Mediation and arbitration – the way to resolve commercial disputes

Mediation and arbitration as ways to resolve legal disputes are becoming   more attractive options  for companies to resolve legal issues .

Eugene Bester, Director in the Dispute Resolution practice at Cliffe Dekker Hofmeyr says that one of the benefits of mediation and arbitration is that both parties agree on the mediator or arbitrator, who in most instances are senior counsel or retired High Court judges.

“The decision is usually made fairly quickly, because both parties can present lists of their preferred candidates and most likely, the list on both sides contains the same people – known experts in the commercial legal sector. However, if the parties can’t agree on a mediator or arbitrator they can either go to the Bar Council of South Africa or the Arbitration Association of South Africa who will  appoint the mediator or arbitrator.

“The process of mediation and arbitration is not necessarily cheaper than taking a legal matter to the High Court, because the cost of the mediator or arbitrator  and other associated costs  must be factored into the equation,  and this is not the case if the matter is dealt with in the High Court,” says Bester.

“However, in the long run, the process will in many instances be resolved more quickly, with less instances of appeal, and this has the potential of making it a more cost-effective option.  A High Court decision can be the subject matter of various  appeals in the High Court or the Supreme Court of Appeal, which usually is a costly affair, whereas an appeal in an arbitration goes to the Appeal Tribunal, if the parties have agreed on a right to appeal. This is a simpler process,” he explains.

Bester explains that parties can not appeal a mediation because if it is successful, both parties will have signed a settlement agreement, and have therefore agreed to the resolution of the dispute.

“Mediations are successful 75% of the time, but it depends on the mind-set of the parties in the mediation. They have to want to resolve the dispute in order for the mediation process to work, because there will always be a compromise on both sides in the settlement.

Arbitration is more adversarial than a mediation, cross examination occurs and lawyers can tear into a witness during the process. Arbitration can follow on from an unsuccessful mediation if both parties have agreed to go that route if a mediation was unsuccessful. If there was already a High Court summons before mediation occurred then litigation in the High Court will simply continue.

“Mediation and arbitration as ways of resolving disputes are occurring  in companies across the board, and are not more prevalent in any one specific sector. The important thing to bear in mind with the resolution of any dispute is to go into the process with the intention of resolving the issues. If that is the case, then this can be a very successful and efficient legal process in the commercial sector,” Bester adds.