Experts Urge SMEs To Prioritise Mediation And Efficiency In Commercial Dispute Resolution

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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.

In my experience, businesses need to move on. They cannot afford lengthy delays and escalating legal costs. In many cases, robust, immediate justice is far more valuable than a theoretical victory years down the line.

Here’s a practical look at the four primary routes to resolving disputes - and when they make commercial 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, flexible and far quicker - and usually far cheaper - than litigation.

It works particularly well in:

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

In a typical shareholder dispute, parties often rush to court alleging oppressive conduct or breach. In reality, what they need is a way forward - a mechanism to separate or restructure.

Mediation allows you to narrow the dispute to what actually matters. And importantly, you don’t have to settle everything. Sometimes what you settle is the process: how value will be determined, how an exit will work or how the business will be divided.

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, protects management bandwidth and keeps the dispute out of the public domain. It allows for commercial solutions that a court simply cannot craft.

PJ Veldhuizen, MD of Gillan and Veldhuizen Inc.

Adjudication: Quick, focused determination

Adjudication is often overlooked, but it is one of the most effective tools available in commercial disputes. It involves appointing an independent third party to make a binding decision on a clearly defined issue.

It is particularly useful where the facts are common cause, and the dispute is narrow.

Typical scenarios include:

• Disputes about professional fees
• Contractual penalties or forfeited deposits
• Valuation disagreements
• Interpretation of specific contractual clauses
• Earn-out or performance-based payment disputes

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 real question is whether the amount is proportionate under the Conventional Penalties Act.

Instead of issuing summons and waiting years while costs escalate and cash remains tied up, the parties can appoint senior counsel or a suitable nominee to decide the issue: does the deposit stand, get reduced, or get refunded?

If there’s no real dispute of fact, appoint someone both sides respect, get a decision, and move on.

Adjudication is contained and issue-specific. It avoids the sprawl of litigation and delivers certainty - which, in a business context, is often the most valuable outcome.

Arbitration: Private court, with control

Arbitration is essentially a private court. The parties appoint the arbitrator, define the process and obtain a binding award.

It is useful in:

• Complex commercial disputes
• Cross-border matters
• High-value shareholder disputes
• Issues requiring specialist expertise

The advantages include speed (usually), confidentiality and the ability to choose a decision-maker with commercial experience. The trade-off is cost. You are paying the arbitrator, the venue and the process.

Arbitration is not a silver bullet. It is still formal and can become expensive. But its real strength lies in control. You can limit the dispute - for example, arbitrate liability and negotiate quantum later.

For businesses dealing with technical disputes, arbitration allows for informed decision-making by someone who understands the commercial context.

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: once you’ve started, it becomes difficult to stop. Time, money and pride keep the matter alive long after it makes commercial sense.

In many consumer and contractual disputes - defective goods, service agreements, smaller claims - the reality is simple: the game is not worth the candle.

Designing the process - not just fighting the case

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

You can:

• Mediate to identify and narrow issues
• Adjudicate on a discrete question
• Arbitrate only what needs determination
• Litigate only where necessary

Hoffman’s work on impasse makes it clear: you can design a process. Resolve what you can, defer what you must and avoid turning deadlock into paralysis.

For businesses, this approach protects liquidity, management focus and reputation.

Before you instruct your attorneys to “go all in”, ask:

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

You are never going to get everything you want - not in mediation, not in arbitration, and not in court. The real 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.