A recurring point that we have emphasized in each discussion around commercial litigation is to always keep the end commercial objective in mind. Litigation should always be a means to achieve the desired end objective. In an Indian context, the end objective for most commercial disputes should be to achieve a favorable settlement. In this final article to the ‘considering litigation in India’ series, we will touch upon the general approach that litigants should have for any material commercial litigation. A litigant who intends to approach a court, has multiple options to achieve the desired result. Having the luxury of choice is one thing but choosing wisely from the available options is another. A litigant’s options could be generally categorized as litigious and non-litigious. In this context, choosing one over the other or simultaneously exploring both options is a matter of strategy and should be tactfully planned.
Strategy and implementation go hand in hand. The strategy to achieve the end objective should be to set out a timeline with various options that could be availed, depending on the evolving situation. Obviously, there can never be a ‘one size fits all’ approach or strategy in litigations. Any high stakes commercial litigation will have its own unique set of nuances and facts that determine the approach for its resolution. A litigant must also account for ongoing developments and counter proceedings that may be initiated by the other side. The best time to develop any strategy is when one anticipates a material disagreement that could escalate into a dispute. The earlier one develops a strategy, the better they are able to control the path that a dispute may take.
For a successful litigation, a satisfactory outcome is paramount. Outcomes could theoretically be a grant of final relief or in most cases a ‘favorable’ settlement. There is no sure shot formula to litigation; but a critical aspect in the litigant’s control is choosing the correct judicial forum for the fight (link the URL of this article). When a litigant diversifies the approach and creates pressure on an opponent from all possible quarters – the scope for a settlement is higher. Complex high stake commercial disputes could often have civil and criminal implications. A litigant must assess each of these aspects carefully and accordingly prepare to either initiate or defend such proceedings.
When a litigant explores one avenue, it must not rule out other options for litigation. During a litigation, there will always be multiple options to initiate alternate litigations, file additional pleadings etc., to add that extra pressure on the opponent. Each of these options should be constantly monitored and explored for possible impact.
Every battle need not be fought
There could be many instances where the other side raises a minor claim or process related issue. A default mindset for most people is to counter and defend everything during a litigation. This usually stems from a position that ‘one should not concede an inch’. This approach can sometimes turn out to be counterproductive. A litigant should always assess the facts and determine if an issue is worth spending time and resources to fight over. Conceding on an issue may have little or no real impact on the end commercial objective. In such situations, it could also be a matter of option and strategy to concede or allow the other side to prevail on the particular point. This approach could have many benefits; the concerned judge would view the litigant’s conduct favorably, the other side would avoid raising such frivolous issues since it served no purpose, and the litigant would also conserve resources by avoiding multiple rounds of hearings over non-essential issues.
As discussed earlier, a litigant must explore all avenues of escalation or engagement, as needed. Many of these methods exist outside the realm of conventional dispute forums. In commercial disputes between stakeholders of an organization, focusing on the ongoing corporate governance could have substantial benefits. Merely because the stakeholders are engaged in litigation does not mean that the functions of the organization have to be halted. The concerned litigants can initiate processes of corporate governance to maintain pressure on the other side. If the counterparty does not adhere to the statutory requirements, this could offer new grounds to explore alternate proceedings. The correspondence and submissions during corporate meetings or negotiation discussions might come of use as supporting material to assist in ongoing, alternate or potential proceedings.
There are several other mediums through which useful information can be obtained. Using the public media to create an adverse impact on a counterparty’s brand could also be a strategy. Brand value for most businesses is sacrosanct, since a large part of a business relies on goodwill earned through years of hard work. Announcements, press releases or news flashes in any public media interface can compel a counterparty to react. The negative publicity associated with an acrimonious litigation may cause discomfort to such parties and they may wish to avoid the dispute from escalating further. However, while indulging in such campaigns, litigants should ensure that they do not publish any defamatory content or violate existing orders of a court.
Another alternative is to team up with competitors, as needed. Every business usually has competitors that would like to get ahead of their opponents. Teaming up with a competitor would probably provide the desired leverage to push an opponent towards a settlement.
Despite the above options, a healthy communication between principals during an ongoing litigation can be fruitful. Open communication can help mitigate disputes arising out of miscommunication between parties. Amicable and non-controversial behavior could help with a healthy settlement process. Principals should always instruct their litigation counsels to encourage discussions for settlement if the opportunity presents itself. They should also stay updated on any proposals received from the counterparty.
Open to settlement only on right terms
The end objective should always be to settle a dispute rather than have it prolonged for years. But that does not mean that one should settle for just about anything. A litigant should only be open to a settlement on the right terms that meet its commercial objectives.
The approach towards settlement is a balancing act; there should neither be a display of excessive eagerness to settle nor should there be a manifest reluctance. It should be escalated slowly and strategically. Any eagerness to settle can drive down the terms of settlement, leaving the litigant exposed. However, in certain circumstances, compromise is the key. The appropriate time and terms will depend on the progress of the dispute and the leverage that a party has gained or lost. To that extent, a litigant should never eliminate any back-end communication or options for negotiations.
Unfortunately, there are no set guidelines that litigants can rely on to amicably settle a dispute. In the entire series of our articles on this subject, we have attempted to shed light on certain aspects that litigants engaging in any commercial litigation should keep in mind. The recurring theme that we would recommend to all, is to always approach commercial disputes with the objective to achieve a fair settlement. One can use an array of methods to direct a dispute towards a fair settlement. What is fair for one dispute may not be fair for another. Hence, it is essential for any litigant to conduct a realistic assessment to determine their desired settlement positions. This would become the starting point to determine any strategy for a potential dispute. Every strategy itself should have multiple options set out that can be deployed as the situation develops in a litigation.
To conclude; in an Indian context, litigation must be explored only as a last resort in commercial disputes. One should not be hasty to jump into a litigation but at the same time should always be prepared for one. Even if one does venture into a litigation, it should only be a means to push towards a favorable settlement of the dispute.
Authors: Ajay Joseph, Partner; Anshu Bhanot, Of Counsel and Priyanka Zaveri, Senior Associate | Veyrah Law
Views expressed above are for information purposes only and should not be considered as a formal legal opinion or advice on any subject matter therein.