What you need to know about Arbitration
Arbitration is a form of Alternative Dispute Resolution to litigation. Arbitration is regulated in terms of the Arbitration Act 42 of 1965.
The parties must agree to refer a matter to arbitration. Arbitration can be governed by the Uniform Rules of Court or the rules of the Arbitration Foundation of South Africa (AFSA), depending on the agreement between the parties.
The arbitrator should be appointed by the parties on the basis of the nature of the dispute. For instance, if the matter revolves around financial issues, the mediator may be an expert accountant with ten years’ experience in the profession. The parties can agree on the particulars of the mediator. Otherwise, the parties can agree that AFSA appoint an arbitrator on their behalf.
Owing to the various fees associated with arbitration, including appointing an attorney and renting a venue, arbitration can be quite expensive. It can also run for a long period of time depending on the complexity of the dispute.
Despite this, arbitration can still be faster and cheaper than litigation. An important benefit is that the arbitration decision is private and cannot be shared to impact the reputation of your business. It is also binding and can be made an order of court which makes the decision easier to enforce against the other party.
Your business may benefit from arbitration, particularly where loss of the dispute would cause reputational harm to your business, or where litigation has already taken a long time and been extremely costly. Arbitration can assist you to achieve a binding decision for your business and resolve a dispute expeditiously and privately.
What you need to know about Mediation
If your business enters into agreement, it will likely become involved in a dispute. Mediation is a useful alternative to litigation. Not only is it cheaper than litigation, but it can be more efficient and less time-consuming, particularly where the mediation is successful.
You cannot force the other party to refer the dispute to mediation. Parties must agree to resolve their dispute through mediation.
If a matter is referred to mediation by the parties, they will meet with an impartial third-party mediator to facilitate agreement between them. The costs of the mediation will be shared by the parties.
Mediation is confidential and “without prejudice” because it involves settlement negotiations. The record of the mediation is not public and cannot be brought before the Court if the dispute is subject to litigation after unsuccessful mediation.
Generally, the process for mediation is as follows:
- The parties agree to mediation and make arrangements for a mediator. The mediation can be subject to the Rules of the Arbitration Foundation of South Africa, in accordance with the parties’ agreement;
- The mediator conducts the mediation at the premises and on the date and time agreed by the parties;
- At the mediation, each party will have an opportunity to express their views. This ensures fairness of the mediation;
- The aim of the mediation is for the parties to cooperate to reach a settlement of the dispute;
- The mediator cannot impose a decision on the parties but rather facilitates resolution of the dispute by the parties;
- The mediation will terminate if a party withdraws from the mediation, a settlement cannot be reached, or a written settlement is concluded between the parties.
If the other party to your dispute is willing to resolve the matter through mediation and you reach a settlement, this will save your business from the costs of litigation and may assist in preserving an amicable relationship with the other party, allowing you to engage with each other after the dispute.