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May 14, 2020

UNDERSTANDING MEDIATION AND ARBITRATION

To address, prevent and combat the spread of COVID-19 in courts, court precincts and Justice Service Points in South Africa the Minister of Justice and Constitutional Development issued Directions in terms of Regulation 4(2) of the Regulations under the Disaster Management Act of 2002.  Section 24 of the Directions issued on 4 May 2020 encourages parties to civil disputes to consider alternative dispute resolution in the form of mediation and arbitration to resolve disputes.  In this article we unpack the concepts of mediation and arbitration, discussing some critical differences applicable to each concept.

Most disputes are capable of resolution by way of either mediation or arbitration.  However, in terms of Section 2 of the Arbitration Act 42 of 1965 certain types of disputes may not be referred to arbitration, namely any matrimonial cause or any matter incidental to any such cause or any matter relating to status.

Mediation

Mediation is a voluntary process which requires the consent of both parties.   A mediator assists parties in actual or potential litigation by facilitating discussions, assisting the parties in identifying issues, clarifying priorities, exploring areas of compromise and generating options to resolve the dispute. 

A mediator may be appointed by agreement between the parties.  In the Magistrates’ courts where parties are unable to agree, the clerk or registrar of court may appoint the mediator.

Parties to a civil dispute may either before or after the commencement of litigation but before the granting of judgment by the court, agree to refer the dispute to mediation.  In the Magistrates’ Courts mediation is governed by Rules 70 to 88 of the Rules of Court.  In the High Court, mediation is governed by Rule 41A of the Uniform Rules of Court.

It is important to understand that the mediator does not make a finding or decision regarding the outcome of the matter.  This method of dispute resolution allows parties to retain control of the manner in which the dispute is resolved.  In terms of the applicable Magistrates Court Rules, if parties reach settlement following mediation in a matter which is the subject of litigation, the clerk or registrar of the court  must, at the request of the parties and upon receipt of the settlement agreement, place the settlement agreement before a judicial officer in chambers who will at the instance of the parties either note that the dispute has been resolved or make the settlement agreement an order of court.  In the High Court, where a settlement is reached, it is the duty of the attorney for the plaintiff or applicant to inform the registrar accordingly.  Further, any party to a settlement which has been reduced to writing and signed by the parties or their legal representatives but which has not been carried out, may apply for judgment in terms thereof on at least five days’ notice to all interested parties.

Arbitration

Arbitration is the referral of a dispute between two or more parties for determination by an arbitrator or arbitrators after hearing of the dispute in a judicial manner. 

Arbitration is a voluntary dispute resolution process that arises by virtue of an agreement between the disputing parties. There are, however, instances where the legislature requires parties to settle their disputes by way of arbitration as in the case of a dispute between owners of sectional title units, or between one or more sectional title owners and the body corporate of the sectional title complex.

In the case of arbitration, parties to a civil dispute may, by agreement, refer the dispute to arbitration prior to the commencement of litigation.  In Telecall (Pty) Ltd v Logan 2000 (2) SA 782 (SCA) the court held that in order for a dispute to be arbitrable such dispute should not be a mere indication of dissatisfaction but rather an expression of conflicting points of view. 

The Arbitration Act 42 of 1965 governs domestic arbitrations where the agreement to submit the dispute to arbitration is in writing.  The arbitrator is appointed based on a method agreed by the parties which is usually defined in the contract out of which the dispute arises.  Such appointment may be made by the parties themselves or by an independent third party. Where no such provision is contained in the arbitration agreement, or where the parties are unable to agree on the adoption of any procedure, Section 12 of the Arbitration Act provides that the Court will, on application by either party, appoint an arbitrator.  An agreement to arbitrate should be drafted by an experienced attorney and address critical issues such as the manner in which the arbitrator is to be appointed and the applicable Rules for the conduct of the proceedings. 

Unlike mediation, the arbitrator makes a finding or determination regarding the dispute which is communicated to parties in the form of an arbitrator’s award.  Unless the arbitration agreement provides otherwise and subject to the provisions of the Arbitration Act, the award is final and not subject to appeal.  Each party to the arbitration is required to abide by and comply with the award in accordance with its terms.  The Arbitration Act makes provision for the award to be made an order of court.  The Arbitration Act also makes provision for the award to be set aside on application by a party on grounds specified therein.

Contact our Dispute Resolution Department for your mediation and arbitration requirements.