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State court proceedings

In state court proceedings, the legal consequences of a matter are examined. The decision-making process is highly formalized by strict rules of procedure. The decision itself is made by a legally prescribed state judge. Participation in the proceedings is practically enforceable. In principle, it is possible to have a court decision reviewed by a higher instance. State enforcement bodies are available to enforce a decision.

Advantages:

  • Legally binding judgements set a precedent.
  • In some states very solution-oriented procedural rules.
  • Predictability of the course of proceedings.
  • Possibility of a first non-binding assessment in the advance of a first hearing
  • Leading the conflict parties through judicial notices throughout the entire procedure
  • Possibility of initiating conciliation proceedings/judicial mediation without additional costs.

Cons:

  • Lengthy and therefore possibly also expensive procedure (especially in case of appeal).
  • Decision is based on law; non-justiciable conflicts cannot be solved.
  • In some countries and at some instances the obligation to hire a lawyer exists.

Court of Arbitration

Arbitration courts are a privately agreed upon jurisdiction. They make legally effective and final decisions on disputes to the exclusion of ordinary legal proceedings. Arbitration court rulings are very largely also internationally enforceable.

Advantages:

  • Procedure can be designed to be confidential.
  • Independence and expertise of the third party (can be chosen by the parties).
  • International enforceability easier than with court decisions because of the New York convention
  • Only one authority (only serious procedural violations can be checked by courts of law).
  • Flexibility of the process.

Cons:

  • Long duration (2 to 5 years).
  • High costs (arbitrators, arbitration court, mostly external lawyers).
  • Evidential rules not always clear and predictable, especially internationally.
  • Multi-party disputes difficult to conduct.
  • Temporary legal protection sometimes difficult to obtain.
  • Decision is based on law; non-justiciable conflicts cannot be solved in arbitration.

Expedited Arbitration

Expedited Arbitration are arbitral proceedings which additionally contain rules to minimize the duration of the proceedings, e.g. setting maximum durations, limiting the number and duration of rounds of submissions, shortening the time limit for the appointment of arbitrators, setting a schedule with predetermined time windows, limiting the number of verbal hearings together with the taking of evidence.

Advantages:

  • Procedure can be designed to be confidential.
  • Independence and expertise of the third party (can be chosen by the parties).
  • Comparatively short duration of the procedure.
  • International enforceability easier than with court decisions because of the New York Convention.
  • Only one authority (only serious procedural violations can be checked by courts of law).
  • Flexibility of the process.

Cons:

  • High costs (arbitrators, arbitration court, mostly external lawyers).
  • Acceleration rules sometimes lead to shortening of content.
  • Rules of evidence not always clear and predictable, especially internationally.
  • Multi-party disputes difficult to conduct.
  • Temporary legal protection sometimes difficult to obtain.
  • Decision is based on law; non-justiciable conflicts cannot be solved in arbitration.

MedArb

MedArb is a procedure in which mediation is carried out first and then, in the event of a failed settlement, arbitration.

Advantages:

  • MedArb: No delay if mediation fails.
  • ArbMed: Party solution possible; agreement “pressure” in the negotiation, as third party decision has already been determined.
  • (international) enforceability.

Cons:

  • MedArb: No openness of the parties in the mediation, as the mediator may later decide as an arbitrator.
  • ArbMed: Costly and time-consuming, since arbitration court proceedings must first be conducted; high costs.

Schiedsgutachten/Expert Determination

Expert determination proceedings are proceedings in which the parties agree to have a legal or factual issue in dispute between them assessed by one or more competent, independent and impartial third parties.
Depending on the agreement, this assessment may be binding, non-binding or provisionally binding.
Forms are: Evaluation/Expert Opinion, Adjudication, Dispute Adjudication Boards and Arbitration Opinion/Expert Determination.

Expert Determination/Schiedsgutachten according to §§ 317 ff. BGB

Arbitrator´s Report according to §§ 317 ff. BGB (according to Anglo-American terminology Expert Determination) are arbitrator´s expert opinions which lead to a binding result.

Advantages:

  • Clarification of disputed factual and legal issues.
  • Independence and expertise of the third party (can be chosen by the parties).
  • Confidentiality can be agreed.

Cons:

  • Costs of the Adjudicator/institution.
  • No comprehensive examination of the facts with full evaluation of evidence (only in subsequent proceedings).

Adjudication

Adjudication is an arbitration procedure that according to the parties agreement leads to a provisionally binding result.

Advantages:

  • Relatively fast procedure.
  • Low effort.
  • Independence and expertise of the third party (can be chosen by the parties).
  • Provisionally binding decision (no project standstill).

Cons:

  • Costs of the Adjudicator/institution.
  • No comprehensive examination of the facts with full evaluation of evidence (only in subsequent proceedings).

Dispute Adjudication Boards (DAB)

Dispute Adjudication Boards are arbitration proceedings, which are often conducted in parallel with the project and according to the parties agreement lead to a provisionally binding decision.

Advantages:

  • Independence and expertise of the third party (can be chosen by the parties).
  • Prospect of ending the conflict on the factual level: Third party makes a decision, if the parties do not settle.
  • Confidentiality can be agreed.
  • Fast procedure for conflict resolution.
  • Non-justiciable issues can be dealt with.
  • Project-accompanying procedure allows early conflict resolution.
  • Provisionally binding decision (no project standstill).

Cons:

  • Costs of setting up the board and for the third party.
  • No comprehensive examination of the facts with full evaluation of evidence (only in subsequent proceedings).
  • Procedure is not as structured and interest-oriented (as mediation, for example)

Dispute Review Board (DRB)

Dispute Review Boards are agreed upon procedures involving independent third parties, which are often run in parallel with the project and make recommendations on disputes, which become binding in the absence of an objection within a certain, usually short, period of time.

Advantages:

  • Third party participation guarantees a neutral view.
  • Third party makes a recommendation if the parties do not settle.
  • Confidentiality can be agreed.
  • Non-justiciable topics can be dealt with.
  • Project-accompanying procedure allows early conflict resolution.

Cons:

  • Procedure is not as structured and interest-oriented (like mediation, for example).
  • Costs for setting up the board and for the third party.

Evaluation/Expert Opinion

Evaluation/Expert Opinion are arbitrators´ opinions, which according to the agreement of the parties are not binding.

Advantages:

  • Neutral third view.
  • Relatively quick settlement.
  • Independence and expertise of the third party (can be chosen by the parties).

Cons:

  • Not binding.
  • Less suitable for complex issues.

Conciliation

Conciliation is an agreed procedure involving an independent third party (conciliator), in which an amicable solution to disputes is first sought. If this does not succeed, the conciliator issues a conciliation award, which is not binding upon the parties, and whose effectiveness therefore requires the acceptance of the parties.

Advantages:

  • Participation of a neutral third party.
  • Conciliator makes proposal, if the parties do not settle, which increases the pressure on the parties to reach a settlement.
  • Confidentiality can be agreed.
  • Fast procedure for conflict resolution.
  • Non-justiciable issues can be dealt with.

Cons:

  • Procedure is not as structured and interest-oriented (like mediation, for example).
  • Costs of the conciliator.

Mini-Trial

In a mini-trial, the parties present the factual and legal issues relevant to a conflict, in a shortened form, to a panel consisting of high-ranking decision-makers of the parties (and usually a neutral third party), who have not previously dealt with the matter. Subsequently, the panel members enter into settlement negotiations, if necessary under the moderation of the neutral third party.

Advantages:

  • The relevance of emotions in negotiations is minimized; blame is reduced.
  • Focus on economically and strategically sensible solutions through participation of the management level.

Cons:

  • Third party costs.
  • Management mostly pre-informed and not very yielding.

Mediation

Mediation is a voluntary process of dispute resolution in which the parties, under the direction of impartial third parties, bring issues requiring regulation to a consensual, interest-based solution. Characteristics of a mediation procedure are in particular the structured communication process and the parties’ own responsibility for the content.
The forms of mediation are out-of-court and court annexed mediation.

Advantages:

  • Fast conflict resolution.
  • Sustainable conflict resolution, as it is interest-based.
  • Possibility of clarifying non-justiciable issues.
  • Confidentiality can be agreed.
  • Mediator takes care of the structure of the negotiation, parties concentrate on the content.
  • Flexibility of the procedure in its design.
  • Clear legal basis.

Cons:

  • Danger of misuse to delay/obtain information.
  • Costs of the mediator.

 

Kooperative Praxis/Collaborative Practice

Cooperative practice is an agreed procedure in which the parties negotiate cooperatively with the participation of consultants of different forms of expertise. The consultants may neither advise nor represent the parties in any subsequent proceedings.

Advantages:

  • All parties concentrate on the negotiation.
  • A high level of consulting expertise is guaranteed.

Cons:

  • Costs due to involvement of third parties.
  • Possible double cost burden in case of failure of the negotiation, as replacement of the consultants is mandatory.

Negotiation

A negotiation is a direct communication process between two or more parties about different positions and/or interests with the aim of reaching an agreement.

Advantages:

  • Extremely flexible in terms of procedure, content and parties involved.
  • No need to engage third parties.
  • Low costs.

Cons:

  • Often lengthy.
  • Danger of insufficient structure to the conversation.
  • Risk of possible emotional escalation.
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Disclaimer

The contents of this tool were created with the greatest possible care and to the best of our knowledge. The tool is solely intended to provide guidelines for a systematic choice of procedure. However, it does not expressly release the user from the obligation to carry out a careful examination on his own responsibility.

RTMKM does not assume any liability for the topicality, correctness or completeness of the recommendations contained in this tool. Liability claims against the RTMKM relating to damages caused by the use of this tool are excluded.

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Step 1

Please enter the title for your legal dispute here: (mandatory field*)

1.Do you want to set a precedent with your case?

Only state court judgments can set precedents. Review your contractual dispute settlement clause and, if possible, initiate state court proceedings.

2.Do you need temporary legal protection?

To obtain provisional legal protection (e.g. injunctions, interim court orders) – available in state court proceedings or, if the parties have agreed on arbitration, also in arbitration – you should initiate the respective procedure. Beyond state court proceedings and arbitration, there are numerous other procedures available to finally resolve the conflict. You can determine the most suitable one for your case in step 2.

3.Is there a risk that evidence that still exists will no longer be available or will lose its probative value as time passes?

You can secure evidence in independent proceedings for the taking of evidence before the state courts. If the parties have agreed on arbitration, the preservation of evidence by the arbitration tribunal is generally only possible after the arbitration tribunal has been appointed (exception: special provisions in expedited arbitration). If you want to secure evidence beforehand, you should opt for independent proceedings for the taking of evidence before the state courts (please seek legal advice on the possibilities of using the evidence in the following procedure). You can nevertheless determine the most suitable (main) procedure for your case in step 2.

4.Are statutory preclusion periods to be observed in the matter at hand (e.g. in employment law, administrative law, ...) ?

To protect your claim, you should initiate state court proceedings. If you have agreed to arbitration and the preclusion period concerns an arbitrable claim (please seek legal advice on this matter), arbitration should be initiated. In parallel to the state court proceedings other proceedings may be considered. Numerous other procedures are available to finally resolve the conflict. You can determine the most suitable one for your case in step 2.

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Step 2: Questionnaire

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Question 1 / 12

1.If you could choose, what would you prefer?
  1. An independent third party makes a decision on the issue
  2. The parties agree (if necessary with external support) on a solution in line with their interests
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Question 2 / 12

2.Is it a complex conflict?
(a. / b. and c. / d. can each be combined cumulatively)
  1. No, the conflict primarily comes down to a few factual issues
  2. No, the conflict primarily comes down to a few legal questions
  3. Yes, the complexity results from the multitude of factual and/or legal issues
  4. Yes, the complexity results from the large number of involved parties without a common contractual commitment
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Question 3 / 12

3.Are you interested in public proceedings or do you wish for their confidential handling?
  1. Public proceeding desired
  2. Confidentiality desired
  3. It does not matter
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Question 4 / 12

4.Does a slow procedure suit you or are you looking for a speedy resolution of the dispute?
  1. It is convenient for our company when the dispute resolution process takes a long time
  2. Our company would like a speedy settlement of the dispute
  3. It does not matter to our company how quickly the dispute is resolved
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Question 5 / 12

5.Will the company provide significant in-house personnel resources for the preparation and implementation of the dispute resolution procedure?
  1. Applicable
  2. Not applicable
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Question 6 / 12

6.What role do legal costs play?
  1. Our company is interested in a particularly cost-effective process
  2. Given the importance of the conflict, procedural costs play a rather minor role
  3. A particularly costly procedure fits the strategy of our company
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Question 7 / 12

7.Is it necessary that the other party can be forced to implement the result (enforceability)?
  1. Due to the nature of the conflict or the solution sought, the legal enforceability of the solution is irrelevant
  2. The other party will probably abide by the result and implement the decision
  3. It is feared that the other party will not implement the result voluntarily, or it is not possible to make an assessment in this respect
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Question 8 / 12

8.Is a business relationship with the other party in the conflict important and would the initiation of legal proceedings burden this relationship?
  1. Yes, an ongoing business relationship with the other party involved in the conflict is important and taking legal action would be a burden on the relationship
  2. The business relationship is not important or would not be burdened by legal action
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Question 9 / 12

9.What is the conflict about?
  1. It is about solving factual questions
  2. It's about resolving emotional issues
  3. Both aspects are relevant
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Question 10 / 12

10.In view of your company's reputation vis-à-vis the opposing side, is it rather important for you to already begin to offensively defend/enforce your own position by choosing the conflict resolution procedure or to be considered ready to talk?
  1. In view of the reputation of our company vis-à-vis the other side, it is important for our company to offensively defend/enforce its own position by choosing the conflict resolution procedure
  2. In view of the reputation of our company, we would like to signal to the other side that our company is ready to talk at any time by choosing the conflict resolution procedure
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Question 11 / 12

11.It is important to me that the third party/decision maker has specialist knowledge of the case (subject of the dispute)
  1. Applicable
  2. Not applicable
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Question 12 / 12

12.Who, in your opinion, can better prove his account and/or legal view of the conflict?
  1. Your company
  2. The opposition
  3. In my opinion, no clear prognosis is possible in this respect
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Step 3: Weighting of the questions

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especially
important
  1. Question 1 (third party decision/own responsibility)
  2. Question 2 (complexity)
  3. Question 3 (public/confidential procedure)
  4. Question 4 (duration of procedure)
  5. Question 5 (investment of resources)
  6. Question 6 (legal costs)
  7. Question 7 (enforceability)
  8. Question 8 (business relationship)
  9. Question 9 (object of the conflict)
  10. Question 10 (reputation of the company)
  11. Question 11 (expertise of the third party/decision maker)
  12. Question 12 (evidence)
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Recommended procedure

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On the basis of your answers, the various conflict resolution procedures were evaluated with regard to their suitability for resolving your conflict. The figures shown below represent the assessment of suitability on a scale of 0 (= completely unsuitable) to 10 (particularly suitable).

If you have marked certain aspects as especially important in step 3, this evaluation may show more than 10 points for a single procedure.

State court proceedings
Court of Arbitration
Expedited Arbitration
MedArb
Schiedsgutachten/Expert Determination
Adjudication
Dispute Adjudication Boards (DAB)
Dispute Review Board (DRB)
Evaluation/Expert Opinion
Conciliation
Mini-Trial
Mediation
Kooperative Praxis/Collaborative Practice
Negotiation

Important notices

If the recommendation generated here conflicts with a contractual agreement on the dispute resolution procedure, you may enter into renegotiations with the other party on the most appropriate procedure. You can make this tool available to the other party for this purpose.
Also check whether the other party has signed a pledge that you can refer to in the renegotiation.

Not all of the proceedings referred to here automatically have an impeding effect on the limitation period.
Please seek legal advice in this regard in good time and clarify in writing when the procedure you are using will begin.

If you wish to enter into proceedings other than state court proceedings, you must agree this with the other party (preferably in writing).

Please consider concluding a confidentiality agreement with all parties involved in the procedure. (see question 3)

Please take care to ensure that the procedure you have chosen ends with an enforceable result (e.g. attorney settlement or notarization).

If the enforceability of the result of the procedure is important, the state court procedure should be chosen for national disputes or, if a consensus-based dispute resolution procedure is chosen, attention should be paid to notarisation of the final agreement. In international disputes, either arbitration (if enforcement in one of the signatory states to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is intended) or mediation (if enforcement in one of the signatory states to the Singapore Convention on Mediation is intended) should be chosen.

Since the third party/decision maker should have specialist knowledge of the matter (subject matter of the dispute), you should define the required knowledge precisely when creating the requirement profile. (see question 11)

In all procedures in which you yourself can influence the selection of the third party, make sure that the third party has the appropriate specialist knowledge. If necessary, agree with the other party on criteria for the suitability/selection of the third party.

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