Small Business Owners Warned Over New Dispute Legislation

Small business owners are being warned of the possible ‘unintended effects’ of draft government legislation, which is intended to help small businesses settle disputes without the need to go to court.

The Law Society, commenting on consultation plans by the government to set up a special commissioner to tackle disputes, said that although it welcomed the idea in principle, it is concerned the changes could retrospectively remove contractual rights.

Under the plans, small businesses would be able to get help resolving contractual disputes through a small-business commissioner and offered voluntary mediation to help resolve any issues without having to take legal action.

However, the Law Society is warning that businesses should still be able to retain their right to independent legal advice through any mediation process – they have also cautioned against government plans to highlight when a party has failed to participate in mediation. Failure to participate in mediation would be considered in court proceedings in awarding costs under the draft legislation.

John Andrews, Company and Commercial Partner at Stone Rowe Brewer LLP, said of the proposals: “Whilst any proposal to simplify dispute resolution and reduce the cost and time involved for small businesses should be welcomed, any measures introduced need to be carefully thought through if they are to impact upon a party’s ultimate right to pursue a claim through the courts.”

If you would like to speak to our specialist team about settling a business dispute, or would like to find out more information regarding how this draft legislation could affect your business, please call John Andrews on 020 8891 6141 or e-mail him at