When commercial disputes arise, and certainly when international issues are involved, the manner in which they are handled may not only yield different results but also have a significant impact on both parties involved, with many times the legal cost of the proceeding being not only the fees paid but also the broad implications of the proceeding and its outcome. For this reason, it is sometimes worthwhile to consider a mediation process before resorting to litigation. Each of these procedures offers unique advantages and challenges and understanding the differences can assist in making more informed decisions and understanding how to better manage the conflict under the circumstances.
Litigation refers to the formal process of bringing a dispute to a decision before a trial Court, which may be a Court or (certainly in an international dispute) arbitration. A Court proceeding is a public proceeding under procedural rules, in which a judge hears the parties and gives a binding decision after presenting evidence and legal arguments. The disadvantages of Court proceedings, as opposed to arbitration, are that they are usually public, conducted in Hebrew (which is not always appropriate for an international dispute) and are lengthy (a regular process usually requires, at best, about two years) and sometimes a large part of it focuses on technical issues (especially in an international dispute where questions of jurisdiction may take many months, or more). However, the legal process provides a formal, enforceable resolution and legal decisions can be appealed if a party believes that the judge erred, without the need for permission. Whether it is litigation in Court or arbitration, conducting a legal proceeding may require expensive administrative resources, costs more, and will usually prevent the parties from continuing to work together, due to residues created.
In contrast, mediation is an alternative dispute resolution (ADR) in which a third party - the mediator - facilitates discussions between the conflicting parties in order to help them reach a solution acceptable to both. The Courts often encourage mediation as a means of reducing the burden on the legal system, but the parties are sometimes referred to mediators who are litigators or retired judges, instead of lawyers who specialize in international transactions and complex disputes (especially international disputes), and this may significantly reduce the chances of success of the mediation. Especially when it comes to international disputes (but also domestic commercial disputes), the mediation process provides a quick solution, maintains confidentiality, and to the extent that it is done by an appropriate mediator, often allows the parties to continue a proper working relationship and may even improve the relationship between them. Unlike litigation, mediation is voluntary, the mediator does not have the authority to impose a binding decision, and a good mediator will know how to act to ensure that both parties communicate effectively and explore creative solutions together that can resolve the dispute. However, mediation is not suitable for all types of disputes, especially those involving clear legal issues or where one party seeks a clear legal solution, and sometimes it is the disadvantages of the Court procedure (the publicity of the proceeding, for example, or the fact that a third party can give binding decisions) that push for compromises. A mediator who is only a litigator, or a retired judge, probably will not know how to provide sophisticated and fast commercial solutions, and a commercial mediator without experience in litigation or the appropriate personality for the job will not know how to make the parties understand their legal position and thus exert pressure on the parties to reach solutions, even if they are not perfect, and as mediation is not a binding procedure, there is a risk that mediation will only lead to loss of time and early exposure of "cards".
The choice between litigation and mediation depends to a large extent on the nature of the dispute, and a good lawyer, especially one with experience in international dispute resolution, will know how to construct a combination of the two or use the threat of one to promote the other. Either way, and especially in an international dispute, it is essential to consult with a lawyer who has experience in both litigation and international dealmaking, and who has conducted international dispute proceedings – both in Court, arbitration and mediation, so that he can navigate the right legal path.