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To resolve disputes is part and parcel of doing business. Although common, these issues can spell disaster for small and medium-sized enterprises (SME) who don’t have the capacity to easily absorb such unexpected costs.

This is why SMEs should know how they can resolve disputes in the most convenient way.

Generally, there are 3 ways to resolve commercial disputes:

  1. Informal or Semi-formal Resolution
  2. Court Resolution
  3. ADR and ODR

Informal or Semi-Formal: Fast and Cheap Dispute Resolution

Informal or semi-formal resolution is the fastest, cheapest, and most widely-used method to resolve disputes. With informal resolution, parties simply talk to each other to reach an agreement, while semi-formal resolution involves the help of an advisor, usually a solicitor or an accountant.

An FSB report mentions that although 43% of their members resolved their dispute through these methods, only 18% were actually satisfied with the resolution. This could largely be because small businesses lack bargaining power when faced with a more powerful opposing party.

PROS

  • Cheap
  • Fast
  • Simple

CONS

  • Low satisfaction rate
  • Not SME-friendly

Court Resolution: Effective Dispute Resolution

By resolving disputes through courts, SMEs are well-protected by legally binding and enforceable resolutions. SMEs can also trust that court resolutions are impartial and fair.
However, courts are notoriously slow and expensive. Based on a study by the European Commission, 28% of respondents who have had a dispute opted not to go to courts because the cost of litigation was higher than the value of the dispute.

PROS

  • Legally-binding
  • Impartial and fair

CONS

  • Expensive
  • Slow

ADRs and ODRs: Promising Dispute Resolution Alternatives

Alternative Dispute Resolution (ADR) such as mediation and arbitration, and its online version (ODR) are slowly gaining traction these days. Through either of these methods, an independent, non-court third party helps in resolving the dispute and provides a legally binding resolution.

ADRs are faster and cheaper compared to court resolutions. And according to a study by the US Department of Justice, they also have a high success and satisfaction rate. To top this all up, ODR and digital arbitration can even be done conveniently anywhere. However, only a few use this method in resolving disputes — why is that?

The answer lies in the knowledge gap amplified by a fragmented ADR sector. Most businesses don’t even know about ADRs; and those who do know, face a maze of confusing options that leave them frustrated and demoralized.

PROS

  • Affordable
  • Fast
  • High success and satisfaction

CONS

  • Fragmented
  • Can be confusing

So, what’s the Best Dispute Resolution Method?

The short answer is, there’s none. Well, at least none yet. Right now, policymakers are devising ways to solve the problem of dispute resolution that is costing small businesses a ton of money.

The development of tech-enabled dispute resolution platforms such as Jur’s Open Justice Platform is also looking like a viable solution. In 2020, Jur has been chosen as the technical delivery partner of LawtechUK, an initiative supported by the UK government, to understand how SMEs can have better access to dispute resolution solutions. Together with researchers from Oxford University, Oxford Computer Consultants, and Resolve Disputes Online, Jur will be creating the foundation of a tool that will truly help SMEs resolve disputes.

As a pioneer in digital arbitration and online dispute resolution, Jur is at the forefront of legal tech innovation. The Open Justice Platform uses a blockchain-enabled arbitration process to provide legally binding resolutions enforceable in 168 jurisdictions.

Jur does this by employing a gamified mechanism that empowers disputing parties and incentivizes voters who take the majority position. 

The current legal framework needs a lot of work. This is why Jur is excited to develop tech that can deliver justice at the speed of business.


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