ARBITRATION: AN ACTUAL ADR MECHANISM OR JUST ANOTHER LITIGATION PROCESS

BY OKORO CHIDERA

ABSTRACT

Arbitration is a renowned ADR process. The fact that it is used widely, despite the world’s preference for the traditional judicial system, is surprising. The other ADR mechanisms are not used as often as arbitration and this leads to my probing question. Why?  This may be due to the fact that arbitration is simply a variant of litigation and should not really be considered an ADR process. This article highlights several similarities and differences between arbitration and litigation as well as between arbitration and other ADR processes.

CAN ARBITRATION REALLY BE CONSIDERED AN ADR MECHANISM?

Alternative Dispute Resolution (ADR) processes such as mediation and conciliation require parties come to terms of settlement. For processes like Early Neutral Evaluation (ENE) and expert determination, parties decide whether or not to accept the award. Therefore, it is only upon consensus ad idem that the said award is binding. In a majority of ADR processes, parties usually have substantial impact in the outcome of the proceedings and this outstanding feature is part of what makes them ADR processes. However, arbitration gives binding awards which can only be set aside after an application to the court. Arbitration gives no room for appeal but the parties can apply for the award to be set aside due to some defect such as a lack of jurisdiction. As arbitration lacks this vital element of choice, can it really be considered an ADR mechanism? Similarly, litigation often gives binding decisions which can only be appealed by right in the presence of certain factors such as in situations where a death sentence has been given and in absence of those factors, can only be appealed by leave of court.

ADR processes are usually known for quick resolution. The main reason they are referred to as alternate processes is because unlike litigation, they usually ensure that the parties receive relief within the shortest time frame possible. However, some arbitration cases are not resolved within a short period of time. A quick example is the investment arbitration case of PeyCassado v Chile, where parties had to wait for 22 years before receiving an award. This shows that, just like litigation, an arbitration claim can take several years depending on the complexity of the claim. If arbitration cannot ensure a fast resolution, can it really be considered an ADR process? Especially since one of the theoretical advantages of arbitration over litigation is the promise of an easier and faster dispute-resolution process. In the same vein, litigation takes a long period of time which also usually depends on the complexity of the matter. For example, land cases can take ten years or more to be resolved.

Most ADR processes are flexible and do not follow strict laws of procedure. However, arbitral tribunals usually follow domestic laws of evidence and procedure. Comparably, litigation usually makes its decisions based on applicable domestic laws including the law of evidence and procedure. This means the ways of accepting and applying evidence, the weight and effect of evidence on the case, the process and timing of the hearing and other procedural matters are usually based on the law of the state. Litigation and arbitration are more formal than the usual ADR processes.

Finally on similarities, most ADR processes hear both parties with the aim of helping the parties come to an amicable resolution rather than just putting both parties against each other. However, arbitration and litigation use an adversarial process in which the disputing parties present their matters to an impartial third party who attempts to ascertain the truth and gives an award or judgement respectively.

DIFFERENCES BETWEEN ARBITRATION AND LITIGATION

Despite numerous similarities between them, there are still ways in which arbitration is similar to the other ADR processes and in consequence, in contrast to litigation.

Arbitrators are chosen by the parties. The parties usually come to an agreement in the arbitration clause on how many arbitrators they are to have. Some parties could agree on two arbitrators with each party choosing one and other parties could use varied methods of selection. Similarly, in other forms of ADR, the presiding third party is usually chosen or appointed by the parties as in conciliation and mediation. However, in litigation, judges are not chosen by the parties but are rather appointed by the state. They are usually appointed by the governments for the courts with the recommendation of some overseeing legal body.

Arbitrators usually have subject matter expertise. This means they are especially knowledgeable on the subject matter of the dispute and as a matter of fact, often specialize in the subject matter of the claims. This is similar to other ADR processes in which specialists are usually appointed to help guide the process along and help the parties come to informed settlements. In contrast, judges are usually not specialists in the matter they hear. Though, theoretically, judges are meant to be appointed to cases based on their experiences, experience is not an essentiality in reality and judges can hear cases though they have no personal knowledge on the subject matter of the dispute.

Litigation is publicly funded and administered by the government of the state. This is the opposite for arbitration and is a similarity arbitration has with other ADR processes as they are usually funded by the parties to the dispute. While conciliation is provided for in Nigeria by the 1994 Arbitration and Conciliation Act, it is still funded privately by the parties who agree to resort to conciliation.

Litigation usually takes place in public. To be more explicit, members of the public are usually allowed to sit in on litigation proceedings except they are cases with sensitive matters that would do more harm than good to expose it to the public such as matters concerning juveniles. This is to ensure justice and fairness, and prevent bias. Contrastingly, arbitration and other ADR processes are held in private. The proceedings are usually limited to the parties and their counsel. However, the details of such arbitration proceedings, especially in the international sphere, are usually published for the consumption of the public so can it really be considered private? And if not, is this another reason why arbitration should be considered more of a litigation process than one of ADR?

CONCLUSION

Would it be fair to state that anything out of court is to be considered ADR or should ADR mechanisms be limited to processes that really embody the principles of ADR? This is a question we students and practitioners, as the future of Alternative Dispute Resolution, need to consider.