The Law: Contracts - Part 27
The Role of: Service Level Agreements
Alternative Dispute Resolutions (Cont’d)
I ended Part 26 (FEB 2017) by stating that arbitration becomes the method of resolving a dispute if parties to the dispute choose that method of problem-solving at the time, or if it is a clause in an agreement governing the relationship that gave rise to the dispute.
Another alternative, to be preceded by wording to the effect that the MDs or CEOs of the businesses concerned will first try and resolve the matter, is to refer to the rules of the AFSA and to allow for AFSA to appoint the arbitrator if the parties cannot agree.
Arbitration does offer the following advantages:
1. Flexibility: e.g. choice of arbitrator, venue, timing and procedure
2. Costs: This may however sometimes be a perceived benefit as you still have to employ an attorney and more often than not counsel (advocate) as well. This benefit will only really materialise if the parties maximise the benefits of arbitration e.g. the informality, the expertise of a correctly chosen arbitrator and limiting the use of expert witnesses.
3. Speed: This is a very real benefit, especially the parties can agree on deadlines e.g. for the filing of pleadings (arguments) and you have a strong arbitrator. This benefit can be enhanced even further if the parties meet beforehand to define the issues and exchange relevant documents (which meeting may or may not be presided over by the arbitrator).
4. Confidentiality: The matter is not heard in an open (public) court (See brand management above).
5. Finality: Arbitrator’s finding is final and can only be attacked on basis of misconduct or gross irregularity.
6. Equity: Arbitrator can make an award relying on equity rather than on the ‘letter of the law’.
7. Relationship: The chances are the relationship between the parties is less likely to be damaged by arbitration than litigation.
Arbitration could, however, be linked to the following disadvantages:
1. Costs: this can, in fact, be as high as litigation if benefit 1 above (esp. the procedure) is not fully maximised.
2. No appeal: i.e. a bad award is not appealable.
Mediation has the same benefits as arbitration but not the disadvantage of high costs – the latter is materially lower and more manageable.
There are four main ADR bodies in South Africa, details of which can be obtained via the Internet i.e.
• The Arbitration Forum
• The Association of Arbitrators
• The CCMA: The Commission for Conciliation Mediation and
I trust the above will give you a better grasp of ADR, assist you in preparing more effective contracts and reducing your legal bills!