Law of Contracts – Part 25
The Role of Service Level Agreements
By Adv Louis Nel.
(For a summary on this series see end of article).
Disputes: You Don’t Have To Go To Court!
As suggested in my article on standard terms and conditions last month, ‘A further relevant clause could provide for alternative dispute resolution (‘ADR’). Disputes are traditionally resolved by summons and ensuing court cases, but ADR was initiated in the ‘80s and has become quite popular. There is the more commonly known arbitration and then the lesser know mediation. These forms of ADR have the benefit over litigation of being less costly (by and large), more private, and quicker’ – I promised you a more detailed article, so here it is!
Locally ADR in the travel and tourism industry takes place on a very informal and ad hoc basis. It has not been formalised but I personally believe such a step is necessary if not overdue as more and more disputes are arising in the industry, either by virtue of disgruntled travellers or between members of organisations such as ASATA, EXSA, FEDHASA, FGASA, SAACI, SACIA, SATSA and SITE. I have, with the help of ASATA and SATSA promoted and conducted (largely successful I am glad to be able to add!) a few such ADR sessions, mainly based on very informal mediation with the parties presenting themselves (i.e. no legal representation). However, I am really keen to formalise the procedure and to get ‘buy-in’ from all the associations mentioned above for the reasons discussed below. The best way to do this would be to make it an integral part of membership by including it in the constitution.
What is the situation internationally in the travel and tourism industry? ABTA (‘The Association of British travel Agents’) ‘..has got together with the Chartered Institute of Arbitrators (CIArb) to help agents and operators resolve legal disputes with minimum hassle’ by providing a ‘.. .new commercial mediation and arbitration scheme for tour operators and travel agents’. IFTTA (The International Forum of Travel and Tourism Advocates – an international organization for lawyers, advocates and educators who specialise in travel and tourism law – of which I am a member) has forged links with the world Travel Dispute Center, Inc. and the Travel Dispute Mediation LLC (based in Florida, USA) to ‘conduct ADR seminars and serve as the central mediation assignment center for graduates of the ADR seminars which it conducts’ – So, if we want to ‘tap into’ overseas expertise, it is ‘ready and waiting’!
These innovative steps by ABTA and IFFTA raise a few questions: What in fact is arbitration? What is mediation? Will either actually result in ‘minimum hassle’? Is it cheaper and/or more effective than litigation or other mechanisms available in South Africa for the resolution of disputes?
Let’s start by looking at definitions of arbitration and mediation: ‘Arbitration is a private judicial hearing with an outcome that binds the parties and puts an end to the dispute between them’ (as defined by the Arbitration Foundation of South Africa (‘AFSA’ – see below). ‘Arbitration is the reference of a dispute to an arbitrator for determination in a judicial manner after hearing both parties’ (Ken Douglas of Webber Wentzel 1986).
Mediation, on the other hand, is a form of Alternative Dispute Resolution (‘ADR’) and is chosen by parties who would ‘.. rather settle their dispute amicably, with the help of a third person, but without being bound to the outcome’ (The Association of Arbitrators).
Confusing? Yes, I’m sure so let’s confuse you some more. The aforementioned are two ways in which parties can resolve disputes, but there are more.
In Part 26 (Feb 2017) I’ll take a brief look at the others before we focus on arbitration and mediation, the options chosen by ABTA.
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’, January 2017.
- 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 SLAs – T&Cs – Benefits & Decisions.