While approaching the courts is a traditional method for resolving disputes between parties, there are times and circumstances where the courts are not necessarily the best option. Now, more than ever during the current Covid-19 lockdown, with the courts only open for certain urgent matters, finding other ways to resolve disputes is sensible, will save you time and money, and can often save relationships as well.
Here are three viable ADR options, which can also be managed remotely:
The first option is mediation, involving an independent, qualified third party to listen to each side’s version of events, examine the dispute, and assist in finding a solution and/or a compromise.
A clear advantage of mediation is that it allows for a creative resolution – often a simple apology can go a long way in healing the divide – in a way that a court cannot. Another advantage is that things said at a mediation are considered ‘without prejudice’; what a party says in a mediation cannot later be used in court proceedings. Parties also do not need to hire legal practitioners and can share the cost of the mediator – there is also the option of Fixed Fee Mediation which will give both parties a fair indication of the costs involved.
Once the parties have agreed to mediation, the first step is to appoint a mediator – many commercial contracts contain mediation clauses setting out the process for choosing a mediator; or organisations such as the local Bar Council, AFSA or Conflict Dynamics who keep lists of accredited mediators for referral. Secondly, a mediation agreement will establish how the process will work. This typically entails a decision on the mediation location and the sharing of the costs.
It is important to note that a mediator does not make a ‘decision’ in the traditional sense of a legally enforceable court decision. It is the role of the mediator to assist the parties in reaching a legally binding agreement. It is therefore recommended that the parties record the outcome of the mediation, and for issues where agreement cannot be reached, they can opt to proceed to litigation or arbitration.
Arbitration is another option for dispute resolution.
Unlike mediation, arbitration results in a ‘decision’ which can be made an order of court by agreement between the parties.
Unlike a mediation, parties are usually represented by legal practitioners because arbitration proceedings are closer to an actual court hearing than mediation. Often, the arbitrator will be a retired judge or senior legal practitioner and so it is recommended that each party have an experienced legal practitioner present to present their case at the arbitration.
Many commercial contracts today include arbitration clauses which set out the process for choosing an arbitrator, either by agreement or by requesting that the chairperson of an association such as the local Bar Council or Arbitration Foundation of South Africa (“AFSA”) make a recommendation. The AFSA is a useful resource for assisting with the administrative side of an arbitration.
An arbitration agreement is critical for parties to agree on several points:
- timelines for the submission of documents and pleadings,
- the process by which the arbitration is run,
- whether or not to include an appeal process.
Time is one major advantage of arbitration. Parties are not restricted by the court’s timelines and can agree to, depending on the arbitrator’s availability, a compressed timeline, resolving the matter in weeks or months rather than years.
Importantly, unlike mediation, arbitration is still an adversarial process and the arbitrator will find in favour of one party, with a costs order to follow, so parties should agree from the outset how the costs will be dealt with.
In an arbitration, parties must appoint legal practitioners to prepare their case, draft papers and present their case to the arbitrator – this is in addition to appointing an arbitrator, so arbitration can be an expensive process. However, a resolution can usually be reached quickly, minimsing delays and allowing everyone to move forward with certainty.
A third dispute resolution tool is adjudication, an accelerated and cost effective tool as the outcome is a decision by a third party (an adjudicator) which is binding on the parties and final, unless reviewed by either agreed arbitration or litigation.
An adjudicator reviews evidence and arguments from both sides to reach a decision which determines each party’s rights and obligations, provides certainty as to each party’s position and permits the parties to get on with business.
In adjudication, the parties do not always need to be present, as an adjudicator may request written submissions and clarifications from both sides before reaching a decision. This keeps costs down and prevents issues from multiplying into procedural arguments and delays. It also means that the parties does not always need to hire legal practitioners, as their case will not be argued as it would in an arbitration or court proceedings.
Adjudicators do not need to be legal practitioners if the dispute to be resolved is not a legal one. They may be specialists in engineering, construction, mining, or any other field to which the dispute relates, allowing for decisions on highly specialised questions. As with mediation, the parties will usually agree to share the costs of an adjudicator.
As with arbitration and mediation, usually a contract between parties contains an adjudication clause. The parties will also need to enter into an additional written agreement to stipulate how the adjudication will proceed.
Unlike an arbitration, an adjudicator’s decision is enforceable as a matter of contractual agreement and obligation between the parties, not as an arbitral award. That means the decision can be implemented without delay.
These alternative avenues to dispute resolution are often more desirable and more readily available than a prolonged court process and can be very effective in the right circumstances.
Author: Katherine Timoney
Associate, Gillan & Veldhuizen Attorneys
BA (LLB) LLM (University of Cape Town)