There are different forms of arbitration. PAA Ramsden enunciates there being consensual arbitration, statutory arbitration (such as the Labour Relations Act 66 of 1995), court-directed arbitration, ad hoc arbitration, institutional arbitration, documents-only arbitration, fast-track arbitration, ex parte arbitration, and multi-party arbitration.
All these different forms, according to arbitration proponents, have their own advantages, especially when compared to litigation. In general, these advantages are:
Arbitration is usually quicker in bringing resolution to a dispute than litigation. The primary factors, in this case, being lengthy delays in obtaining court dates. The saving in time equates to a substantial saving in costs.
The parties to the dispute have the right to choose the arbitrator and can determine the venue and time of the proceedings. The form of arbitration can be varied and adapted to suit the situation.
Expertise of the Arbitrator
If the dispute involves a complex issue, an arbitrator can be appointed with the necessary expertise in the subject matter in dispute. This reduces the number of expert witnesses required to give evidence and saves both time and costs.
Legal Representation Is Not Obligatory
The parties can conduct the arbitration themselves as opposed to court proceedings, where parties are advised to be represented by attorneys or advocates.
This is only an advantage if the form of arbitration is less formal and time-consuming. One should keep in mind that the parties pay for the arbitrator, venue, and institutional costs, which is not the case with court proceedings.
Arbitration awards are final. There is no automatic right to appeal unless the arbitration agreement provides for it. In litigation, judgments can be appealed.
Arbitration proceedings are private, and the parties should make provision for the confidentiality thereof in the arbitration agreement itself. Court proceedings are in the public domain.
Jurisdictional Problems Avoided
This is applicable primarily in international commercial arbitration, where the parties are from different legal systems, and decisions regarding the jurisdiction, law, procedure, and enforceability of the award become problematic. Through arbitration, the parties can resolve issues by virtue of the rules of the law of their choice.
Avoidance of Delay
Litigation affords ample opportunities to use delaying tactics, whereas arbitration offers an arbitrator the opportunity to determine the dispute with minimal delay.
Justice for All
Arbitrations are conducted relatively informally, thereby bringing justice within the reach of those deferred by the expense, delay, and uncertainty found in litigation proceedings.
However, Butler and Finsen indicate that there are also disadvantages associated with arbitration. If the proceedings are conducted in a formal manner, the costs could end up being higher than litigation. There are also limited remedies with which to appeal an award. There are no provisions for compulsory consolidation of arbitration proceedings without the consent of the parties. Legal aid, which is available in certain circumstances to assist litigants, is simply not available in arbitration proceedings. Finally, the nature of the dispute would be appropriately resolved by litigation, for example, if a precedent is required to obtain clarity on a legal issue or when public interest might be an overriding consideration.
There is no doubt that the advantages outweigh the disadvantages, and arbitration should be seriously considered as an alternative to litigating in court.
(Erratum: In Part 1 of this series, the Arbitration Act was incorrectly referred to as Act 47 of 1965 instead of 42 of 1965.)
- Ramsden PAA, The Law of Arbitration: South African and International Arbitration (Juta, 2nd Edition, 2018)
- Butler & Finsen, Arbitration in South Africa: Law and Practice (Juta, 1993)
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)