By Fouché Strydom (Senior Associate at Hayes Incorporated)
TO LITIGATE OR NOT TO LITIGATE, WHAT ARE THE ALTERNATIVES? AN OVERVIEW OF ARBITRATION AND COURT ADMINISTERED MEDIATION AS ALTERNATIVE DISPUTE RESOLUTION MECHANISMS
You’ve learnt to trust your inner voice of reason to guide you to act justly and appropriately, but when the voice of reason fades into the background, when it whispers too softly and when we simply don’t listen: “Stop arguing! What is going on here?! Share with Billy and play nice now…” It is safe to say that we have all experienced this kind of quick, uncomplicated and effective dispute resolution. It is dispute resolution of this kind that the alternatives to traditional litigation, sets out to be.
Traditional litigation (as a form of commercial dispute resolution) is run strictly in accordance with a formal process. Codified Rules of Court define the parameters of the game and when the long-awaited day for your case to be heard finally arrives, the Magistrate or Judge, wearing a brightly coloured robe, is looking down from his bench at your attorney or advocate as they bow when he enters the room. That about sums up traditional litigation. What are the alternatives?
Since 2014 and after an amendment to the Magistrates Court Rules, a party may refer a dispute to mediation prior to commencement of litigation, or after commencement of litigation, in accordance with the Magistrate Court Rules. This mechanism of mediation via the Court Rules is in an experimental phase and currently being implemented in certain provinces only, but will most likely see full implementation in the near future.
Mediation is a form of facilitated negotiation whereby a mediator assists the parties to resolve their dispute by facilitating discussions between them, assisting them in identifying issues, clarifying priorities, exploring areas of compromise and generating options in an attempt to resolve the dispute.
The ultimate purpose of mediation is to facilitate a settlement between the parties, which they reach by agreement. Participation is voluntary and the process confidential. The mediator plays the role of the diplomat and does not make any findings of fact or in law.
Mediation makes the most sense when it is initiated prior to litigation, with a view to avoid litigation altogether. But even if you have already crossed swords with a litigious adversary, you may still have a remedy in mediation. In terms of the mediation mechanism provided for in the Court Rules, when parties have mediated a dispute which is already the subject of litigation, their agreement may be made an order of court by agreement between the parties. In other words, the mediated agreement becomes binding and enforceable in the same way as an order of court.
Arbitration is an agreed dispute resolution process governed by the Arbitration Act 42 of 1965. The parties will agree that, in the event of any dispute arising between them, or a dispute of a certain nature arising, then an independent third party will adjudicate their dispute.
A prerequisite for arbitration is a written arbitration agreement, which may be entered into when a dispute arises, or take the form of a clause dealing specifically with arbitration of disputes which is incorporated in a commercial agreement. The parties will agree the procedure for referral of any disputes to arbitration and on the method of appointing an arbitrator. As an alternative, they may agree to an independent body to appoint an arbitrator for them. Typically, the parties will agree to a body of independent arbitrators, such as the Arbitration Foundation of Southern Africa (AFSA), to administer the arbitration and to a set of arbitration rules to govern the arbitration process. Matrimonial matters and matters related to status may not be submitted for arbitration.
Benefits of arbitration include:
- Arbitration is consensual and once agreed to a party cannot unilaterally withdraw from the proceedings;
- The parties have the benefit of choosing and agreeing to an arbitrator, this is especially beneficial if the dispute is of a technical nature and when it will be helpful if the arbitrator has certain expertise;
- Unless the parties have agreed on a procedure for appeal, the arbitration award is final and binding;
- The arbitration award may be made an order of court, which means it can be enforced in the same way as a court order; and
- The arbitration proceedings are confidential, however, if the arbitration award is made an order of court, it will become public record.
Arbitration is essentially a form of privatised litigation. The parties to the dispute will bear all the costs relating to the proceedings, which typically include the arbitrator’s fee, venue hire, recording of the proceedings, and an administration fee if an independent body such as AFSA were utilised to administer the arbitration. This fact has given arbitration the reputation to be more expensive than traditional litigation, however, since the parties to arbitration proceedings have defined their disputes and have agreed to a suitable arbitrator, disputes referred to arbitration are typically resolved much more conveniently and expeditiously than in ordinary litigation. For these reasons arbitration has become the preferred method to expeditiously resolve commercial disputes.
Alternative dispute resolution mechanisms hold the potential to lead to a desired outcome for a prospective litigant, without the investment in time, money and the anxiety that traditionally accompanies litigation. For these reasons mediation and arbitration as forms of alternative dispute resolution are good alternatives to litigation, although our courts are, and will always remain, the gatekeepers of justice and in many cases the most suitable forum for dispute resolution.