• Arbitration, like mediation, is a method of alternative dispute resolution (or “ADR”) but it is similar to ordinary court litigation. It is the most traditional form of private dispute resolution and is, in essence, a private judicial hearing. The parties choose their arbitrator and the matter is heard privately at a time and place that is agreed upon by all parties. Arbitration generally, as in court litigation, makes use of an adversarial approach to dispute resolution but, as explained below, the parties and/or the arbitrator may decide upon the format and rules of the arbitration.
• Most arbitrations in South Africa are governed by the Arbitration Act, 42 of 1965.

• The arbitrator is an independent private person, often an experienced advocate or attorney. Because a dispute may only be referred to arbitration by agreement between the parties the arbitrator is decided upon by the parties involved or in accordance with a process agreed upon by the parties.

• Not all disputes can be arbitrated, certain matters are reserved for the courts. Generally matters which cannot be arbitrated are divorce, issues of status (eg. determining a person’s mental capacity), the liquidation of companies or close corporations and matters relating to the commission of a crime.

• Arbitration is adjudicatory, as opposed to facilitative (like mediation) or advisory. The arbitrator renders a decision at the end of an arbitration hearing, and that decision is legally final and binding, subject only to a very limited court review. There is no appeal against the decision of the arbitrator. Section 28 of the Arbitration Act states that “Unless the arbitration agreement provides otherwise, an award shall, subject to the provisions of this Act, be final and not subject to appeal and each party to the reference shall abide by and comply with the award in accordance with its terms.”

• In terms of Sections 23 and 24 of the Arbitration Act the award must be in writing and must be given within 4 months. The time period may, however, be varied by agreement between the parties.

• An award may, in terms of Section 31 of the Arbitration Act, be made an order of court and “an award which has been made an order of court may be enforced in the same manner as any judgement or order to the same effect”.

• Referring a dispute to arbitration is, other than in certain limited exceptions, voluntary however, it must be remembered and understood, that once the parties have agreed to refer a dispute to arbitration (whether as a term of a contract or elsewhere) that is the end of the matter and it is obligatory for the matter to be referred to arbitration.

• Frequently an ‘arbitration clause’ is incorporated into a written agreement concluded between the parties and, as a result, should a dispute arise the parties agree in advance to refer any dispute to arbitration. This is not always the case though and parties may agree (although this is often more difficult) to refer a dispute to arbitration even after the dispute has arisen. The advantages to referring a dispute to arbitration are considered below.
• In the event that an arbitrator cannot be mutually agreed upon by the parties to the dispute, they may provide, or agree, that an independent third party will nominate the arbitrator.

There are as many benefits to using arbitration but the predominant reasons include –

1. It is a voluntary process.
2. It offers speedy resolution of disputes. (In the High Court in can take two years from the issue of the summons to final judgement.)
3. The rules and process can be flexible and may reduce the introduction of spurious technicalities.
4. It is generally cheaper, in the long run, than court litigation.
5. The parties can choose someone who they believe has the necessary knowledge and skill to adjudicate their dispute.

• This (unless it is specifically set out in the arbitration agreement) is generally determined between the parties and/or the arbitrator who usually has the discretion to set the format and rules for the arbitration.
• Because one of the main advantages to arbitration is the speed with which a matter can be brought to finality there is an emphasis on setting rules and practices designed to ensure time-saving. This, often, leads to a more robust, practical, time-efficient and cost-effective manner of resolving disputes.