual outcome.
Once proceedings are issued, a commercial claim in England and Wales typically moves through statements of case, disclosure of documents, witness evidence and, where needed, expert evidence, before reaching trial. Many cases still settle at some point along the way, often once both sides have a clearer picture of the evidence and the litigation risk they are carrying. Where a lease or commercial property is at the heart of the dispute, our commercial property litigation team handles this end to end, from the pre-action stage through to trial if it gets that far.
Comparing Your Options
There is no single right answer for every dispute. The table below sets out how the main routes typically compare, though the right choice always depends on the specific facts, what your contract says, and what you are trying to achieve.
| Route | Typical cost | Typical timescale | Privacy | Who decides the outcome |
|---|---|---|---|---|
| Negotiation | Lowest, generally solicitors’ time only | Days to a few weeks | Private | The parties themselves |
| Mediation | Low to moderate, a shared mediator’s fee plus preparation time | Often resolved in a single day, arranged within weeks | Private and confidential | The parties themselves, with the mediator’s help |
| Arbitration | Moderate to high, arbitrator’s fees plus preparation similar to litigation | Several months, depending on complexity | Private | An independent arbitrator, decision is binding |
| Litigation (court claim) | Highest, court fees, disbursements and exposure to the other side’s costs | Many months, often over a year if it reaches trial | Public, judgment is generally published | A judge, decision is binding, subject to appeal |
Commercial Lease and Property Disputes: A Common Flashpoint
Property-related commercial disputes deserve a specific mention, since they are among the most frequent disputes we see and often the most time-pressured. Rent arrears, disputed service charge demands, dilapidations claims at the end of a lease, and disagreements over whether a break clause has been validly exercised can all escalate quickly if they are not handled correctly from the outset. Many of the same principles apply: an early, well-evidenced position and a genuine attempt at negotiation or mediation will usually produce a better result than an immediate move to litigation. We have also set out some of the drafting issues that lead to these disputes in the first place in our article on commercial lease agreements and the red flags to watch for.
What This Means for You
Waiting for a disagreement to become a full-blown dispute before taking advice rarely works out well. The businesses that come out of a commercial dispute in the strongest position are usually the ones that took advice early, chose the right route deliberately rather than by default, and kept sight of the underlying commercial relationship throughout, rather than treating the dispute as something to win at any cost.
If you are facing a commercial dispute, whether it involves a contract, a lease, a business partner or a customer who will not pay, our commercial dispute solicitors can help you assess your position and choose the right way forward. Get in touch with our team or call us on +44 207 566 1188, or email info@gurvelegal.com, for a conversation about your specific situation.
