Dispute settlements

Various dispute settlements circulate in the franchise practice. These regulations include mediation, (NAI) arbitration and regulations granting the power to settle disputes to the civil court. In addition, there are stipulations whereby the Franchise Council acts as a disputes committee. It has already been recommended in this section that the latter form of dispute resolution should in any case not be used.

Can arbitration take precedence over civil courts after an attempted mediation has failed? Arbitration has a reputation for being fast and effective. It is certainly the case that arbitrators in general have more far-reaching powers than the ordinary courts to settle a case in fairness as good men. The civil courts are more likely to be forced to limit themselves to the system of civil law and other relevant provisions. However, this does not mean that an arbitral tribunal can simply overrule civil law.

If too much is judged on the basis of private views, an arbitral award may under certain circumstances be subject to annulment by the civil court. However, arbitrators usually have more options to give a somewhat broader interpretation to various facts and circumstances than the ordinary court. However, this in no way means that an arbitrator cannot and must under certain circumstances appoint an expert to determine certain facts or the extent of the damage. This entails that arbitration proceedings can indeed take a very long time, as can also be the case with a civil court. On the other hand, the civil court is becoming increasingly decisive in actively seeking solutions between parties and is also succeeding better in this. Perhaps unnecessarily, it should be stated here that judges are specifically trained to settle disputes professionally. The aim is also to speed up proceedings before the civil courts than was the case in the past.

Unfortunately, in practice this means longer waiting times, given the large number of cases that have to be dealt with by the judiciary. This problem is therefore not limited to healthcare or traffic jams. It is also important that arbitration proceedings are generally much more expensive than proceedings before the civil court. The reason for this lies in the fact that the arbitrators are privately funded; that is, must be paid by the parties. The civil court is paid for a large part from tax resources; apart from court fees and any costs order.

All in all, it remains to be seen whether arbitration is so much more practical and accessible than going to the civil court. In addition, the civil court pre-eminently offers legal protection to parties on the basis of the law. Only in the case of large group disputes, consisting of a group of franchisees versus a franchisor, can it be desirable under certain circumstances to have arbitration take place. In any case, it is advisable to leave the parties at least free to make a choice: arbitration or going to the ordinary court. Ideally, however, disputes are resolved through mediation, where the goodwill of both sides is a precondition for success.

Ludwig & Van Dam franchise attorneys, franchise legal advice