What Is Commercial Litigation (Explained: All You Need To Know)

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What is Commercial Litigation?

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What Is Commercial Litigation

Commercial litigation is a term used to broadly refer to any type of legal action between businesses or individuals engaged in a commercial activity.

In other words, commercial litigation refers to any type of dispute that may arise in a business relationship.

For example, breach of contract claims, partnership disputes, shareholder disputes, class action lawsuits, breach of fiduciary duty, trade secret infringement, and other business-related disputes can be categorized as commercial litigation.

What’s important to understand is that commercial litigation does not necessarily relate to a lawsuit that has been filed before a court.

In fact, from the moment a company or individual engaged in a commercial activity retains the services of an attorney to investigate a matter or sends a demand letter to another party, you have the commencement of commercial litigation.

“Litigation” is the entire series of steps that a company will need to go through to resolve a commercial dispute, from the investigation of the cause of action to filing appeals, and “lawsuit” is the specific act of filing a court complaint against someone.

Keep reading as I will further break down the meaning of commercial litigation and tell you how it works.

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How Does Commercial Litigation Work

In general, commercial litigation is similar to the manner civil litigation is handled.

Typically, when a business or company considers having suffered damages or injury, it will consult a qualified attorney to evaluate its legal rights and obligations.

Then, the retained attorney will investigate the matter further to assess whether or not there is a feasible claim.

The attorney’s objective is to research and find the facts along with applicable laws to determine if the business has a valid legal claim.

When the validation is done, the client will send a demand letter to the potential defendant seeking compensation or formulating its demand.

If the matter is amicably resolved, then the litigation is over.

However, if the matter cannot be resolved, the plaintiff will formally file a lawsuit serving the defendant a complaint and summons.

In court, the parties will go through the discovery phase, file motions, participate in pre-trial motions, prepare for trial, and eventually go to trial.

Litigation will be formally over when a final and binding judgment is issued by the court or the parties reach an out-of-court settlement.

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Commercial Litigation Challenges

Over the past decades, we have noticed a tendency for commercial litigation to be more complex and more difficult to manage.

Companies are now able to sell internationally, the regulatory landscape is becoming more complex, governments are increasingly investigating commercial activities, and complex cross-border transactions are more common.

Businesses can have disputes with their customers, partners, suppliers, employees, directors, and pretty much any stakeholder.

As a result, commercial litigation has become more complex.

One important challenge is that there are a number of commercial disputes that can be engaged in different jurisdictions.

Once the question of jurisdiction is resolved, another challenge is to potentially handle legal disputes in a foreign jurisdiction where there may be a language barrier.

Also, commercial disputes tend to involve highly complex commercial contracts with highly specific industry-related terms.

As such, to understand the complexities of commercial litigation, it’s important to adequately understand the business and the particulars of the commercial relationship.

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Civil Litigation Examples

Let’s look at a few examples of civil litigation to understand the concept better.

The notion of “commercial litigation” is quite broad as it captures any type of “commercial” or “business” dispute that can include things like:

• Breach of contract
• Insurance claims
• Partnership disputes
• Shareholder disputes
• Environmental issues
• Tax disputes 
• Employment disputes
• Securities litigation
• Trademark issues
• Trade secret issues
• Copyright issues
• Data protection issues
• Real estate disputes 
• Unfair competition actions
• Tortious interference 
• LLC membership disputes
• Intellectual property disputes 
• Debtor or creditor actions
• Breach of duty 
• Antitrust cases 
• Cybersecurity issues

The list can go on and on.

What is common with the above examples of commercial disputes is that they involve businesses, and the issues arise in the context of their business operations.

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Commercial Litigation vs Civil Litigation

What is the difference between commercial litigation and civil litigation?

Although commercial litigation and civil litigation are similar in many respects, they do not necessarily refer to the same thing.

Commercial litigation is a type of legal dispute involving companies, business entities, or individuals engaged in a business relationship of some sort.

Typically, commercial litigation will involve complex commercial contracts that are industry-specific and where the litigants are sophisticated parties.

Another feature of commercial litigation is that the lawsuit can be instituted in multiple jurisdictions or may involve many defendants.

On the other hand, civil litigation refers to any type of litigation implicating civil laws.

As such, civil litigation has a much broader perspective than commercial litigation.

Civil litigation can include personal injury claims, family disputes, probate matters, contractual disputes, and more.

You can say that commercial litigation is a type of civil litigation, but you cannot say that civil litigation is necessarily commercial litigation.

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Commercial Litigation FAQ

What does “commercial litigation” mean?

Commercial litigation refers to virtually any dispute that may arise between businesses or in the context of commercial activities.

Commercial litigation can include M&A litigation, product liability, class action, trusts and estate disputes, real estate litigation, data protection and data privacy, cybersecurity, partnership disputes, joint venture issues, and so on.

What is the difference between commercial litigation and civil litigation?

Commercial litigation is a type of legal dispute relating to all aspects relating to a business or people working for that business.

For example, breach of contract claims, execution in kind, the exercise of collateral, shareholder disputes, and so on.

Civil litigation is a type of litigation revolving around a single person or a few people where one is seeking compensation from another.

For instance, family law disputes, personal injury claims, or negligence lawsuits are civil litigation matters as the plaintiff seeks compensation from another.

What are some examples of commercial litigation?

Although there are many examples of commercial litigation that we can offer you, here are some to illustrate the point:

• Unfair competition actions
• Tax disputes
• Securities litigation
• Shareholder disputes
• Partner disputes
• LLC member disputes
• Labor issues
• Insurance coverage claims
• Fraud actions
• Product liability
• Misrepresentation actions
• Debor actions
• Creditor actions
• Business torts
• Antitrust cases 
• Class action lawsuits

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Takeaways 

So there you have it folks!

What does commercial litigation mean?

In a nutshell, commercial litigation is a non-criminal type of legal dispute between businesses, partnerships, corporations, LLCs, or any type of legal entity somehow relating to their business operations.

For example, a software company that enters into a subscription agreement with a client sues for unpaid invoices or a company sues a former shareholder for having breached a non-compete agreement.

Virtually any type of dispute that can arise in business is considered commercial litigation to the extent.

Some commercial litigation matters may be considered “routine” while others may be considered “bet-the-company” types of cases.

No matter what type of commercial litigation you may be in, it’s important to consult with a qualified attorney, properly evaluate your options, and make a decision that is best for your business.

Now that you know what commercial litigation means and how it works, good luck with your research!

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