Arbitration is a procedure whereby the parties to a dispute refer that dispute to a third party, known as an arbitrator, for a final decision, after the arbitrator has first impartially received and considered evidence and submissions from the parties. The reference to the arbitrator takes place pursuant to an agreement between the parties. The arbitrator, in resolving the dispute, is not an ordinary court of law but a person chosen by the parties."
(Arbitration in South Africa: Law and Practice – Butler and Finsen)
Ideally, when the parties have agreed to elect an Arbitrator they should appoint a person that has the necessary technical and legal skill to address the issues in dispute. This, if agreed to by the parties can reduce the time spent on presenting expert testimony for the purpose of explaining a technique or procedure which is common knowledge to the respective professional.
The Arbitration Act 1965 provides for the settlement of disputes by arbitration tribunals in terms of written arbitration agreements and for the enforcement of the awards arising from the arbitration. The Arbitration Act applies to the arbitration as if the statute in question was an arbitration agreement.
The following five are essential characteristics of Arbitration: -
- There must be a dispute between the parties. The existence of a dispute is necessary so as to render the arbitration agreement enforceable and to establish the arbitrator's jurisdiction.
- The reference to arbitration takes place in terms of an enforceable agreement between the parties.
- The arbitrator's appointment is made by the parties or someone designated by them (e.g. The President of the SAIV/ Branch Chairman/Law Society etc), if they are unable to agree on the appointment.
- In terms of the Agreement the arbitrator will determine the dispute in an impartial manner and will reach his decision after hearing all the evidence and submissions from the parties following a procedure that is fair to both disputing parties.
- The arbitrator, after hearing the evidence and submission of the parties, will reach a decision on the dispute and publish an award. The award is final and binding on the parties.
Once appointed an Arbitrator would immediately obtain a copy of the Agreement being challenged in order that he can establish his jurisdiction. Various procedures can be adopted in resolving the dispute depending on the nature thereof. A knowledgeable and qualified Arbitrator may envisage a cost effective procedure where he can encourage the parties to address those issues in agreement and those in dispute without the necessary need for them to be legally represented.
Where legal representatives represent the parties, they may feel more comfortable to agree on, say, the Rules of the High Court. However, Dispute Resolution Associations e.g. the Association of Arbitrators have suggested various other procedures, for example "Standard Procedure Rules" or "Summary Procedural Rules" which are designed to bring about cost effective and less time consuming procedures which can be utilised.
Arbitration hearings are of an adversarial nature in that the plaintiff decides to institute proceedings and how much he will claim. The defendant will decide how he will defend the case. In each case, they will gather their own evidence and present same in support of their case. The judge/arbitrator will decide the case on the evidence presented. Incidentally, this system differs from the inquisitorial approach which is mainly found in Western Europe where the Judge has a more active and interventionist role. The Judge may search the truth on its own motion and is not restricted only to the witnesses and evidence provided by the parties.
The Arbitrator, although not obliged to follow the rules of Court, is the master of his own proceedings He must nevertheless ensure that the proceedings are conducted in accordance with the rules of natural justice and ensure the parties are given a fair hearing. The general rule for "burden of proof" is he who asserts must prove i.e to say the party making the case bears the onus (burden) of proof. If he fails to do so his claim will fail. After the hearing of the dispute, you as the Arbitrator will be required to publish an award, which could become the order of a High Court.