Court, Arbitration or Mediation: Choosing the Right Path for a Commercial Dispute

When a commercial dispute arises, the first reaction is often simple: “we’ll go to court.”

But court proceedings are not always the only option and, depending on the circumstances, not always the most suitable one. A dispute between two companies may be taken to court, decided by an arbitral tribunal, or resolved through an agreement negotiated with the assistance of a mediator.

These three mechanisms, however, are designed to achieve different things.

In court, a judge applies the law and issues a binding judgment. In arbitration, the parties entrust the dispute to one or more arbitrators, who decide the case by an arbitral award. In mediation, no one decides for the parties: the mediator helps them negotiate, and the dispute ends only if they reach a solution they both accept.

The right question is therefore not necessarily “which procedure is better?”, but what are we trying to achieve through this dispute, and which of the three mechanisms brings us closest to that result?

Sometimes what is needed is a binding decision and access to enforcement. In other cases, confidentiality or the expertise of the decision-maker matters more. And in some commercial relationships, the most valuable outcome may be something no court or arbitrator could order: restructuring a debt, amending a contract, continuing deliveries or agreeing new terms for future cooperation.

Sometimes the choice was made before the dispute arose

Before deciding where to file a claim, the first document to read is the contract.

A clause that looks like standard boilerplate near the end of the agreement can completely change the path of a dispute:

“Any dispute arising out of this Agreement shall be resolved by…”

If the parties have validly agreed to arbitration, that choice cannot simply be ignored once a dispute arises.

In the Republic of Moldova, domestic arbitration is currently governed by Law No. 23/2008 on Arbitration, while international commercial arbitration is governed by Law No. 24/2008. These remain the key legislative acts in the current framework, even though a broader reform of arbitration legislation has been under consideration in 2026.

Under Law No. 23/2008, an arbitration agreement may take the form of a clause in the contract or a separate agreement and, in domestic arbitration, must be in writing. If a dispute covered by a valid arbitration agreement is nevertheless brought before a court, the interested party may invoke the arbitration agreement no later than its first submission on the merits. Subject to Article 9 of the law, the court will remove the claim from its docket and direct the parties to arbitration if the arbitration agreement is valid and capable of being performed.

The dispute-resolution clause is therefore not wording that should be completed mechanically at the end of a contract.

It may determine who will decide a dispute worth millions of lei, what procedure will apply and how much control the parties will have over the way the dispute is handled.

That is why the clause should be negotiated while the commercial relationship is working well, not only after a conflict appears.

Court proceedings: when you need the authority of the state

For many commercial disputes, court proceedings remain the natural route.

If a supplier has delivered the goods, the invoice is overdue, the buyer refuses to pay and there is no arbitration agreement, there may be little reason to create a more complex process. The creditor needs a judgment confirming the payment obligation and, if the debtor does not comply voluntarily, access to enforcement mechanisms.

Proceedings before the courts are governed primarily by the Civil Procedure Code No. 225/2003. It provides the procedural framework for evidence, interim measures, examination of the claim and appeals, subject to the conditions laid down by law.

The core advantage of court proceedings is precisely the public authority behind them.

A debtor may refuse to negotiate. It may refuse mediation. It may ignore correspondence and decline to participate constructively in discussions. Court proceedings, however, do not depend on its willingness to reach an amicable solution.

Courts become especially important where urgent measures are required. If there is a risk that assets may be disposed of, evidence may disappear or the legal position may change before the dispute is resolved, the ability to seek interim or protective measures may matter more than the difference in cost between two procedures.

There are also disputes where the nature of the claim, the number of persons involved or the effects on third parties make court proceedings a more natural choice. Not every right can be submitted to arbitration, and Law No. 23/2008 expressly sets limits on arbitrability. As a general rule, proprietary rights may be the subject of an arbitration agreement, but the law provides exceptions and allows special legislation to impose further restrictions.

Court proceedings also have a cost that goes beyond the court fee or lawyers’ fees.

A dispute that moves through several procedural stages consumes management time, requires employees to locate documents and prepare evidence, may involve expert reports and can leave an important commercial issue unresolved for a significant period.

Sometimes that cost is justified. Sometimes it is not.

Arbitration: not private mediation, but a jurisdiction chosen by the parties

Arbitration is often described as a “more flexible” alternative to court proceedings. That description is correct, but incomplete.

An arbitrator is not a mediator. The arbitrator’s role is not to persuade the parties to compromise, but to decide the dispute.

The difference is that the arbitrator’s authority comes from the parties’ agreement.

Law No. 23/2008 gives the parties substantial freedom to shape the procedure. Within the limits of the law, they may agree on the constitution of the tribunal, the number and appointment of arbitrators, the seat or place of arbitration, procedural rules and other elements of the process. Confidentiality is also recognised among the principles of arbitration.

This may be particularly valuable in a technical dispute.

Suppose two companies disagree over performance of a complex construction contract, an investment transaction or an international distribution agreement. The ability to appoint an arbitrator with relevant subject-matter experience may make a real difference.

Confidentiality may matter just as much. A dispute may involve pricing formulas, margins, supplier information, technology, market strategy or other commercially sensitive information that companies would prefer not to expose more widely than necessary. Under the domestic arbitration regime of Law No. 23/2008, hearings are generally closed, with public hearings possible only in the circumstances provided by law.

There is also the advantage of greater control over the timetable. In domestic arbitration, unless the parties agree otherwise, Law No. 23/2008 sets a benchmark of no more than six months from constitution of the arbitral tribunal for the award to be issued. This does not mean that every arbitration ends within six months — the parties may agree otherwise and case complexity matters — but the framework is designed around a relatively concentrated procedure.

Still, the idea that arbitration is always “faster and cheaper” should be treated with caution.

The parties do not pay only their lawyers. There may be institutional fees, arbitrators’ fees, expert costs and other procedural expenses. For a small and straightforward unpaid-invoice claim, arbitration may not be the most economical option. For a high-value, technical or international dispute, however, its advantages may justify those costs.

There is another feature that can be both an advantage and a risk: finality.

Arbitration is often chosen precisely so that the dispute can be resolved without all the ordinary levels of review associated with court litigation. Judicial control of an arbitral award is not the same as a full rehearing of the case. In international commercial arbitration, for example, Law No. 24/2008 permits an award to be set aside on defined grounds, such as defects in the arbitration agreement, denial of the right to present one’s case, excess of jurisdiction, non-arbitrability or public policy.

For a party that wants a relatively final and efficient resolution, this can be an advantage. For a party that assumes any disagreement with the tribunal can later be corrected through an ordinary appeal, it can be an unpleasant surprise.

Arbitration should therefore not be selected simply because it “sounds more sophisticated.” It should be chosen where its characteristics fit the needs of the contract and the disputes that may realistically arise from it.

In international contracts, “where do we litigate?” becomes even more important

Where the parties are based in different countries, the dispute-resolution mechanism acquires another dimension.

It is no longer enough to ask who is right. The parties also need to know which law applies, where the proceedings will take place, in what language, who will decide the dispute and, perhaps most importantly, in which country the resulting decision will have to be enforced.

Law No. 24/2008 on International Commercial Arbitration allows the parties to choose the rules of law applicable to the merits. In the absence of such a choice, the arbitral tribunal determines the applicable law in accordance with the statutory framework and takes into account the contract and relevant trade usages.

This is one reason arbitration is frequently considered in cross-border agreements.

But the wording “any dispute shall be resolved by arbitration” is not enough as a risk-management exercise. A properly drafted clause should avoid uncertainty about the arbitral institution, applicable rules, seat of arbitration, number of arbitrators and, depending on the contract, the language of the proceedings and governing law.

A badly drafted arbitration clause can generate exactly what the parties were trying to avoid: a preliminary dispute about where and how the actual dispute is supposed to be resolved.

Mediation: when the commercial solution matters more than the verdict

Court proceedings and arbitration have something fundamental in common: at the end, an external decision-maker determines who is legally right.

Mediation works differently.

A mediator does not issue a judgment and cannot order a company to pay, deliver or abandon a claim. The parties retain control over the outcome and decide for themselves whether there is an acceptable solution.

At the date of the source article, 18 August 2026, mediation was still governed by Law No. 137/2015 on Mediation. That law defines mediation as an amicable dispute-resolution mechanism and structures it around principles such as voluntary participation, confidentiality, equality of the parties and the mediator’s neutrality and impartiality. The parties may withdraw from mediation, while the rules and duration of the process are largely determined through their cooperation with the mediator.

For a commercial dispute, that freedom may make solutions possible that a judge could never order.

Suppose a distributor owes a supplier MDL 2 million, but the problem is not a final refusal to pay; it is a temporary liquidity shortage.

In court, the discussion will focus on whether the debt exists, when it became due, contractual penalties and evidence.

In mediation, the parties can discuss something different: immediate payment of part of the debt, instalments for the balance, a reduction of penalties, additional security, changes to future order volumes and continuation of the commercial relationship.

Such a package may give the creditor a better recovery than a judgment obtained after litigation while also giving the debtor a chance to continue operating.

That is the major advantage of mediation: it does not have to reproduce the legal result a court would impose.

It can build a commercial solution.

Confidentiality can have economic value

Mediation is especially useful where the existence or details of the dispute may themselves harm the business.

Law No. 137/2015 protects the confidentiality of mediation and limits the use in other proceedings of information obtained during mediation, subject to statutory exceptions.

In a shareholder dispute, a conflict with a strategic supplier or a disagreement over a joint project, keeping the discussion within a confidential framework may be almost as valuable as the amount in dispute.

There is also a psychological and commercial advantage: mediation allows parties to discuss matters that do not fit easily into a statement of claim.

“We have lost trust.”

“We can continue working together, but only if we change the payment mechanism.”

“We need another 60 days, not cancellation of the debt.”

These are not always legal arguments. But they may be exactly the information needed to resolve the dispute.

Mediation does not work in every conflict

Flexibility should not be confused with universality.

If the other party has no genuine interest in negotiating, uses discussions only to gain time, or there is an immediate risk that assets will be disposed of, mediation may be insufficient as a standalone tool.

Similarly, if the parties need an authoritative determination of a legal issue or one party legitimately requires urgent coercive measures, court proceedings or arbitration may be necessary.

Mediation does not, however, have to be viewed as a final alternative to those procedures.

It can take place even after formal proceedings have begun. The applicable legislation regulates the effects of starting mediation on court or arbitral proceedings, while Law No. 23/2008 expressly provides for suspension of arbitration where mediation is initiated in relation to the same dispute, subject to the law.

In other words, filing a claim does not close the door to negotiation.

Sometimes genuine settlement space appears only after both sides have seen their legal positions set out clearly.

A good settlement must also be enforceable

The success of mediation should not be measured only by a handshake at the end of the meeting.

If the settlement requires payments six months later, transfers of assets or other significant future obligations, the parties also need to consider what happens if one side later fails to do what it promised.

Law No. 137/2015 regulates settlements reached through mediation and the mechanisms through which they may acquire enforceable force under the conditions provided by law, including court confirmation and, in certain relationships between legal entities, the notarial mechanism recognised by law.

The same principle applies regardless of the chosen procedure: before starting the dispute, think about the last step.

Where are the debtor’s assets?

In the Republic of Moldova or in another country?

Do you need only a declaration of rights, or do you actually need to recover money?

A legal victory on paper and an effective recovery are two different things.

For international commercial arbitration, Law No. 24/2008 expressly regulates recognition and enforcement of arbitral awards and the limited grounds on which recognition or enforcement may be refused.

The dispute-resolution mechanism should therefore be chosen with enforcement in mind.

“Which is cheaper?” may be the wrong question

It is natural for a company to compare costs.

Court proceedings involve court fees and litigation costs. Arbitration may add institutional fees and arbitrators’ fees. Mediation involves the mediator’s fee and, generally, far less formal evidence administration.

But the real cost of a commercial dispute is broader.

It includes the hours the finance director spends locating old documents. Management time. Expert reports. Cash tied up in the dispute. Accounting uncertainty. A lost relationship with an important customer. The possibility that a project remains blocked for two years. And, ultimately, the risk that the party against whom judgment is obtained no longer has sufficient assets for enforcement.

For that reason, arbitration that is more expensive at the outset may still be justified for a complex, high-value dispute.

A few mediation sessions may be the best investment where there is still meaningful room for compromise.

And for a clear debt against a debtor who has no intention of negotiating, court proceedings may remain the most rational route.

There is no universal ranking.

Three questions can change the choice

Before a commercial dispute is launched, management should answer three questions.

The first is: what do we need immediately?

If the answer is “we need to stop assets from disappearing” or “we need a binding decision,” the focus shifts toward an adjudicative procedure.

If the answer is “we need someone who understands this kind of contract, we want confidentiality and we already have an arbitration clause,” arbitration may be the natural choice.

If the answer is “we want to recover the money, but we would also like to keep the customer,” mediation deserves serious consideration.

The second question is: what happens if we lose?

Arbitration is subject to a different and more limited form of judicial review than ordinary court appeals. In mediation there is no concept of “losing,” because without agreement there is no imposed outcome. In court, the statutory appeal routes are available.

And the third question is perhaps the most pragmatic:

how will we turn the outcome into money or into an obligation that is actually performed?

The answer may matter more than the elegance of the procedure.

Sometimes the best strategy uses more than one route

Court proceedings, arbitration and mediation should not always be viewed as three doors where opening one permanently closes the others.

A well-designed commercial contract may include a staged process: first, direct negotiation between the responsible representatives; then escalation to management; potentially mediation; and, if no agreement is reached within a clearly defined period, arbitration or court proceedings.

Such a mechanism needs careful drafting.

If the wording is vague — for example, “the parties shall attempt amicable settlement before applying to court” without stating who initiates the process, how long it lasts or when it is deemed unsuccessful — the clause intended to simplify matters may itself become the subject of a dispute.

The dispute-resolution procedure should be designed like any other important contractual mechanism: with sufficiently clear steps, deadlines and consequences.

A legislative framework that is itself changing

For the Republic of Moldova, 2026 brings an additional reason to verify the applicable law when a dispute actually arises.

On 12 March 2026, Law No. 9/2026 on Mediation and the Status of Mediators was published in the Official Gazette. The general rule provides for entry into force six months after publication, meaning that the new regime is, as a rule, due to become applicable on 12 September 2026.

The new law also introduces mandatory participation in an initial mediation session for certain categories of disputes, but those provisions have later application dates. For employment and family disputes, the relevant rules are due to take effect 12 months after publication, while for certain civil disputes the period is 24 months. Accordingly, the existence of the new law did not mean that, as of 18 August 2026, every commercial dispute had to go through mediation first.

Arbitration legislation was also undergoing reform. On 2 July 2026, Parliament approved in first reading a draft new arbitration law intended to consolidate and modernise the existing framework. At the date of the source article, however, that draft had not replaced Laws No. 23/2008 and No. 24/2008.

This makes it even more important to verify the legal framework actually in force when drafting a dispute-resolution clause or initiating proceedings.

The right path is the one that solves the business problem, not just the case file

A commercial dispute is not merely a legal problem.

It is a receivable the business cannot use. A blocked project. A supplier that is not delivering. A contract that no longer works. A commercial relationship that must either be repaired or brought to an end.

The dispute-resolution mechanism should therefore be chosen by reference to the problem the company is trying to solve.

Court proceedings are often appropriate where the authority of the state, coercive measures or a binding judgment against an uncooperative party are required.

Arbitration may be appropriate where the parties want a jurisdiction chosen by them, procedural flexibility, confidentiality, specialised expertise or a framework suited to an international commercial relationship.

Mediation is particularly valuable where there is room for a negotiated outcome and the commercial result may matter more than formally identifying a winner and a loser.

Sometimes the correct strategy combines different tools: protect urgent rights through the available formal procedures while keeping the possibility of a negotiated settlement open.

Perhaps the most important decision, however, is the one made before any dispute exists. The dispute-resolution clause is not “legal boilerplate at the end of the contract.” It is the plan the parties will follow precisely when their relationship is functioning at its worst.

And that is exactly when clarity matters most.

This material is provided for general informational purposes and reflects the legislation of the Republic of Moldova as at 18 August 2026. The appropriate dispute-resolution mechanism depends on the nature of the legal relationship, the contract, arbitrability of the claims, value and complexity of the dispute, location of assets, need for urgent measures and other circumstances. Given the legislative changes already adopted or under consideration in the fields of mediation and arbitration, the applicable legal framework should be verified at the time proceedings are initiated.