Courtney Bailey, Guest Columnist
Commercial disputes are an unavoidable risk of doing business and are generally considered a part of its cost. The inefficient resolution of these disputes can however unnecessarily inflate these costs, and by so doing potentially threaten a business' viability.
In a shrinking economy, commercial players must therefore seek to find the most efficient way of resolving their business disputes.
Traditionally, litigation through the courts has been the most common method of dispute resolution resorted to by disputants.
However, due largely to the administrative and infrastructural challenges faced by the overburdened Jamaican court system, litigation is increasingly proving to be a tremendously inefficient method for commercial dispute resolution in Jamaica, as anyone who has interacted with the court system can testify.
Internationally, arbitration is increasingly proving to be a preferred and more efficient method of commercial dispute resolution.
Arbitration is a private mechanism for the resolution of disputes, whereby two or more parties agree to transfer the adjudication of a dispute from the civil courts to an agreed or appointed arbitrator, and to be bound by that arbitrator's decision.
Unlike some other forms of alternative dispute resolution, arbitration is binding and enforceable at law.
There are several advantages offered by arbitration which make it a better option than litigation for commercial dispute resolution.
Arbitration's flexibility generally allows for the avoidance of delay in disposing of the dispute.
Unlike litigation, in arbitration the parties have control over the dispute resolution process and are not tied to formal court procedure and rules. Accordingly, the parties may agree the most suitable procedure for the adjudication of the dispute, thereby saving time and cost.
In addition to flexibility on procedure, arbitration allows its participants to select the arbitrator who will decide their dispute, or at the very least to appoint a trusted third party who will make this selection.
This enables the parties to select their own tribunal according to the nature of the dispute.
Accordingly, in a highly technical dispute involving, for example, principles of reinsurance law or the design of computer software can be decided by an arbitrator with experience in that field to whom the relevant jargon, principles and/or techniques are very familiar.
In such a technical case, much time and expense can be saved by having the dispute adjudicated by someone familiar with the technical issues who doesn't have to be educated by the parties to understand them.
It goes without saying that this also lends itself to an increased likelihood of the adjudicator getting the final decision right, having properly understood the facts and issues underlying the dispute.
The opportunity to participate in the choice of the arbitrator also removes the uncertainty of having to be dependent on the luck of the draw from the court list as to who will decide the dispute.
It can also lead to a speedier resolution of the dispute, as where a dispute needs urgent resolution, the parties can choose an arbitrator who is able to hear the matter promptly instead of having to wait on available court dates from an overburdened court calendar.
In the Jamaican context, the avoidance of delay is perhaps one of the most significant reasons why arbitration is a more efficient means of commercial dispute resolution.
Presently, it generally takes at best one to two years to dispose of a civil court case in the Supreme Court, and there are in fact large commercial claims which have taken as much as 10 years to move from commencement of the claim to delivery of judgment at trial, notwithstanding the significant commercial implications of the decision in question.
By contrast, arbitration proceedings can be disposed of much more quickly.
Additionally, arbitration awards are final and can be challenged on more limited bases than trial judgments can be appealed. The limited scope for recourse against an award may also save time by potentially avoiding appeals.
Of course, associated with the avoidance of delay is the significant savings in costs. While the parties to arbitration incur additional costs in having to pay the fees of the arbitration tribunal as well as the accommodation costs of the venue - where they would not be directly responsible for the costs of judges or court facilities - these additional costs are generally far outweighed by the significant savings in legal costs from shorter more efficient proceedings, as well as from reducing the costs to business associated with having prolonged unresolved commercial disputes and the almost incalculable costs of having personnel distracted by potentially damaging litigation, not to mention the lost man-hours attending protracted litigation hearings.
Additional advantages include the privacy and confidentiality of arbitration, which ensure that disputes will be determined out of the public gaze.
Not only are hearings held in private, but documents filed in the proceedings and also the arbitration award are generally confidential, unlike court documents which are generally open to the public.
Finally, as a result of the 1958 New York Convention to which Jamaica is a signatory arbitral awards are recognised and enforceable in many more countries than a court judgment.
Under the New York Convention, it is also easier to enforce an arbitration award than to enforce a court judgment across national boundaries. It is also possible to enforce an arbitration award in Jamaica in the same way as a judgment of the court under the existing arbitration legislation.
While Jamaica's existing arbitration legislation is presently being considered for long overdue reform, it is still possible in the interim to rely on the existing legal framework to refer commercial disputes to arbitration by simply agreeing to submit an existing dispute to arbitration, or by including an arbitration clause in commercial contracts.
Recent developments, including the establishment of a Commercial Dispute Resolution Centre by the PSOJ and the admission of a cadre of 24 trained Jamaican arbitrators as fellows of the Chartered Institute of Arbitrators, present increased opportunities to make use of this more efficient method of dispute resolution.
It is now time for more commercial entities to realise they do not necessarily have to go to court and to simply elect to exercise a more efficient option that has for some time been available to them.
Courtney A. Bailey is an
attorney-at-law and partner at DunnCox, 48 Duke Street Kingston, and a
fellow of the Chartered Institute of