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Law of Contracts – Part 27

The Role of Service Level Agreements. By Adv Louis Nel.

(For a summary see end of article).

Alternative Dispute Resolutions (Cont’d)

I ended Part 26 of this series by stating that arbitration becomes the method of resolving a dispute if parties to the dispute choose that method of problem-solving at the time, or if it is a clause in an agreement governing the relationship that gave rise to the dispute.

Another alternative, to be preceded by wording to the effect that the MDs or CEOs of the businesses concerned will first try and resolve the matter, is to refer to the rules of the AFSA and to allow for AFSA to appoint the arbitrator if the parties cannot agree.

Arbitration does offer the following advantages:

Flexibility: e.g. choice of arbitrator, venue, timing and procedure.

Costs: This may however sometimes be a perceived benefit as you still have to employ an attorney and more often than not counsel (advocate) as well. This benefit will only really materialise if the parties maximise the benefits of arbitration e.g. the informality, the expertise of a correctly chosen arbitrator and limiting the use of expert witnesses.

Speed:  This is a very real benefit, especially the parties can agree on deadlines e.g. for the filing of pleadings (arguments) and you have a strong arbitrator. This benefit can be enhanced even further if the parties meet beforehand to define the issues and exchange relevant documents (which meeting may or may not be presided over by the arbitrator).

Confidentiality: The matter is not heard in an open (public) court (See brand management above).

Finality: Arbitrator’s finding is final and can only be attacked on basis of misconduct or gross irregularity.

Equity: Arbitrator can make an award relying on equity rather than on the ‘letter of the law’.

Relationship: The chances are the relationship between the parties is less likely to be damaged by arbitration than litigation.     

Arbitration could, however, be linked to the following disadvantages:

Costs: this can, in fact, be as high as litigation if benefit 1 above (esp. the procedure) is not fully maximised.

No appeal: i.e. a bad award is not appealable.

Mediation has the same benefits as arbitration but not the disadvantage of high costs – the latter is materially lower and more manageable.

There are four main ADR bodies in South Africa, details of which can be obtained via the Internet i.e.

AFSA – www.arbitration.co.za

The Arbitration Forum – www.adrforum.com

The Association of  Arbitrators – www.arbitrators.co.za

The Commission for Conciliation Mediation and Arbitration (CCMA) – www.ccma.org.za

I trust the above will give you a better grasp of ADR, assist you in preparing more effective contracts and reducing your legal bills!

Disclaimer: This article is intended to provide a brief overview of legal matters pertaining to the adventure tourism industry and is not intended as legal advice. © Adv Louis Nel, ‘Louis The Lawyer’, March 2017.

SUMMARY

  • In Part 1 (Aug 2014), I categorised risk into five categories, namely; 1. PEOPLE, 2. MONEY, 3. LAW, 4. SERVICE and 5. ECOLOGY. In this series, I deal with the risk profile of each, i.e. broadly speaking the areas of risk that any business is exposed to can been allocated under these five categories.
  • Part 2, (Sep 2014) covered the category of ‘People’ under four sub-categories: Staff (discussed in Part 1); Third party service providers (‘TPSP’); and Business Associates.
  • Part 3 (Oct 2014), continued with ‘PEOPLE’ as Customers.
  • Part 4 (Nov 2014), started the discussion on the 2nd category, namely ‘MONEY’ in terms of CASH and CHEQUES.
  • Part 5 (Dec 2014), looked at CREDIT and CREDIT CARDS.
  • Part 6 (Jan 2015), looked at LAW and CONTRACTS, with an introduction and Requisite #1: Offer & Acceptance.
  • Part 7 (Feb 2015), continued with Requisite #1 covering telephone enquiries, e-mails, websites and advertising.
  • Part 8 (Mar 2015), covered Requisites #2: Legally Binding Obligation, and #3: Consensus in contracts.
  • Part 9 (Apr 2015), covered Requisite #4: Performance Must Be Possible.
  • Part 10 (May 2015), covered Requisites #5 & 6: Performance Must Be Permissible, and Capacity of the Contracting Parties.
  • Part 11 (Jun 2015), continued with Requisites #6: Capacity of the Contracting Parties.
  • Part 12 (July 2015), covered Requisite #7” Negotiating a Contract.
  • Part 13 (Aug 2015), covered Requisite #8 Drafting a Contract.
  • Part 14 (Oct 2015), covered Requisite #9 Contract Management.
  • Part 15 (Nov 2015), covered Requisite #10 Enforcing Your Contract – Part 1.
  • Part 16 (Dec 2015), Requisite #10 Enforcing Your Contract: Requisites (continued-1)
  • Part 17 (Jan 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-2)
  • Part 18 (May 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-3)
  • Part 19 (Jun 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-4).
  • Part 20 (Jul 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-5).
  • Part 21 (Sep 2016), Enforcing a Contract: the 8th & final question.
  • Part 22 (Oct 2016), Enforcing a Contract: Step 3 – Impact on your Business.
  • Part 23 (Nov 2016) Enforcing a Contract: Step 4 – Who to Consult.
  • Part 24 (Dec 2016), The Role of Service Level Agreements (SLAs) – T&Cs – Benefits & Decisions.
  • Part 25 (Jan 2017), The Role of SLAs – T&Cs – Alternative Dispute Resolutions (ADR).
  • Part 26 (Feb 2017), The Role of SLAs – T&Cs – ADR (Cont’d) – mediation & arbitration.
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