Arbitration is the process in terms of which the parties to a dispute refer that dispute to a third party, known as an arbitrator, for a financial decision after the arbitrator has first impartially and objectively received and considered evidence and submissions from the parties.
The object of arbitration is for the arbitrator to resolve a dispute between the parties regarding past events in accordance with their legal rights.
- Where the dispute relates to complex matters, parties can greatly reduce the amount of expert evidence required to qualify a court to resolve that dispute. This can be done by using an arbitrator with specialised knowledge and experience in that field.
- Arbitration may be a less expensive means of settling a dispute than litigation, but this is not necessarily the case.
- Arbitration will only be less expensive than litigation if the procedure used is less formal and time consuming than that of a High Court trial.
- In the case of a trial, the hearing will normally take place at the seat of the court on a date allocated by the Registrar. Arbitration may take place at a venue and time convenient for the parties.
- Arbitration offers considerable advantages in respect of:
- the shortage of courts in relating to the number of cases,
- and the resultant lengthy period of time between the institution of legal proceedings and the trial date, as there are no unnecessary delays before the hearing to arrange an expedited form of hearing.
- Litigation takes place in open court. Both the public and the media have access to the proceedings. On the other hand arbitration proceedings are private and confidential.
- The arbitration process is a flexible one.
- The arbitrator and the parties can determine by mutual consent the procedure to be followed.
- They can adopt the procedure taking into account the nature and the extent of the issues in dispute as well as the amount in dispute.
- A judgement of a court may be taken on appeal to a Higher Court, but an arbitrator’s award is final and is not subject to appeal to the courts.
- The high court does, however have statutory power to set aside or remit an arbitrator’s award under certain circumstances.
- A more informal procedure could create a greater party involvement and a more relaxed atmosphere and the dispute will therefore be resolved more speedily.
Arbitration and Litigation
Many of the advantages claimed for the arbitration in preference to litigation as a method for settling disputes are particularly applicable to arbitration in labour disputes.
The saving in time is important, especially in unfair dismissal cases, where labour relations between an employer and his employees require the dispute to be settled speedily.
An informal arbitration can dispose of the matter in a day or two, whereas delays in finalising such matters in the courts are notorious.
When to use Arbitration
Arbitration is used as a alternative to Court Procedure for disputes between two or more parties that needs to be solved without unnecessary delays and costs.
Arbitration will be used once negotiations and mediation have failed. Arbitration is primarily used in commercial disputes.
Is an Arbitration decision binding on the parties?
Arbitration is regulated by the Arbitration Act 42 of 1965, the decision in an Arbitration is binding on both the parties.
The Arbitration outcome can be made into a Court Order, where the decision of the Arbitration will be enforceable as if it was a Court Order.
What are the disadvantages to Arbitration?
Arbitration has some disadvantages, with regards to costs Arbitration will cost more compared to a matter done through the Courts.
After an Arbitration decision has been made and one of the parties are unsatisfied, they have limited remedies, the main remedy a party can institute is to appeal the decision.
The purpose of Arbitration
The purpose of Arbitration is to dissolve disputes between parties, in a manner where the parties have more input on who the Arbitrator who is that does the Arbitration.
Additionally, the purpose of Arbitration is to settle a dispute in a small period of time, without unnecessary court proceedings.