

State court proceedings
In state court proceedings, the legal consequences of a matter are examined. The decision-making process is highly formalized by strict rules of procedure. The decision itself is made by a legally prescribed state judge. Participation in the proceedings is practically enforceable. In principle, it is possible to have a court decision reviewed by a higher instance. State enforcement bodies are available to enforce a decision.
Advantages:
- Legally binding judgements set a precedent.
- In some states very solution-oriented procedural rules.
- Predictability of the course of proceedings.
- Possibility of a first non-binding assessment in the advance of a first hearing
- Leading the conflict parties through judicial notices throughout the entire procedure
- Possibility of initiating conciliation proceedings/judicial mediation without additional costs.
Cons:
- Lengthy and therefore possibly also expensive procedure (especially in case of appeal).
- Decision is based on law; non-justiciable conflicts cannot be solved.
- In some countries and at some instances the obligation to hire a lawyer exists.
Court of Arbitration
Arbitration courts are a privately agreed upon jurisdiction. They make legally effective and final decisions on disputes to the exclusion of ordinary legal proceedings. Arbitration court rulings are very largely also internationally enforceable.
Advantages:
- Procedure can be designed to be confidential.
- Independence and expertise of the third party (can be chosen by the parties).
- International enforceability easier than with court decisions because of the New York convention
- Only one authority (only serious procedural violations can be checked by courts of law).
- Flexibility of the process.
Cons:
- Long duration (2 to 5 years).
- High costs (arbitrators, arbitration court, mostly external lawyers).
- Evidential rules not always clear and predictable, especially internationally.
- Multi-party disputes difficult to conduct.
- Temporary legal protection sometimes difficult to obtain.
- Decision is based on law; non-justiciable conflicts cannot be solved in arbitration.
Expedited Arbitration
Expedited Arbitration are arbitral proceedings which additionally contain rules to minimize the duration of the proceedings, e.g. setting maximum durations, limiting the number and duration of rounds of submissions, shortening the time limit for the appointment of arbitrators, setting a schedule with predetermined time windows, limiting the number of verbal hearings together with the taking of evidence.
Advantages:
- Procedure can be designed to be confidential.
- Independence and expertise of the third party (can be chosen by the parties).
- Comparatively short duration of the procedure.
- International enforceability easier than with court decisions because of the New York Convention.
- Only one authority (only serious procedural violations can be checked by courts of law).
- Flexibility of the process.
Cons:
- High costs (arbitrators, arbitration court, mostly external lawyers).
- Acceleration rules sometimes lead to shortening of content.
- Rules of evidence not always clear and predictable, especially internationally.
- Multi-party disputes difficult to conduct.
- Temporary legal protection sometimes difficult to obtain.
- Decision is based on law; non-justiciable conflicts cannot be solved in arbitration.
MedArb
MedArb is a procedure in which mediation is carried out first and then, in the event of a failed settlement, arbitration.
Advantages:
- MedArb: No delay if mediation fails.
- ArbMed: Party solution possible; agreement “pressure” in the negotiation, as third party decision has already been determined.
- (international) enforceability.
Cons:
- MedArb: No openness of the parties in the mediation, as the mediator may later decide as an arbitrator.
- ArbMed: Costly and time-consuming, since arbitration court proceedings must first be conducted; high costs.
Schiedsgutachten/Expert Determination
Expert determination proceedings are proceedings in which the parties agree to have a legal or factual issue in dispute between them assessed by one or more competent, independent and impartial third parties.
Depending on the agreement, this assessment may be binding, non-binding or provisionally binding.
Forms are: Evaluation/Expert Opinion, Adjudication, Dispute Adjudication Boards and Arbitration Opinion/Expert Determination.
Expert Determination/Schiedsgutachten according to §§ 317 ff. BGB
Arbitrator´s Report according to §§ 317 ff. BGB (according to Anglo-American terminology Expert Determination) are arbitrator´s expert opinions which lead to a binding result.
Advantages:
- Clarification of disputed factual and legal issues.
- Independence and expertise of the third party (can be chosen by the parties).
- Confidentiality can be agreed.
Cons:
- Costs of the Adjudicator/institution.
- No comprehensive examination of the facts with full evaluation of evidence (only in subsequent proceedings).
Adjudication
Adjudication is an arbitration procedure that according to the parties agreement leads to a provisionally binding result.
Advantages:
- Relatively fast procedure.
- Low effort.
- Independence and expertise of the third party (can be chosen by the parties).
- Provisionally binding decision (no project standstill).
Cons:
- Costs of the Adjudicator/institution.
- No comprehensive examination of the facts with full evaluation of evidence (only in subsequent proceedings).
Dispute Adjudication Boards (DAB)
Dispute Adjudication Boards are arbitration proceedings, which are often conducted in parallel with the project and according to the parties agreement lead to a provisionally binding decision.
Advantages:
- Independence and expertise of the third party (can be chosen by the parties).
- Prospect of ending the conflict on the factual level: Third party makes a decision, if the parties do not settle.
- Confidentiality can be agreed.
- Fast procedure for conflict resolution.
- Non-justiciable issues can be dealt with.
- Project-accompanying procedure allows early conflict resolution.
- Provisionally binding decision (no project standstill).
Cons:
- Costs of setting up the board and for the third party.
- No comprehensive examination of the facts with full evaluation of evidence (only in subsequent proceedings).
- Procedure is not as structured and interest-oriented (as mediation, for example)
Dispute Review Board (DRB)
Dispute Review Boards are agreed upon procedures involving independent third parties, which are often run in parallel with the project and make recommendations on disputes, which become binding in the absence of an objection within a certain, usually short, period of time.
Advantages:
- Third party participation guarantees a neutral view.
- Third party makes a recommendation if the parties do not settle.
- Confidentiality can be agreed.
- Non-justiciable topics can be dealt with.
- Project-accompanying procedure allows early conflict resolution.
Cons:
- Procedure is not as structured and interest-oriented (like mediation, for example).
- Costs for setting up the board and for the third party.
Evaluation/Expert Opinion
Evaluation/Expert Opinion are arbitrators´ opinions, which according to the agreement of the parties are not binding.
Advantages:
- Neutral third view.
- Relatively quick settlement.
- Independence and expertise of the third party (can be chosen by the parties).
Cons:
- Not binding.
- Less suitable for complex issues.
Conciliation
Conciliation is an agreed procedure involving an independent third party (conciliator), in which an amicable solution to disputes is first sought. If this does not succeed, the conciliator issues a conciliation award, which is not binding upon the parties, and whose effectiveness therefore requires the acceptance of the parties.
Advantages:
- Participation of a neutral third party.
- Conciliator makes proposal, if the parties do not settle, which increases the pressure on the parties to reach a settlement.
- Confidentiality can be agreed.
- Fast procedure for conflict resolution.
- Non-justiciable issues can be dealt with.
Cons:
- Procedure is not as structured and interest-oriented (like mediation, for example).
- Costs of the conciliator.
Mini-Trial
In a mini-trial, the parties present the factual and legal issues relevant to a conflict, in a shortened form, to a panel consisting of high-ranking decision-makers of the parties (and usually a neutral third party), who have not previously dealt with the matter. Subsequently, the panel members enter into settlement negotiations, if necessary under the moderation of the neutral third party.
Advantages:
- The relevance of emotions in negotiations is minimized; blame is reduced.
- Focus on economically and strategically sensible solutions through participation of the management level.
Cons:
- Third party costs.
- Management mostly pre-informed and not very yielding.
Mediation
Mediation is a voluntary process of dispute resolution in which the parties, under the direction of impartial third parties, bring issues requiring regulation to a consensual, interest-based solution. Characteristics of a mediation procedure are in particular the structured communication process and the parties’ own responsibility for the content.
The forms of mediation are out-of-court and court annexed mediation.
Advantages:
- Fast conflict resolution.
- Sustainable conflict resolution, as it is interest-based.
- Possibility of clarifying non-justiciable issues.
- Confidentiality can be agreed.
- Mediator takes care of the structure of the negotiation, parties concentrate on the content.
- Flexibility of the procedure in its design.
- Clear legal basis.
Cons:
- Danger of misuse to delay/obtain information.
- Costs of the mediator.
Kooperative Praxis/Collaborative Practice
Cooperative practice is an agreed procedure in which the parties negotiate cooperatively with the participation of consultants of different forms of expertise. The consultants may neither advise nor represent the parties in any subsequent proceedings.
Advantages:
- All parties concentrate on the negotiation.
- A high level of consulting expertise is guaranteed.
Cons:
- Costs due to involvement of third parties.
- Possible double cost burden in case of failure of the negotiation, as replacement of the consultants is mandatory.
Negotiation
A negotiation is a direct communication process between two or more parties about different positions and/or interests with the aim of reaching an agreement.
Advantages:
- Extremely flexible in terms of procedure, content and parties involved.
- No need to engage third parties.
- Low costs.
Cons:
- Often lengthy.
- Danger of insufficient structure to the conversation.
- Risk of possible emotional escalation.
