How are commercial disputes settled in the USA? (FORBES)

April 7, 2015

In order to collect a debt from a foreign counterparty, a company-creditor usually submits a claim to a court. In general, litigation in state courts tends to be both expensive and time-consuming. However, when the commercial dispute between companies is of international nature, costs of litigation increase significantly.

In the USA, starting from the middle of the twentieth century, commercial disputes are effectively resolved through mediation. This method of alternative dispute resolution proved to be so effective that American judges currently order mediation as the obligatory stage in certain types of commercial disputes.

High demand for mediation in the USA can be explained by the fact that it provides companies with all the needed tools to effectively resolve disputes with their business partners through multilateral negotiations in a speedy manner. For example, our clients, operating in the multimedia market, choose mediation in approximately 80% of disputes with their Ukrainian counterparties, instead of referring the matter to state courts.

What are the main advantages of mediation?

Litigation often leads to significant costs for both the creditor and the debtor, and can easily put the future cooperation between business partners in danger. On the other hand, the result of mediation is a compromise solution, aimed to resolve the existing dispute, minimize costs and preserve a fruitful business relationship between companies.

Unfortunately, Ukrainian companies have not yet fully appreciated all the benefits of mediation, and continue referring their disputes to state courts.

It should be noted, however, that alternative dispute resolution becomes more and more popular in the CIS region. A sizeable contribution to development of this trend is made by the Ukrainian office of TCM Group International – a global network of law firms, operating in 145 countries all over the world.

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