Disputes are frequent and inevitable in both personal and business endeavours. In light of increasing court backlogs and the undesirability of protracted litigation, alternative dispute resolution mechanisms, such as mediation and arbitration, have emerged as viable alternatives to traditional litigation. These mechanisms, however, differ in process and outcome.
Arbitration
Governed by the Arbitration Act, arbitration involves the referral of a dispute to a neutral third party – an arbitrator – for resolution after an impartial assessment of the parties’ evidence and submissions. In practice, arbitration is triggered by the inclusion of an arbitration clause in an agreement to resolve disputes through the appointment of a mutually agreed-upon accredited arbitrator or, if no agreement is reached, an arbitrator recommended by an accredited organisation, such as the Arbitration Foundation of Southern Africa. Crucially, the arbitrator’s decision is final and binding on the parties. If the parties are dissatisfied with the arbitrator’s finding, they cannot challenge it.
Often arbitration is preferred to traditional litigation for various reasons. First, the arbitrator has specialised legal expertise in the sphere of law relevant to the dispute. Second, in light of an overburdened judicial system, arbitration offers a speedier and more convenient pathway to resolving disputes. Third, an arbitrator’s finding is private, which allows the parties to avoid the public disclosure of sensitive information and or reputational damage.
Mediation
An increasingly popular form of alternative dispute resolution, mediation is not currently regulated by statute, apart from scant reference under the Uniform Rules of Court. It involves the use of neutral and independent third party to facilitate discussion and resolution between disputing parties. Facilitated by the mediator, the parties identify the dispute/s, formulate opinions, and attempt to reach mutual agreement. Mediation may be voluntary, incorporated in an agreement, or mandated in limited instances. For example, Rule 41A of the Uniform Rules of Court requires the parties to formally consider resolving their dispute through mediation.
Importantly, mediation is confidential, which offers the parties the opportunity to fully engage. Notably, the outcome of mediation is not legally binding, unless it is made an order of court. Like arbitration, mediation provides a swifter route to resolving disputes than traditional litigation. Generally, it is significantly more cost-effective, too.
In light of the shift towards alternative dispute resolution processes, mediation and arbitration offer various advantages over traditional litigation. The appropriate legal avenue, however, will depend on various factors, including time constraints, the nature and complexity of the dispute, cost considerations, and confidentiality, among others.
At STBB, our skilled litigators specialise in both traditional litigation and alternative dispute resolution. Have a dispute that requires resolution? Contact our specialist attorneys at litigation@stbb.co.za.
