Smarter ways to resolve business disputes

There is a moment in most disputes where emotion overtakes economics. Pride digs in. Letters get sharper. Threats of court are made. And yet, by the time a matter reaches trial, the real question often lingers in the background: was the game worth the candle?

For business owners and SMEs, disputes are not abstract legal battles. They affect cash flow, management, time, staff morale and reputation. How you choose to resolve a dispute can either drain the business or protect it. As PJ Veldhuizen, Managing Director of commercial law firm Gillan & Veldhuizen Inc., puts it:  “You need to move on. You can’t afford lengthy delays and exorbitant legal costs. In business, robust, immediate justice often beats a theoretical victory years later.”

Below is a practical look at the four primary routes to resolve disputes – and when and why each makes sense:

Mediation: start here

Mediation is a structured, voluntary process in which a neutral third party helps the parties reach their own solution. It is confidential and becomes binding when a written settlement agreement is entered into, and usually far quicker and more cost-effective than going to court.

Typical scenarios:

  • Shareholder or partnership deadlocks
  • Supplier or service-level disputes
  • Family business fallouts
  • Customer complaints that have escalated beyond repair

Consider a business where two shareholders are deadlocked or complain of unfairly oppressvie conduct. Instead of issuing court papers and fighting for years, mediation can narrow the dispute to the real issue, for example: how to determine value and how to split the business or agree a buy-out mechanism.

Veldhuizen often reminds clients that mediation is not about capitulation. “You don’t have to settle everything. Sometimes what you settle is simply the way forward.”

This thinking aligns with David Hoffman’s The Art of Impasse Breaking: A Handbook for Mediation, which emphasises that impasse is not failure – it is information. Hoffman writes that the mediator’s task is to help parties “move from positions to interests” and to design processes that allow progress even where agreement on the substance seems out of reach. In business terms: if you cannot agree on price, agree on the method to determine price.

For businesses, mediation preserves relationships and management bandwidth. It keeps the dispute out of the public domain and allows for the kind of commercial creativity that a court simply cannot offer.

Adjudication: quick, focused determination

Adjudication is often overlooked in mainstream commercial disputes, yet it can be one of the most practical tools available to business owners. It involves appointing a respected, independent third party to make a binding (or sometimes temporarily binding) decision on a clearly defined issue.

Typical scenarios:

  • Disputes about professional fees (for example, trustee or executor remuneration)
  • Contractual penalties or forfeited deposits
  • Valuation disagreements in shareholder exits
  • Interpretation of a specific clause in a commercial agreement
  • Deadlocks over earn-outs or performance-based payments in a sale of business

Take a sale agreement where a purchaser cancels and the seller retains the deposit as pre-estimated damages. The purchaser claims it’s an unenforceable penalty; the seller says it’s commercially justified. The facts aren’t in dispute – the agreement, the payment and the cancellation are common cause. The real issue is whether the amount is proportionate under the Conventional Penalties Act.

Instead of issuing summons and waiting years for a court date while costs mount and cash remains tied up, the parties could appoint senior counsel or a suitable nominee to decide the narrow question: should the deposit stand, be reduced, or be refunded?

“The facts are the facts,” says Veldhuizen. “If there’s no real dispute of fact, why not appoint someone you both respect, get a decision, and move on?”

Adjudication is controlled, contained and issue-specific. It avoids the sprawl of litigation. For a business that needs certainty especially where contingent liabilities affect its books, speed matters.

Arbitration: private court, with control

Arbitration is often described as a private court. The parties appoint an arbitrator, define the procedure and obtain a binding award.

Typical scenarios:

  • Complex commercial disputes
  • Cross-border contracts
  • High-value shareholder litigation
  • Matters requiring specialist expertise

The advantages include speed (usually), confidentiality and the ability to choose a decision-maker with commercial experience. The downside is the potential costs:  the parties pay the arbitrator, the venue and the administrative infrastructure.

“Arbitration is not a panacea,” cautions Veldhuizen. “It’s still a formal process. You’re just paying the judge.”  But its real strength lies in control. Parties can limit arbitration to a single issue – liability only, for example,  and leave quantum (damages) to negotiation. In insurance disputes, this is common. An insurer may accept negligence but arbitrate only the amount payable. The scope can be tailored.

For businesses dealing with technical or industry-specific matters, arbitration can offer expertise that a generalist court may not.

Litigation: the last resort

Litigation has its place. Some disputes require judicial authority. Some opponents refuse to engage. Some matters involve public law, fraud or precedent-setting issues.

Typical scenarios:

  • Enforcement against a wayward debtor
  • Urgent interdicts
  • Matters involving constitutional or statutory interpretation
  • Opponents acting in bad faith

But litigation is slow. It is public. And it is expensive. Even a relatively straightforward commercial matter can take years to finalise, with appeals extending the timeline further. There is also a psychological trap as Veldhuizen notes, “There’s a sunk-cost fallacy. You just keep going. Pride and anger drive the process long after the economics have ceased to make sense.”

In many smaller consumer or contractual disputes – the defective vehicle, the telecoms contract gone wrong – “the game is not worth the candle.” The legal costs will exceed the value at stake.

Designing the process – not just fighting the case

The real shift for business owners is this: dispute resolution is not two-fold. It is not “court or nothing.”

You can:

  • Mediate to identify and narrow issues.
  • Adjudicate on a discrete question.
  • Arbitrate liability but negotiate damages.
  • Use litigation only where necessary.

Hoffman’s work on impasse emphasises that parties can design layered processes – resolving what they can, deferring what they must and preventing stalemate from becoming paralysis. For businesses, this approach protects liquidity, management focus and reputation.

Before instructing attorneys to “go all in,” ask yourself:

  • What is the real issue?
  • What does success look like commercially?
  • How long can the business carry this?
  • Is there a faster, controlled way to get a decision?

As Veldhuizen puts it, “You are never going to get everything you want – not in mediation, not in arbitration and not in court. The question is how quickly and cost-effectively you can reach an outcome that allows you to move forward.”

In business, forward motion is often the real victory. When disputes arise, the smartest strategy is not always to fight harder – but to choose the forum (or battlefield) that makes the most commercial sense.