Before engaging in any process it is necessary to identify the individuals and corporations that must take part to achieve the desired outcome.

For example it is pointless suing an individual who has signed a contract in his or her role as a director of a company and not in his or her own right.

See Parties.

Litigation is a very formal and structured process that is pursued in the many State and Federal courts and tribunals. It is generally the most expensive and time consuming method of dispute resolution.

The procedure in each court or tribunal is governed by strict rules that are set out in statutes and regulations. Often, a court or tribunal will supplement the applicable legislation by issuing practice notes. Decided cases also determine correct procedure where the legislation is deficient or unclear.

The basic steps followed in most courts and tribunals are:

• an application identifying the relief sought and outlining the facts on which the applicant claims to be entitled to that relief is filed by the moving party;

• the party against whom the claim is brought files an answer to the allegations in the application;

• the parties exchange documents in their possession that are relevant to the issues in the dispute;

• documents in the possession of third parties are obtained pursuant to orders issued by the court or tribunal;

• the parties exchange the evidence their witnesses will give at the trial in the form of affidavits or written statements;

• a trial is held at which the formal rules of evidence apply to varying degrees; and

• the judge or other judicial officer that has presided at the trial gives a judgment.

See Litigation.

Arbitration refers to a process whereby two or more parties, generally by agreement, have a dispute heard and determined by one or more private individuals, generally of their choosing.

It is usual for parties to be legally represented at commercial arbitrations.

The arbitration agreement may detail procedural aspects of the arbitration. Usually however, the arbitrator has full discretion as to how the arbitration is to proceed subject to agreed limitations. Depending on whether the arbitration is domestic or international, the Commercial Arbitration Act 2010 (NSW) or the International Arbitration Act 1974 (Cth) set out certain matters relevant to the rights and obligations of the parties to a commercial arbitration and of the arbitral tribunal, as well as the circumstances and scope of court involvement.

The process for the arbitration would usually consist of:

• one or more preliminary conferences to agree procedure and define the dispute;

• provision of evidence, generally by way of statements;

• a form of hearing either on the papers or with oral evidence; and

• written determination of the dispute (with reasons) by the arbitrator (an “award”)

A court can be approached for recognition and enforcement of arbitration awards.

See Arbitration.

The adjudication process in NSW is only applicable to commercial construction contracts, and particular construction work or related goods and services.

• a party (“the claimant”) that is or may be entitled to a progress payment serves a payment claim on a person (“the respondent”) who is or may be liable to make that payment;

• the respondent must reply to the payment claim by serving a payment schedule on the claimant stating (with reasons) how much of the payment claim the respondent agrees to pay;

• if the claimant disputes the respondent's reasons for withholding some or all of the claimed amount or the respondent fails to provide a payment schedule or the respondent fails to pay the scheduled amount the claimant files an adjudication application with an adjudicator chosen from a panel appointed by the Minister;

• the respondent lodges a response to the adjudication application; and

• the adjudicator then determines the dispute, usually on the basis only of the written adjudication application and the response.

The adjudicatory decision is enforceable through the courts. There is no appeal but the decision can be reviewed on limited administrative grounds.

See Adjudication.

Mediation is a process by which parties involved in a dispute meet to negotiate an appropriate resolution. The key feature of mediation is the mediator; an impartial person chosen by the parties to chair the meeting and conduct the process, assist the participants in negotiations and facilitate settlement.

Although fees are charged by the mediator and there are other expenses, it is an efficient, informal, flexible and less expensive way to resolve a dispute than litigation or arbitration. Also it is confidential and attracts negotiation privilege.

There is no compulsion to reach an agreement at the conclusion of the process.

See Mediation.

The most common form of alternative dispute resolution is direct negotiation between parties to the dispute. The structure of such negotiations, and how they are commenced, will vary in almost all business disputes.

Negotiation is as flexible as the parties desire. The process of negotiation is private and its processes are generally privileged from disclosure in existing or subsequent proceedings.

See Negotiation.

In addition to commonly known and utilised means of alternative dispute resolution, such as mediation, arbitration and adjudication, there are many other processes by which to resolve business disputes. All are intended to save time and money, and ideally to preserve business relationships.

Some of the more common alternatives to the standard alternative dispute resolution processes are:

• Mini trial;

• Expert appraisal/neutral evaluation;

• Expert determination;

• Assisted negotiation;

• Ombudsmen;

• Complaints handling; and

• Legislative alternative dispute resolution.

See Other types of alternative dispute resolution.

In the event of a dispute arising under a construction contract, the parties may have resort to litigation, adjudication or other forms of alternative dispute resolution. Typically, construction contracts contain provisions that require the parties to engage in some form of alternative dispute resolution before commencing proceedings in a court or tribunal. Most often, this takes the form of structured negotiation, mediation, arbitration or expert determination.

The Building and Construction Industry Security of Payment Act 1999 (NSW) provides access for builders who are parties to a commercial contract to a mandatory form of alternative dispute resolution where a progress payment is in dispute.

All proceedings for building claims in relation to residential building work, where the amount in dispute is less than $500,000 must be brought in the Civil and Administrative Tribunal of New South Wales (NCAT). Actions in relation to construction contracts for commercial buildings are brought in the Local Court, District Court or Supreme Court of New South Wales. Alternatively, if the causes of action include a claim under the Competition and Consumer Act 2010 (Cth), the proceedings might be brought in the NCAT, the Federal Circuit Court or the Federal Court of Australia.

See Resolving disputes in construction.