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Understanding Mediation, Adjudication, Arbitration and Litigation

Posted By Graeme Lloyd, Tuesday, 29 January 2019

Many of you have watched the TV broadcasts of the Zondo Commission into state capture. The terms of reference of this inquisitorial inquiry are to determine the facts regarding accountability for what had occurred and probable reasons why. The rules of procedure adopted by this Commission relate more closely to Conciliation, Mediation, and certain Adjudication dispute resolution processes.

Arbitration and Litigation procedures follow a different legal process ending with an imposed enforceable finding to settle the matter. Civil litigation is a function of our Courts in resolving disputes and enforcement of a binding solution regarding the substantive rights and duties of the parties. Court decisions and procedures are subject to considerable legal constraints, rights and precedents.

The private nature of an arbitration agreement is essentially contractual, therefore failure on the part of one party to comply with this particular contract provision carries the same penalty as any other major breach of contract. The circumstances for appealing an arbitration agreement are highly restricted. The successful party can easily obtain a court order for enforcement.

Significant advantage
The settlement of engineering and construction disputes by means of arbitration confers a significant advantage over litigation proceedings, as the choice of arbitrator can be based on technical knowledge of the type of work associated with the dispute.

Obviously this of particular importance and interest to all engineers involved in projects and design contracts. If the court appointed presiding officer cannot comprehend the engineering complexity then a just and equitable decision is unlikely.

An additional advantage of arbitration over litigation is that the process is private and away from adverse publicity. The participants also have the mutual convenience of arranging the dates, venue and times for submissions and hearings that suit themselves.

The other remedies for resolving disputes are non-statutory, which means their form and procedure is not prescribed by law, and the outcome is also not legally enforceable, unless agreed in the rules of conduct. Because these processes rely on both parties negotiating in good faith, there is always the possibility that they could be a preliminary dress rehearsal for arbitration proceedings.

Willingness
Mediation can only succeed if both participants are genuinely willing to agree upon the terms of settlement. Their joint objective must be to strive to reach a win-win rather than lose-lose scenario.  The chosen mediator is not expected or mandated to recommend or propose a settlement solution. The mediator’s core responsibility is to act as an intermediary, seeking to narrow the field of controversy by facilitating dialogue and understanding between the parties. In our country, in the context of CCMA decisions, a conciliator is expected to propose a solution to the dispute.

Because these processes rely on both parties negotiating in good faith, there is always the possibility that they could be a preliminary dress rehearsal for arbitration proceedings.

Successful adjudication depends upon selecting an adjudicator who is fluent in the language of the contract. It is also essential that the participants agree on the adjudication rules of procedure and binding outcome. Legal representation is normally excluded. The format and content of the documentation submitted to the adjudicator is a vital ingredient for discussion at the preliminary meeting of the parties. An adjudicator plays a more active and interventionist role in the proceedings compared with an arbitrator.

Graeme Lloyd
FSAIMechE. FAArb (SA)

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Vaughan Rimbault says...
Posted Tuesday, 29 January 2019
Thanks for a great article Graeme.

I hope you will consider following it up with a bit more detail on how to properly prescribe arbitration in contracts, and how to go about establishing the proper credentials of the arbitrator.

I'm looking forward to the next installment.
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