‘HAVE A DISPUTE THAT NEEDS TO BE RESOLVED? DON’T FORGET ABOUT YOUR RIGHT TO ARBITRATE OR MEDIATE’

Gary Warne | Legal Services Manager

At one time or another most, if not all of us, have faced the somewhat daunting prospect of having to take drastic steps in order to obtain specific relief or the co-operation of another party in order to resolve an ongoing dispute.

Such disputes could arise out of a simple and straightforward engagement with a contractor to perform certain services or the breach arising out of the non-compliance by a party to a complex commercial agreement.

Whether or not the underlying agreement between the parties is formally regulated in writing or specifically provides for the steps to be taken in resolving such disputes, parties have traditionally resorted to litigation to obtain the relief they seek.

ONE’S RIGHT TO APPROACH THE COURTS

Parties to a dispute have the inherent right to have same referred to the courts, or another appropriate forum, to seek appropriate relief.

Such right is even entrenched in the Constitution by way of section 34 which states that: “Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.”

Traditionally the practice has been for disputing parties to approach the courts,  however in recent years there has been an increasing trend by parties seeking to enforce their rights / speedily resolve disputes to make use of alternative dispute resolution processes, such as arbitration and mediation, to resolve their disputes outside of the court system.

The most common advantages of utilizing such alternative dispute resolution processes are that the proceedings are private and confidential, less formal, often less cumbersome, more flexible and often more cost effective.

ARBITRATION

The right to have matters adjudicated upon by means of arbitration as well as the types of matters which can be referred to arbitration and the effect of arbitration rulings are regulated in terms of the Arbitration Act, Act 42 of 1965 (“the Act”).

Most commercial contracts also contain specific provisions relating to the adjudication of disputes by means of arbitration and often regulate the exact terms to be adhered to when declaring a dispute and referring same to arbitration.

In terms of the Act, matters which cannot be referred to arbitration for adjudication are in respect of matters with a matrimonial cause or any matter relating to the status of a person or juristic entity.

The decision of the arbitrator is both final and binding and unless the underlying arbitration provides otherwise an arbitration agreement shall not be capable of being terminated except by the consent of all parties thereto.

The court may at any time on the application of any party to an arbitration agreement and on good cause:

1. Set the arbitration agreement aside; or
2. order that any particular dispute referred to in the arbitration agreement not be referred to arbitration; or
3. order that the arbitration agreement shall cease to have effect with regard to any particular dispute to which such application may relate.

The advantages of arbitration is that the process is less formal and is also quicker than litigation, however, depending on the complexities and nature of the issue/s in question, it does not necessarily mean that the arbitration process will be less expensive than pursuing litigation.

Due to various similarities with litigation (particularly from a procedural and structural point of view) there appears to be increasing dissatisfaction with arbitration, with a growing trend towards opting for mediation instead.

MEDIATION

Unlike arbitration there is no specific legislation empowering the use of mediation however in terms of Rule 41A of the Uniform Rules of Court the parties are required to consider the option of mediation at the outset of litigation. The purpose of this requirement is to try and ease the burden on the court system.

Mediation can be described as a voluntary process entered into by agreement between the parties and in terms of which a mediator (who is impartial and independent) assists them in resolving their dispute(s) or identifying the specific issues upon which consensus can be reached between the parties and trying to resolve or reach compromise on the remaining issues. 

Mediation is a confidential process and the evidence given is inadmissible as evidence in court.

It is less formal than arbitration and is also quicker and less expensive than either arbitration or litigation.

WHY CHOOSE ALTERNATIVE DISPUTE RESOLUTION?

Parties hesitant to pursue formal legal action on the grounds that same is costly, time-consuming and cumbersome should consider the alternative options available to them, namely arbitration or mediation, as same could achieve the results which they seek in a less cumbersome, more expedient and cost-effective manner.