Is arbitration a good option for solving legal disputes?

“Our company has noticed a rise in default by our service providers. In the past we’ve managed to address these with a few stern phone calls and letters, but it looks more and more like we are starting to run into serious issues with service providers struggling because of the economy. We don’t want to necessarily engage in litigation but at the same time, we cannot just let these defaults continue. Is arbitration an option for us at all?”

Recent years has seen arbitration gaining tremendous impetus as a viable, and in many cases, preferred method of dispute resolution as compared to traditional court-based litigation. Why the rise in popularity? Here are some of the most notable reasons:

  • It is well known that South African courts are currently congested and that even obtaining a court date may take months or even years in some cases. Arbitration is substantially faster and therefore far more expedient in comparison.
  • The parties to an arbitration choose the arbitrator, and this can even be an expert with an in-depth understanding of the specific area to which the dispute relates. On the other hand with court litigation the judges are not chosen by the parties and are not necessarily technical experts.
  • The referral and outcome of a dispute referred to arbitration can be closely regulated and treated confidentially by the parties involved, which is not generally the case with our courts.

For parties where speed is important, like as would often be the case in a contractual dispute, arbitration is far more advantageous than going the route of court proceedings, where a slow resolution could mean big losses for the parties. The benefit of arbitration and that a dispute can be resolved relatively quickly to allow the parties to continue with their business activities therefore weighs heavily in favour of arbitration for many parties.

In your case therefore, arbitration would definitely be an option to consider. Importantly though, you would need to establish what your agreements with the service providers determine and whether they allow for arbitration. Have your legal advisor review your contracts and provide guidance as to the feasibility of arbitration as an option to speed up your dispute resolution.

December 14, 2021
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