Proceedings before state courts are costly, nerve-racking and, above all, they can take a very long time (e.g. in Switzerland over three instances up to the Federal Supreme Court three years and more [!]). For this reason, proceedings before state courts, especially in business cases, should be avoided whenever possible!
For this purpose, the following stages of dispute resolution should be agreed between the parties, in contracts in advance and in other cases when legal disputes arise, the so-called Alternative Dispute Resolutions (ADR).
A change management or escalation procedure deals with the question of how the parties, especially in a long-term relationship, deal with changed circumstances (prices, law, etc.). For this, an escalation procedure can be agreed upon, in which one first searches for a solution at the lowest hierarchical level and within a project. If this does not succeed, one moves up the hierarchy in the search and outwards in the organisation, in the latter case from internal to external dispute resolution.
Change management or escalation procedure
For example, it can be agreed that a (legal) disagreement will first be negotiated between the project leaders. If no agreement can be reached at this level, the problem is discussed at the level of the management of the parties involved in the project. If no agreement can be reached at this level either, the matter can be raised to the last internal level, the boards of directors, in the case of corporations.
If there is no agreement here either, the internal escalation has failed and an external escalation is agreed upon instead. As in life, it is sometimes good to involve a third party in a dispute between two people. In the escalation process, this is a mediator. A mediator is a person who is independent of the parties. The mediator’s task is not to resolve a conflict, but to help the parties find a solution that is acceptable to all parties. The latter in particular is a great advantage of mediation, because a solution that is acceptable to all increases the likelihood that this solution will then actually be implemented by the parties. Mediation is therefore a way of helping the parties to help themselves.
But even if mediation fails, there is still an (external) escalation stage before going to a state court (which should be avoided; see above), namely arbitration.
This is very well known from sport, where it also shows the obvious advantages. If, for example, there is a foul in football and the teams do not agree, the matter would have to be taken to a state court. This would mean that the game would have to be suspended and could only be resumed months later. But the teams or their association have agreed that in such a case an arbitration court or, in football, a single judge, the referee, will decide. The advantage of a referee is that he decides quickly so that the game can continue immediately. But this is also the disadvantage. Because the referee has no time to judge the matter à fonds. His decision is «fastlaw» from a legal point of view. In order to give the referee a better basis for his decision in the future, video evidence is now being introduced. However, this will lead to delays.
Another advantage of an arbitrator or arbitral tribunal is their professional competence. Arbitration tribunals for commercial cases are often staffed not only by lawyers, but also by experts such as software engineers, civil engineers, architects, physicists or chemists, depending on the matter to be judged.
A court of arbitration is explicitly agreed upon by the parties. It is a private institution.
Well-known arbitration courts are those of the chambers of commerce, in particular the International Chamber of Commerce (ICC) in Paris. What most people are probably not aware of is that when they reserve a domain name, they have subjected themselves to the domain arbitration procedure prescribed by the Internet Corporation for Assigned Names and Numbers (ICANN), the organisation that coordinates the allocation of internet addresses. One of the arbitration tribunals provided for this purpose is that of the World Intellectual Property Organization (WIPO), based in Geneva. These proceedings are regularly conducted in English.