RECONCEPTUALISING COMMERCIAL DISPUTE RESOLUTION: THE ROLE OF ALTERNATIVE DISPUTE RESOLUTION IN AVOIDING CONTENTIOUS LITIGATION

Abstract

The inherent complexity of commercial activities makes disputes between parties almost inevitable. Managing commercial and contractual performance involves intricate considerations of corporate and human behaviour, often leading to disagreements. Such disputes typically consume significant financial and temporal resources, potentially resulting in loss of trade, reputational damage, and strained commercial relationships. Therefore, effective dispute resolution mechanisms are essential for swift, fair settlements that preserve business relationships and optimise resource use. Traditionally, litigation has been the primary method for resolving commercial disputes. However, its adversarial nature often leads to delays, high costs, and further deterioration of already fragile business ties. In contrast, Alternative Dispute Resolution (ADR) mechanisms such as mediation and arbitration offer more collaborative, cost-effective, and time-efficient approaches. These methods can preserve valuable business relationships while avoiding the contentiousness of court proceedings. Nigeria has increasingly embraced ADR as a viable alternative to litigation, as evidenced by the enactment of the Arbitration and Mediation Act 2023 and the National Policy on Arbitration and Alternative Dispute Resolution 2024. These developments signal a commitment to modernising dispute resolution frameworks and promoting ADR literacy. This paper adopts a doctrinal research methodology, analysing statutory instruments, policy documents, and relevant case law to assess the effectiveness of ADR in commercial dispute resolution. Findings reveal that ADR mechanisms, particularly arbitration and mediation, offer faster and more cost-effective outcomes than litigation, while also preserving commercial relationships. However, challenges remain in terms of awareness, enforcement, and institutional capacity. The paper concludes by recommending the integration of ADR into standard commercial practices and calls for enhanced stakeholder education to foster a more efficient and harmonious business environment.