“Can it be that there is no one among you wise enough to settle a dispute between the brothers …?” (v5-6). Paul’s era was very litigious; people took each other to (civil) court over everything. Paul wanted the believers to realize that they were part of a new spiritual family (and family relationships mattered) and that they could settle their own minor disputes. His advice was not meant to cover up real crimes, but to encourage believers to deal with one another honestly (v8).
“Do you not know that the saints will judge the world” (v2). The judgment of the world is in the future; we are called now to pursue truth, holiness, and mercy within God’s own household.