There are bound to be problems when running your own business. Although you could have a series of measures in place to mitigate the risks, many of them are inevitable and unforeseeable. The severity of some disputes may require legal action, leading to civil and commercial litigation.
Civil litigation is a process in which civil matters are resolved in a court of law. (For example, employers and employees of a company). Typically, a person pursuing a civil claim seeks compensation in monetary form. The following are the frequent cases of civil litigation:
Employee compensation cases
Sexual discrimination, disability, race and family status discrimination cases
On the other hand, commercial litigation is when businesses or companies are involved in a legal dispute. Some of the sample disputes in commercial litigation are:
Fraud and Misrepresentation
In this guide, we shall focus on the steps of approaching civil litigation in a business context.
Sometimes, a legal dispute does not arise overnight. It might be an accumulation of a series of events over a period of time. You may need to look over all communication history to investigate the issue. Hence, it is important to have various policies to monitor, investigate, and prevent potential conflicts or disputes that may arise. It provides a predictable framework for dealing with these problems and minimising disruptions to the work environment. For example, in whistleblowing, there may be a designated whistleblowing officer that may deal with the company's reporting mechanism. Click here to see a sample template for a whistleblowing policy.
It is also understandable that sometimes not all problems are foreseeable. Hence, there are no existing policies or documents within the company to deal with the problem. This is especially the case if the company facing a potential civil dispute is newly established. It is then important to seek legal advice from a legal counsel and explain your situation. Your legal counsel will then be able to advise you on appropriate legal steps and other legal problems that may arise.
A company may also have to assess the potential magnitude of the problem. For example, if you have a pending employment dispute, the company's reputation may be affected. Sales figures may decrease. It is important to monitor your company's operation and use every single means to mitigate any damages of any legal actions.
It is also important to identify all the potential stakeholders when a dispute arises, for example, in a civil case involving product liability claims. Your potential stakeholders are your customers, suppliers, manufacturers, marketing team. You may need to identify and inform their role and responsibilities about this pending civil litigation. Your marketing team may need to refrain from using certain wordings in their advertisement. You may also need to communicate with your suppliers and manufacturers about this pending product liability claim and make appropriate production adjustments.
The situation is always especially tricky if the defendant is a company, you may want to consider filing a claim against the parent company instead of the subsidiary company. However, it may be difficult to do so if the parent company is not based in the same jurisdiction. It is best to consult with your lawyer on the best course of action.
Depending on the legal problem's severity, you may choose to hire an attorney to assist you with the pending civil litigation. You may want to find a lawyer specialising in the area concerned, for instance, litigation lawyers, lawyers that are familiar with employment law or product liability. Depending on the problem's magnitude, you may choose to hire a larger firm that can accommodate your needs. Your litigation problem may spread over different jurisdictions, or there are too many stakeholders involved in the process.
Alternatively, you may also seek legal aid or pro bono services. This is suitable for small, medium enterprises (‘SME’) as they may not necessarily have sufficient financial means to litigate. A good place to start is the law society of your respective jurisdiction. Usually, they will provide where you may book a free consultation or places where you may seek pro bono services.
In employment cases, the process is usually less formal, and some people may not choose to have any legal representation. However, as a business owner, you probably would want to hire an employment specialist to assist you in such a matter as high stakes.
Your lawyer may act as a negotiator between the parties involved. It may not always be necessary to go to a court or tribunal to resolve a civil litigation dispute. In fact, it is almost always more desirable to settle the dispute outside of the courts or tribunal as the litigation process can be very lengthy and costly. Your company may incur more losses due to the pending trial and judgement. Many business plans may have to be on hold, and it is a major impediment for many plans for the business.
You may also consider alternative routes to litigation. Arbitration is a viable solution. It is beneficial if your claim involves stakeholders from all over the world. Many countries have signed the New York Convention, which makes arbitral awards readily enforceable worldwide. On the other hand, enforcing a judgment in a foreign country relies on mutual reciprocity agreements or local courts to recognize foreign judgement. Also, arbitral awards are final. There is no appeal. Hence, if you would like to resolve your dispute quickly, arbitration an attractive alternative to litigation.
Click here to here to access our guide to arbitration.
This step is pretty straight forward. All litigation process begins with the complainant filing a complaint and delivering the document to the respondent. Typically, the document will contain a deadline for the beginning of the litigation process. Click here to look at sample templates for the letter of claim.
Usually, parties will utilise the timeframe stated in the letter of claim to attempt to negotiate. As mentioned, it is more desirable to settle disputes outside, as it can save a lot of time and money.
Different jurisdictions have different rules on the formalities of filing a claim. If you think of filing a civil claim, you must contact your lawyer to ensure that you comply with all the relevant rules. Usually, a letter will be sent by post to the registered address of a company or the person's residential address. Subsequently, the complainant will file a claim with their local registry. The process becomes more complicated if the defendant is not located in the same place as the complainant. As a rule of thumb, you sue where the defendant is located in. Hence, you may wish to contact different local courts depending on the parties involved in the litigation process.
You have received a letter of claim. If you are the party who is receiving a letter of claim, you should carefully examine the content of the claims stated in the letter. Do not panic. Not all claims are substantiated and have a sufficient legal basis. Also, there are legal defences that you may rely on in response to any allegations. It would help if you talked to your lawyer regarding receiving a letter of claim and the ways to send a counterclaim or a defence letter in response to the letter of claim.
You have talked to all the potential stakeholders. You have attempted to settle, but all efforts did not yield any fruitful result. The period stated in the letter of claim has elapsed. You or the complainant formally files the complaint to the court. The other party may not have agreed to go to arbitration; hence you have no choice but to settle the dispute through litigation.
It is then necessary to gather information to prepare for the litigation process. This is commonly called the discovery process. This is a pre-trial process where one obtains and examine documents that they use and present as evidence in the court. Some of these documents may include affidavits (Witness statements). Through this process, it allows lawyers from each side to better prepare for the trial.
Different jurisdictions have different procedures on how the local courts deal with scheduling the timings for the trial. One common method would be inviting representatives of both parties to attend a ‘listing day’. The parties will confirm with the judge on the representatives and the court's availability and agree on the hearing date.
Both parties need to attend the hearing on time and bring along all the relevant documents. Relevant witnesses or expert witnesses will also give evidence at the court to help the judge understand the facts of the case. Some jurisdictions allow lawyers to assist their witnesses in preparing for the case.
The judge who heard the case has now rendered a judgment. Parties may now take the judgement and enforce it. If the judge rules in favour of the complainant, the respondent would usually have to pay compensation or damages, as well as the cost of litigation.
Suppose you are unsatisfied with the judgment or order. You may apply for an appeal. However, there are certain limitations to appeal. For most common law jurisdictions, the matter of facts is decided by the court of the first instance. Any appeals will only consider law matters. You should consult with your lawyer on the prospects of success in appealing the case. Otherwise, it could be a waste of time and money.
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