Top 5 Strategies For Resolving Business Disputes Without Litigation

Commercial relationships do not tend to collapse based on a single moment or disagreement. More often than not, pressures will build slowly as misunderstandings, contractual uncertainties or communication gaps begin to interfere with day-to-day operations. If those early warning signs are not addressed, positions harden and the parties can find themselves talking about formal proceedings before they have even had chance to explore more productive avenues.

In most situations, the court room is not the most efficient or commercially sensible place to start to resolve such business disputes. The real skill lies in recognising what is happening at an early stage and engaging with the issues in a way that protects the business, the relationship and the value behind the contract.

Here, we examine five proven strategies that allow businesses to resolve disputes while preserving commercial relationships and avoiding the expense, publicity and unpredictability of litigation. Each approach serves different circumstances, and understanding which mechanism fits which situation is just as important as understanding how each one works.

1. Understanding what the dispute is really about

The heart of a commercial dispute is not always obvious. A director may insist a supplier has breached the contract, but the real concern may be about reliability in the next quarter. A shareholder may demand a valuation adjustment, yet the underlying fear could relate to lost influence or future risk. A customer might challenge pricing not because the figure itself is unacceptable, but because the business case behind it has shifted.

This is why the first step is a calm, structured assessment of the situation. Senior teams benefit from standing back from the personalities involved and examining the factual narrative from the beginning. This includes reviewing the contract as it was drafted, how it has been applied in practice, where communication broke down and what commercial pressures each party is currently facing. Corporate disputes often sit against a broader strategic backdrop, and solutions only become visible when that wider context is understood.

The diagnostic process should involve the right people. Legal counsel must be engaged early, but so too must the commercial team that lives with the relationship day-to-day, and any operational personnel who understand how the contract actually functions in practice.

The questions that matter are straightforward but often overlooked: Is this fundamentally about money, control, risk allocation, or timing? What does each party actually need to move forward? What would success look like in six months if this were resolved well? And critically, what are the costs and risks if this is not resolved at all?

2. Creating space for structured negotiation

The power of negotiation is often underestimated. Many leaders view it as a conversation about numbers. In reality, it is a managed process that hinges on preparation, clarity of objectives and an honest appraisal of risk. When approached with that level of discipline, negotiation becomes one of the most useful tools available to a commercial business.

The most effective negotiations begin with understanding what each side needs to achieve for the business to move forward. Not everything is financial. For long-term contracts, continuity may be more important than immediate remedy. For joint ventures, governance and communication paths often matter more than compensation. High-quality negotiation will shift the conversation from blame to solution, and give leaders the space to explore different settlement structures, including changes to future performance obligations, revised timelines, phased payments or adjustments to governance arrangements.

However, preparation will be crucial. Before entering negotiation, businesses should have gathered all relevant correspondence, contract documents and performance data. They should understand their own legal position clearly, including the realistic strength of any claim or defence. They should have modelled the financial impact of various settlement scenarios and established internal authority limits so that negotiators know where their discretion ends. Without this groundwork, negotiations will simply drift or stall.

There are several common pitfalls that can undermine even well-intentioned negotiations. Sending representatives without sufficient authority wastes time and signals a lack of seriousness. Conflating legal merit with commercial outcome can lead to unrealistic expectations. Allowing negotiation to proceed without a clear timeline or defined process often results in drift. And positioning legal advisors incorrectly, either too prominently or too far in the background, can destabilise the tone of discussions.

The most effective approach is usually to have legal counsel prepare the team thoroughly, remain accessible during discussions, and step forward when legal clarity is required, but otherwise allow commercial leads to drive the conversation.

Knowing when to walk away is equally important. If the other party is negotiating in bad faith, using the process purely for delay, or making demands that fundamentally undermine the business, then continuing to negotiate may simply expose the organisation to further risk. Senior leaders need to set boundaries before negotiation begins and be prepared to move to a more formal process if those boundaries are crossed.

When handled well, negotiation not only resolves the immediate issue but also strengthens operational resilience. Many disputes that look irreparable can, with thoughtful negotiation, be turned into opportunities to recalibrate the relationship and provide clarity for the future.

3. Using mediation to break impasse

Mediation introduces an independent presence into the process at the point where direct negotiation has faulted. It provides a confidential environment in which each party can speak openly, test ideas and explore outcomes that would be impossible to engineer through formal correspondence.

The real value of mediation lies in its structure. Each party retains control over the outcome, which often makes leaders more willing to explore concessions that they would reject in a court-led environment. Mediators also help unpick complex dynamics. They highlight patterns in communication, challenge unrealistic assessments of risk and encourage parties to look at the dispute through a wider commercial lens.

For corporate disputes, mediation is especially effective where the relationship has long-term significance. It reduces reputational exposure and helps prevent internal disruption, particularly when key commercial relationships or strategic suppliers are involved. Even when mediation does not result in a full settlement, it usually narrows the issues significantly, giving businesses a clearer roadmap of what remains in contention and how to approach it.

From a practical perspective, mediation is also considerably more cost-effective than litigation. Where a commercial dispute might involve legal costs in the hundreds of thousands, or even millions, through trial, mediation typically costs a fraction of that figure, often between ten and twenty percent of projected litigation costs. The process itself is usually completed within a day or two, though preparation may take several weeks depending on the complexity of the issues. This means disputes that might take two years to reach judgment can be resolved in two months.

Selecting the right mediator matters. Businesses should look for individuals with genuine experience in the relevant sector, a reputation for managing difficult personalities, and a style that suits the nature of the dispute. Some mediators are more evaluative, offering views on legal merit; others are purely facilitative, focusing on interests and outcomes. For highly technical commercial disputes, an evaluative approach may be more effective. For disputes rooted in relationship breakdown, a facilitative style often works better.

Success rates for mediation in commercial disputes are high. The most recent CEDR Mediation Audit shows that in England and Wales, 92% of civil and commercial mediations result in settlement, with 72% settling on the day and 20% settling shortly after. That statistic alone makes it worth serious consideration before embarking on litigation.

4. Turning to expert determination for technical questions

Some disputes will hinge on a single technical issue. Valuation disagreements, performance metrics, defects analysis, audit calculations and specialist compliance questions often fall into this category. These disputes can be extremely costly to litigate because they require expert evidence, significant disclosure and prolonged procedural steps.

Expert determination offers a more focused alternative. The parties agree on a suitable expert in the relevant field, define the scope of the question, and allow the expert to reach a decision based on the evidence. It is usually a paper-based process and is typically faster and more cost-effective than litigation. Crucially, the decision is often contractually binding, allowing the parties to move on without further escalation.

For corporate leaders, the value of expert determination is that it isolates the technical issue from the wider relationship. Once the point is resolved, there is often no remaining dispute. It provides clarity, certainty and finality in areas where specialist knowledge is essential. Typical scenarios include lease dilapidations assessments, earn-out calculations in acquisition agreements, software performance metrics under IT contracts, and product quality disputes in manufacturing supply chains.

Expert determination is not suitable for every dispute. Where the issue involves complex questions of law, or where procedural fairness requires cross-examination of witnesses, litigation or arbitration may be more appropriate. Expert determination also depends on both parties cooperating in the appointment of the expert and the framing of the question. If one party is fundamentally opposed to the process, it cannot proceed.

The ability to challenge an expert determination is limited. In most cases, the decision is final and binding, subject only to narrow grounds such as fraud, bias, or the expert having exceeded their jurisdiction. This finality is precisely what makes the process attractive, but it also means the initial drafting of the expert determination clause in the contract is critically important. Businesses should ensure these clauses clearly define the scope of issues that can be referred, the qualifications required of the expert, the procedure to be followed, and the binding nature of the decision. Without that clarity, disputes about the process itself can arise.

5. Considering arbitration where confidentiality and enforceability matter

Arbitration is increasingly the preferred choice for businesses that need a determinative process without the risks of public proceedings. It provides privacy, procedural flexibility and the ability to appoint an arbitrator with genuine sector expertise. For many corporate disputes, these factors are central. The confidentiality of arbitration protects sensitive business information, pricing structures, intellectual property, board-level decisions and strategic plans that would otherwise become part of the public record. This allows parties to address difficult issues without reputational fallout. For publicly listed companies, or businesses operating in highly competitive markets, this protection can be as important as the outcome itself.

Arbitration is also particularly valuable for cross-border disputes. Awards benefit from international enforceability arrangements, making it a reliable route for international contracts and joint ventures. If a judgment is required in multiple jurisdictions, arbitration avoids the need to relitigate the dispute in each territory. The award can simply be recognised and enforced, subject to limited grounds for refusal.

There are some common misconceptions about arbitration that need addressing. The first is cost. Arbitration is not always cheaper than litigation. For complex commercial disputes involving substantial disclosure, multiple experts and lengthy hearings, the costs can be comparable to, or even exceed, those of litigation. The arbitrator's fees, administrative fees charged by arbitration institutions, and hearing venue costs all add to the expense. However, the ability to shape procedure, control timelines and safeguard commercial information provides strategic benefits that many corporate entities regard as essential. The real advantage is not necessarily lower cost, but greater control.

The second misconception is speed. Arbitration can be faster than litigation, but this is not automatic. If parties agree to extensive disclosure, multiple rounds of submissions and protracted hearings, arbitration can take just as long as court proceedings. The speed advantage comes from the ability to design a bespoke procedure suited to the dispute, and from the fact that arbitrators are appointed specifically for the case and are not managing a broad caseload like a judge.

When considering arbitration, businesses must also choose between institutional and ad hoc arbitration. Institutional arbitration, administered by bodies such as the London Court of International Arbitration or the International Chamber of Commerce, provides established rules, administrative support and a framework for resolving procedural disputes. Ad hoc arbitration offers greater flexibility but requires the parties to agree every procedural step themselves, which can lead to delays if cooperation breaks down. For most commercial disputes, institutional arbitration provides the structure and certainty that corporate parties prefer.

Choosing the right mechanism for the dispute

Understanding which resolution method suits which situation is a skill in itself. The choice depends on a combination of factors, such as the nature of the dispute, the importance of the relationship, the need for confidentiality, the presence of technical questions, and whether the parties are still capable of negotiating directly.

Where the relationship is critical and positions have hardened but not irretrievably, mediation is usually the best starting point. It preserves confidentiality, maintains control, and creates space for creative solutions that litigation cannot deliver. However, in instances where the dispute turns on a narrow technical question and both parties are prepared to accept an independent expert's view, expert determination offers speed and finality. If confidentiality is paramount, particularly in cross-border contexts, arbitration will provide enforceable outcomes without public exposure. But if positions are still fluid and the parties retain a degree of trust, structured negotiation remains the most cost-effective and relationship-preserving option. Only when none of these routes are suitable, or where one party is unwilling to engage constructively, litigation will become the only realistic path forward.

The key is to make this assessment early, with proper legal input, and to approach the choice strategically rather than reactively. Businesses that treat dispute resolution as a deliberate decision, rather than something that simply happens to them, consistently achieve better outcomes.

Why timing and preparation matter

Across all these methods, one theme is constant. Early, informed engagement protects businesses far more effectively than adversarial escalation. By the time litigation becomes the primary option, commercial relationships may be fractured, operational risks may have increased, and costs may already be mounting.

For business leaders, the most effective approach is proactive. This means seeking early legal insight, assessing the strength of the organisation's position, considering the reputational environment and examining the long-term commercial consequences of each route. Alternative resolution methods are not simply procedural options. They are strategic tools that allow businesses to manage risk, protect value and maintain control over outcomes.

Preparation begins well before any dispute arises. Contracts should contain well-drafted alternative dispute resolution clauses that set out a clear escalation path, from negotiation through to mediation or expert determination, before arbitration or litigation becomes available. Internal escalation protocols should ensure that commercial and legal teams are brought in at the right stage, and that decision-making authority is clearly defined. Businesses that maintain good contractual hygiene, document their dealings carefully, and foster strong communication channels with counterparties are far less likely to find themselves in intractable disputes.

The question for business leaders is not whether disputes will arise, but how prepared the organisation is to handle them strategically. Companies that treat dispute resolution as a strategic capability rather than a distraction consistently protect more value and preserve more relationships than those that default to litigation.

Commercial disputes will always be part of business life, but they need not dominate it. With careful preparation, honest assessment and the right choice of mechanism, most conflicts can be resolved well before court proceedings are issued. For companies focused on stability and long-term performance, these strategies offer a way to manage disputes that supports both operational continuity and commercial strength.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.