What is a more cost-effective solution to resolving a legal dispute other...

What is a more cost-effective solution to resolving a legal dispute other than going to court?

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Many parties to disputes are rather opting for resolving disputes through arbitration than to approach court. This is because it is, generally speaking, more cost effective and the dispute is resolved sooner that it may have been at court. Moreover, the proceedings are generally conducted in a more informal and private manner.

Parties consent by agreement to arbitration however poorly drafted consents or clauses in agreements seem to achieve the exact opposite effect as to why people prefer arbitration to court. As such it is of the utmost importance that these agreements or consents are professionally drafted.

Moreover, according to section 2 of the Arbitration Act 42 of 1965 (the “Act”), which regulates arbitrations in South Africa, any dispute may be resolved via arbitration save for matters involving status, criminal matters or matrimonial causes.

So, once consensus has been reached to refer a matter to arbitration, other proceedings are stayed pending the outcome. In addition, section 3 of the Act provides that only an order of court may order that the arbitration agreement be set aside.

From the above, it is clear that these agreements can generally only be varied by application to court. This means that where the agreement is ambiguous or where the manner in which disputes are to be handled is unclear, costs may escalate in order to proceed in resolving the dispute.

As such a professionally drafted agreement or clause referring a dispute or consenting to the referral of a dispute to arbitration must include amongst others the following:

 

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  1. What type of dispute shall be determined by arbitration,
  2. How will an arbitrator be appointed,
  3. What if the parties cannot agree to the appointment of an arbitrator,
  4. The payment of fees for the arbitrator, venue and related expenses.

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Nicolene Schoeman-Louw
Nicolene Schoeman – Louw is an admitted attorney of the High Court of South Africa, as well as being a Conveyancer, Notary Public and Mediator. She is the Managing Director of Schoemanlaw Inc Attorneys, Conveyancers and Notaries Public (Schoemanlaw Inc Attorneys) in Cape Town. Visit www.schoemanlaw.co.za for more information or email enquiries@schoemanlaw.co.za