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Arbitration vs other dispute resolution methods

BY JACOB MUTEVEDZI

Dispute resolution is a term which refers to an assortment of mechanisms that can be employed to resolve a dispute or claim. Alternative Dispute Resolution (ADR) processes are alternatives to having a dispute determined by a court through litigation. Dispute resolution processes are employed to settle a broad spectrum of disputes including commercial, labour, consumer, investment and environmental disputes, among others. The chief ADR methods are negotiation, mediation, expert determination and arbitration. There is tendency in certain quarters to refer to all ADR methods as “arbitration”. This article explores the differences between arbitration and other ADR mechanisms.

Negotiation 

Negotiation is, arguably, the most elementary method of settling disputes. It comprises back-and-forth engagement between the disputants with a view to finding a solution. It is the most versatile, informal and party-driven dispute resolution method. Unlike in arbitration, there is no involvement of a neutral third party to make a determination. It is important to understand that negotiation is not adjudicative in nature. Conversely, arbitration and litigation are adjudicative in that both culminate in a final and binding determination.

The outcome of successful negotiation is often encapsulated in a settlement agreement which is essentially contractual in nature. It is no surprise that negotiation is frequently employed as an initial step in the resolution of most disputes. Despite its apparent virtues, negotiation will fail dismally if the parties have a poor relationship, both parties are not willing to give ground, or their interests are mutually exclusive. This process can be appropriately used at any stage of the conflict — before a lawsuit is filed, while a lawsuit is in progress, at the conclusion of a trial, even before or after an appeal is filed.

Mediation

Mediation is a voluntary process through which a neutral person (the mediator) assists with communication and promotes reconciliation between the parties, thus allowing them to reach a mutually acceptable agreement. It is usually the next step if negotiation fails.

The mediator’s role is merely facilitative in that the mediator is confined to helping the parties identify a mutually acceptable solution to their dispute. Unlike arbitration in which the arbitrator issues a binding award, mediation is not adjudicative. The take away is that the mediator cannot impose an outcome on the parties. However, mediation shares certain attributes with arbitration. For instance, it is a private dispute resolution method. It cannot happen without the consent of the parties.

The parties to mediation have absolute control over the process. They can agree on any outcome and leave the mediation at any point. Therefore, mediation is not binding. Parties who walk out of arbitral proceedings, on the other hand, risk having awards rendered against them in their absence. In arbitration, if a party walks away, an award can still be rendered against it. In the event that the arbitration succeeds parties may conclude a binding settlement agreement. Unsuccessful mediation often leads to arbitration or litigation. Mediation can also be resorted to at any stage of the dispute for example to facilitate settlement pending the finalisation of litigation.

Expert determination (Adjudication)

It is usually an efficient method of settling disputes of a technical or contractual nature by referring them to an impartial third party who will resolve the dispute by making a decision based on his own expertise. Parties to a dispute agree to be bound by the decision of a third party that has expert knowledge of a particular construction issue or subject. The decisions are binding but not necessarily final and are often achieved on a fast-track basis.

Expert determination is particularly convenient for resolving disputes of a technical nature; for instance in the construction or intellectual property. Expert determination is different from arbitration in that the expert can ditch legal principles and apply his own technical knowledge to come to his own decision and has no obligation to furnish reasons. An expert’s decision is not automatically enforceable like an arbitration award and if a party does not voluntarily comply with it, the other party must seek the court’s assistance for enforcement.

Going to court (Litigation)

Locally, litigation is the most popular dispute resolution method. Litigation means the resolution of disputes in the formal courts presided over by judges and magistrates. These proceedings are generally conducted in public. Litigation is, therefore, different from arbitration which is private in nature.

Litigants are obligated to adhere to strict and rigid rules of evidence and procedure. These inflexible rules define the court’s jurisdiction by determining the circumstances in which litigants can institute action in the courts. They also regulate procedural matters concerning how parties should commence proceedings, the documents which they must file and the sequence of filing such documents, among a morass of other issues.

Arbitration, on the other hand, is consensual. Strict rules of procedure are not applicable in arbitration and the parties are at liberty to define how the arbitration will be conducted. Generally, judges and magistrates have very limited latitude to act outside the applicable adjectival laws. Parties to litigation can neither waive the application of these procedural rules nor agree to litigate outside them. Conversely, arbitration is not rigid and parties are free to determine their own procedure. It is also vital to note that an arbitration award is binding on the parties and, under normal circumstances, final. While court judgments are also final, they can be subjected to a deluge of appeals in the appellate courts.

Conclusion

The legal needs of states, multinational corporations, and ordinary people are evolving at break-neck pace. Over the last decade or so, most business people have learnt to resort to alternative dispute resolution mechanisms than waste both time and money in public courtrooms. There can be no doubt that the privacy, practicality, promptness and economy afforded by ADR makes it way more attractive than litigation.

  • Jacob Mutevedzi is a commercial lawyer and arbitration practitioner. He can be contacted on jmutevedzi@gmail.com, on Twitter @jmutevedzi_ADR and on +263775987784. He writes in his personal capacity.

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