With the economy on a back footing, many small and some larger businesses are struggling to stay afloat. It is becoming even more important that businesses do everything they can to reduce spending, particularly in areas such as litigation where there is little possibility of recovering losses.
Litigation can be an extremely costly process and this is even more likely if the parties to the dispute are from different countries. According to an article published on publicserviceeurope.com, "forty-five per cent of small businesses have said they would not pursue a claim in another European Union court if the money owed was less than €50,000, which year-on-year amount to massive losses to EU small businesses." This is an alarming figure since many small businesses are already struggling.
Part of the problem is that businesses are not making regular use of methods of Alternative Dispute Resolution (ADR), instead believing that their only options are taking a case to court or cutting their losses.Whilst legal proceedings can be extremely costly, particularly if pursuing a case requires attending a hearing in a foreign court, there are more cost-effective solutions available to many businesses. One of the most efficient and effective of these is mediation.
Mediation has a number of advantages over taking a dispute to court. It paves the way for an out of court settlement that could save both parties the considerable costs associated with holding a court hearing.At the same time, resolving a dispute through mediation takes far less time than using the judicial process. Both parties retain the right to take the issue to court if a satisfactory resolution cannot be negotiated, and the mediation process is focused on finding a solution that is agreeable to both parties. It has been argued that the EU should do more to promote mediation because many businesspeople are unaware of it as an option.
Whilst independent mediators can help to solve problems between two businesses, they are also helpful in resolving disputes within a business. If there is a dispute between an employee and a member of the management team over discrimination, legal proceedings are often costly to both parties and bad for the reputation of the business. On the other hand if the problem is not dealt with it may create problems further down the line. Mediation often provides a preferable alternative to a tribunal when sensitive issues arise in the workplace.