BASIC ARBITRATION (CBM 1401)

ASSIGNMENT 1

LECTURER: MR Francois Bangamwabo

R. N. MBWALALA 200414526
Introduction

Disputes/Conflicts between individuals/organization are everyday headline news and most

The issue of Dispute resolution is said to be very complex: one has to know why a person acts in
a certain way, what are their positions, interests and real needs, and one has to understand human
and non-human interfaces in order to make headway in avoiding distractive stages of dispute.

Alternative Dispute Resolutions (ADR) process have to be formulated and implemented in order
to improve the handling of conflict and disputes in a private and resolute manner that does not
involve the dynamics of litigations and court proceedings. Measures are needed to ascertain the
sustainability of mutual agreements and to ensure that the conflicts will not arise again in the
future.

The objective of the research assignment is to encourage information exchanges (e.g., academic
debates) with the aim to learn and to contribute to the improvement of knowledge and practice
regarding conflict management.

In this study the author will aim to and analyze (2) two frequently overlooked essential topics to
successful conflict/dispute resolution strategies. Firstly the text “Compare and contrast
Arbitration with Litigation, by providing definition to the two terminology, thereafter it will
highlight details in differences and similarities.”

Secondly the text critically analyzes a “Possible Dispute resolution methods to use in a Scenario
of breach on a Loan Contract between two Business Partners, Mr. X (the loaner) and Mr. Y (the
Loan). The text will aim to fully explain to Mr X on the characteristics and factors to consider
before selecting a particular Dispute resolution method with Mr. Y.
QUESTION 1

Definitions:

Litigation is the process of taking a case through court. The litigation or legal process is most
common in civil lawsuits. In litigation, there is a plaintiff (one who brings the charge) and a defendant
(one against whom the charge is brought).

Arbitration is the process of bringing a business dispute before a disinterested third party for
resolution. The third party, an arbitrator, hears the evidence brought by both sides and makes a
decision. Sometimes that decision is binding on the parties.

Arbitration is a form of alternative dispute resolution (ADR), used in place of litigation in the hope of
settling a dispute without the cost and time of going to court.

Arbitration vs. Litigation

1. Public/Private, Formality
The arbitration process is private, between the two parties and informal, while litigation is a
formal process conducted in a public courtroom.
2. Speed of Process
The arbitration process is fairly quick. Once an arbitrator is selected, the case can be heard
immediately. In a civil litigation, on the other hand, a case must wait until the court has time
to hear it; this can mean many months, even years, before the case is heard.
3. Cost of the Process
The costs for the arbitration process are limited to the fee of the arbitrator(depending on the
size of the claim, expertise of the arbitrator, and expenses), and attorney fees. Costs for
litigation include attorney fees and court costs, which can be very high.
4. Selection of Arbitrator/Judge
The parties in the arbitration process decide jointly on the arbitrator; in a litigation, the judge
is appointed and the parties have little or no say in the selection. The parties may have some
say in whether a case is heard by a judge or a jury.
5. Use of Attorneys
Attorneys may represent the parties in an arbitration, but their role is limited; in civil
litigation, attorneys spend much time gathering evidence, making motions, and presenting
their cases; attorney costs in a litigation can be very high.
6. Evidence Allowed
The arbitration process has a limited evidence process, and the arbitrator controls what
evidence is allowed, while litigation requires full disclosure of evidence to both parties. The
rules of evidence do not apply in arbitration, so there are no subpoenas, no interrogatories, no
discovery process.
7. Availability of Appeal
In binding arbitration, the parties usually have no appeal option, unless an appeal has been
included in an arbitration clause. Some arbitration decisions may be reviewed by a judge and
may be vacated (removed), if you can prove that the arbitrator was biased. Litigation allows
 multiple appeals at various levels.

Summary-Arbitration vs. Litigation

Arbitration Litigation
Private/Public Private - between the two Public - in a courtroom
parties

Type of Proceeding Civil - private Civil and criminal

Evidence allowed Limited evidentiary process Rules of evidence allowed

How arbitrator/judge Parties select arbitrator Court appoints judge - parties have
selected limited input

Formality Informal Formal

Appeal available Usually binding; no appeal Appeal possible

Use of attorneys At discretion of parties; Extensive use of attorneys

Waiting time for case to be As soon as arbitrator Must wait for case to be scheduled;
heard selected; short long

Costs Fee for arbitrator, attorneys Court costs, attorney fees; costly

What are the Similarities?

Although there are very few similarities between these two processes of dispute resolution.
What is clear in their similarities is that both processes are intended to resolve legal
disputes and finding a binding solution agreeable to all parties involved.

Additionally both apply rules of law and procedure but to different degrees to ensure that
tangible resolutions are initiated to bring an end to the conflict in discusion.

QUESTION 2-
General Definition of ADR for Mr.X:

Alternative Dispute Resolution (ADR) describes processes of settling disputes such as that Mr. X
iis facing against Mr. Y on the breach of loan Agreement contract, by means other than litigation
(taking a case to court). ADR includes mediation , arbitration, conciliation and negotiations processes..

1. Mediation is an informal dispute settlement process run by a trained third party, called a
mediator. Mediation is intended to bring two parties together to clear up misunderstandings,
find out concerns, and reach a resolution. The process is voluntary, although it may be urged
by an agency like the Office of the Labour Commissioner in labour related disputes, unlike Mr
X which is private monetary related. So Mr X can proach Mr Y to voluntarily consult a
Mediator to seek solution to their Loan Agreement dipute.

During the mediation, each side between Mr. X and Mr. Y will present its view of the issue, and
the mediator will work with each side in a caucus to attempt to work out a settlement. At the
end of the process, the mediator can present his or her findings and present a potential
solution to the issue. The mediation process, unlike arbitration, is non-binding; that is, the
mediator does not impose a decision on the parties, but he/she attempts to present a solution
that is acceptable to both parties.

Benefits of Mediation:

 The process can solve many disputes in a short time; most mediation sessions are only one or
two days long.
 Mediation is less expensively than litigation.
 Mediation allows the parties to deal directly with each other, rather than relying on attorneys.
 Mediation minimises the risk of damage to relationships and to reputations.

Drawbacks of Mediation:

 Because the decision of the mediator is not binding, the parties must be committed to
reaching an agreement. If one or more parties is not ready to agree, the mediation process is
frustrating and waste of time.
 Sometimes, attorneys must still be involved, which increases the cost of the mediation.
 A lot depends on the skill of the mediator. An unskilled or poorly trained mediator can do more
damage than help.
 2. Arbitration is the process of bringing a business dispute before a disinterested third party for
resolution. The third party, an arbitrator, hears the evidence brought by both sides and makes
a decision. Sometimes that decision is binding on the parties.

Arbitration is a form of alternative dispute resolution (ADR), used in place of litigation in the
hope of settling a dispute without the cost and time of going to court.

Arbitration is often confused with mediation, which is an informal process of bringing in a third
party who goes between the disputing parties to help them settle a dispute. The mediation
process is not binding on the parties, and the mediator does not hear evidence.

The benefits of arbitration

 Disputes are resolved more quickly than in the court system. While litigation often continues
for years, arbitration proceedings usually conclude within months
 Arbitration generally costs less than litigation. Speedier resolutions help in lowering the costs,
and because the scope of discovery is more limited in arbitration proceedings, costs associated
with court cases, such as multiple depositions, are eliminated or reduced
 Arbitration proceedings, especially in their early stages, can be kept confidential.
Confidentiality provisions in arbitration agreements protect companies and employees from
public disclosure of damaging - and, in many instances, false-allegations.

Drawbacks of arbitration

 Because of the benefits they gain, including confidentiality, reduced costs, and quicker
resolution, employees may be more likely to assert claims against their employers under an
arbitration scheme than if they were forced to file a lawsuit. As a result, the time and money
spent on arbitration could outweigh the costs of litigation.
 Arbitration schemes may, in effect, lead to the delegation of management decision-making to
third parties. With arbitration proceedings, each time an employee challenges an employer's
decision, the arbitrator decides the appropriateness of that decision.
 Finally and significantly, the results of an arbitration proceeding are difficult to challenge in
court. Arbitration awards are usually not appealable, even if the decision-maker misapplied
the law.

3. Conciliation is another dispute resolution process that involves building a positive

Conciliation tries to individualize the optimal solution and direct parties towards a satisfactory
common agreement. Although this sounds strikingly similar to mediation, there are important
differences between the two methods of dispute resolution. In conciliation, the conciliator
plays a relatively direct role in the actual resolution of a dispute and even advises the parties
on certain solutions by making proposals for settlement. In conciliation, the neutral is usually
seen as an authority figure who is responsible for the figuring out the best solution for the
parties. The conciliator, not the parties, often develops and proposes the terms of settlement.
 The parties come to the conciliator seeking guidance and the parties make decisions about
proposals made by conciliators. In this regard, the role of a conciliator is distinct from the role
of a mediator. The mediator at all times maintains his or her neutrality and impartiality. A
mediator does not focus only on traditional notions of fault and a mediator does not assume
sole responsibility for generating solutions. Instead, a mediator works together with the
parties as a partner to assist them in finding the best solution to further their interests

4. Negotiation. Contains two or more parties who are engaged in direct talks with each other in
a concerted action of an agreement. Both sides have seen the conviction of influence and the
other things that come their way.
BULLET POINT COMPARISON BETWEEN ARBITRATION AND MEDIATION:
AN ENGLISH PERSPECTIVE
REFERENCES
 
Advice Company (1995-2008). Litigation – Arbitration Center. Retrieved March 10, 2008, from
the FreeAdvice Web Site.

Belknap, Thomas H., Jr. (2003). Drafting A U.S. Arbitration or Mediation Clause. Retrieved on
March 7, 2008, from Blankrome.com Web site.

Melamed, James (n.d.). What is Mediation? Retrieved March 10, 2008, from the Mediate.com
Web site.

National Arbitration Forum (2008). What Is the Difference Between Arbitration and Mediation?
Retrieved March 6, 2008, from Arb-Forum.com Web site.

Pedreira, Tom (n.d.). Arbitration. Retrieved on March 7, 2008, from the Research.lawyers.com
Web site.

United States Arbitration and Mediation (1991-2001). Arbitration Services. Retrieved on March
7, 2008, from USAM.com Web Site.