Document Series No.

14: Alternative Dispute Resolution Methods

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Document No. 14
Alternative Dispute Resolution Methods
Paper written following a UNITAR Sub-Regional Workshop on Arbitration and
Dispute Resolution (Harare, Zimbabwe 11 to 15 September 2000)

Table of Contents page

Introduction 2

Chapter 1: Alternative Dispute Resolution Methods 3

by Dr. Vinod Agarwal

Chapter 2: Dispute Resolution Mechanisms and

Constitutional Rights in Sub-Saharan Africa 15
by Mr. Bolaji Owasanoye

Profile of the Authors 26

Published in Geneva
March 2001

These contributions do not necessarily reflect the views of UNITAR or any other body of the United Nations system,
but strictly those of the respective contributors.

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INTRODUCTION
The increasing importance of arbitration and dispute resolution in the African context
is a reflection of the global growth in international business and what are the preferred
methods of resolving international disputes, a trend that is likely to continue into the
21st Century. Since the 1970s there has been a surge in the participation in arbitration
by less developed countries. It is therefore important for lawyers and officials
representing less developed countries to be aware of the issues and problems involved
in the various stages of international arbitration.

This paper follows a UNITAR workshop on Arbitration and Dispute Resolution for
Sub-Saharan Africa (Harare, Zimbabwe, 11 to 15 September 2000).

This workshop was addressed to 27 senior and middle level participants from Angola,
Botswana, Ethiopia, Ghana, Kenya, Lesotho, Mozambique, Nigeria, Rwanda, South
Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe. Participants were
targeted as senior lawyers and other members of the Attorney General’s office
responsible for negotiating, drafting, reviewing or in any other way involved in the
preparation of all types of international contracts; senior officials of the ministry of
justice; all persons responsible for projects (tenders, contract negotiation etc) in the
Ministries most likely to be engaging international contractors, such as the Ministry of
Works, Ministry of Transport, Ministry of Housing, Ministry of Finance, those
responsible for infrastructure projects (electricity, roads, telephone communications,
water supplies, waste and sewerage treatment, etc; all senior employees of State
Owned enterprises engaged in international business (including telecommunications
companies, banks, construction companies etc); representatives from the law faculties
of the Universities who may be interested in international arbitration; representatives
of regional law societies interested in international arbitration; and judges who may be
interested in international arbitration.

The objectives of the workshop were to familiarise the participants with the various
types of international dispute mechanisms, including: the determination of the
appropriate method of dispute resolution; the drafting of arbitration and other dispute
resolution clauses; and the familiarisation with the procedural aspects of an arbitration
and the procedural and substantive legal issues involved. In order to address some of
the specifically less developed countries-related issues, the UNCITRAL rules, the
ACP Convention and construction arbitration were all covered in detail.

This document is the outcome of the issues discussed at the Harare workshop. It
comprises two chapters written by the workshop speakers, Dr. Vinod K. Agarwal and
Mr. Bolaji Owasanoye. We are grateful to them for their interest and valuable
contributions to our training activities. We hope that this document will be useful as
well as challenging to its readers.

Marcel A. Boisard
Executive Director of UNITAR

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ALTERNATIVE DISPUTE RESOLUTION METHODS

by Vinod K. Agarwal*

There are several methods available for resolving disputes between two parties. The
first and most important method is through the courts. When a dispute arises between
two parties belonging to the same country, there is an established forum available for
the resolution of the same. The parties can get the said dispute resolved through the
courts established by law in that country. Generally, this has been the most common
method employed by the citizens of a country for the resolution of their disputes with
the fellow citizens.

When a dispute arises between two persons belonging to two different countries, the
difficulty arises. One option available to the parties is to go to the domestic courts of
either country for the resolution of that dispute. However, this approach may have its
own problems. The first is the jurisdiction of the courts. The laws relating to
jurisdiction of courts in a country are not made keeping in view the transnational
disputes. Normally, they are designed to resolve domestic disputes, that is, disputes
arising between two citizens of the same country. The other is dissimilarity in the
legal system of two countries. The problem acquires serious dimensions if the county
of one party follows common law system and the country of the other party follows
civil law system. In spite of tremendous work done by many international
organisations and institutions, unification or uniformity of different legal systems is
still a distant dream. The next is the choice of law applicable to the agreement and the
consequential dispute between the parties. Availability of assets of the defendant in
that jurisdiction is also a consideration for the purpose. The reason being that the
enforcement of the judgement in any other jurisdiction may be a prolonged and
cumbersome process. The absence of a treaty for the enforcement of foreign
judgements between the two countries may render the judgement a worthless paper. If
the judgement debtor happens to be a sovereign of that other country, the execution
may involve claim for sovereign immunity. In some countries, sovereign assets enjoy
sovereign immunity. The establishment of the fact in the court of that very country
that the sovereign has waived the immunity itself will be a Herculean task. Apart from
these difficulties, conventional difficulties, like undue delay in the dispensation of
justice, complicated procedural formalities, transportation of entire evidence and
witnesses from one country to the other country, high cost of litigation, judicial
imperfection, etc., cannot be ignored. In view of these and other difficulties, either
party avoids going to the courts in the country of the other party.

It is for these reasons that the alternative dispute resolution methods are becoming
more popular for resolution of disputes between parties belonging to two different
countries. So much so that some persons have started calling them “appropriate”
dispute resolution methods rather than “alternative” dispute resolution methods. The
alternative dispute resolution methods offer distinct advantages over litigation.

_____________________________________________________________________
* This script was prepared for presentation to the participants in the Workshop on
“Arbitration and Dispute Resolution” organized by the UNITAR at Harare,
Zimbabwe from 11th to 15th September, 2001. This is not an exhaustive description of
the “Alternative Dispute Resolution Methods” but only an illustrative discussion.

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Litigation is a process which takes place in the court rooms. These court rooms are
open to public. Any member of the public can enter a court room and can watch, so
long as he wishes, the court proceedings of any case. Alternative dispute resolution
proceedings take place in private. They are not public proceedings. Thus, they ensure
confidentiality. Further, for initiation of alternative dispute resolution methods, an
agreement between the parties is an essential requirement. While litigation is an
adversorial, formal and inflexible process, alternative dispute resolution methods may
be less adversorial, less formal and more flexible process. In litigation, rules of
evidence and procedure have to be strictly followed. In alternative dispute resolution
methods, simple procedure is followed and the formal rules of evidence and
procedure do not apply. Similarly, in litigation, the parties have no voice in the
process of selection of judges. They are appointed and paid by the State. Such judges
are not specialists in any particular branch of law or subject. They are generalists and
deal with all kinds of cases. Generally, the arbitrators and other persons helping in the
resolution of disputes through alternative means are selected and paid by the parties.
The parties have a choice to prescribe their technical and other qualifications and
experience or they can insist that the person having expertise in any particular
discipline may alone be appointed. Except in rare or specified circumstances, the
settlements arrived at through alternative dispute resolution methods are not subject to
challenge in court of law. In addition, the alternative dispute resolution methods offer
the conventional advantages like less expensive and dispensation of quick justice,
including choice of venue for the resolution of disputes.

The alternative dispute resolution methods have been found satisfactory and are
popular not only in the settlement of disputes between two parties belonging to two
different countries but they are equally popular and common in the resolution of
disputes between two parties belonging to the same country.

Alternative dispute resolution encompasses a variety of methods for the resolution of

disputes between the parties. The availability or deployment of any particular method
of alternative dispute resolution in any specific case depends on a number of factors.
The clause relating to alternative dispute resolution in the agreement between the
parties, the availability of persons well versed in the process of alternative dispute
resolution, the support provided by the legal system of a country to the alternative
dispute resolution methods, the national or international institutional framework for
alternative dispute resolution, the availability of necessary infrastructure facilities,
etc., play a significant role in the selection of any particular method of the resolution
of dispute. The most important, popular and common alternative method of dispute
resolution is arbitration.

ARBITRATION
Arbitration is one of the oldest methods for the resolution of disputes between the
parties. It has existed, in one form or the other, in every country at all times.
Arbitration as a process of dispute resolution offers many advantages to both the
parties.

In the field of arbitration, there are three international documents. However, all these
three documents deal with the enforcement of foreign arbitral awards. The first is
Protocol on Arbitration Clauses signed at Geneva on 24th September, 1923

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(commonly known as Geneva Protocol, 1923). It has 8 Articles. It has been ratified by
30 States. However, it is not very popular amongst the States for obvious reasons.

The second is the Convention on the execution of Foreign Arbitral Awards signed at
Geneva in 1927 (commonly known as Geneva Convention, 1927). This Convention
amended the Geneva Protocol in certain respects. According to this Convention “Each
High Contracting State was required to recognise as binding and to enforce, in
accordance with the rules of the procedure of its territory, arbitration award made in
another Contracting State pursuant to an agreement
covered by the Protocol.”

Last, is the Convention on the Recognition and Enforcement of Foreign Arbitral

Awards signed at New York on 10th June, 1958 (commonly known as New York
Convention). This Convention gave the parties greater freedom in the choice of the
arbitral authority and of the arbitration procedures. It attempted to remove the
difficulties faced by the parties in the enforcement of foreign arbitral awards. The
New York Convention reduced and simplified the requirements with which the party
seeking recognition or enforcement of an award had to comply.

There is one more international document, that is, 1965 Convention on the Settlement
of Investment Disputes Between States and Nationals of Other States done at
Washington in 1965 (commonly known as ICSID Convention, 1965). It applies only
to the investment disputes between a country and the investors of another country
who have made investments in that first country. There are a few regional conventions
and protocols also, such as European Convention on International Commercial
Arbitration, 1961, Inter-American Convention on International Commercial
Arbitration signed on 30th January, 1975 (commonly known as Panama Convention).

Internationally, the United Nations Commission on International Trade Law

(UNCITRAL) has prepared Model Law on International Commercial Arbitration. It
has been prepared after long deliberations in various meetings of the whole
Commission during 18th Annual Session and was adopted on 21st June, 1985. The
General Assembly of the United Nations, in its Resolution 40/72 of 11th December,
1985, recommended, “that all States give due consideration to the Model Law on
International Commercial Arbitration, in view of the desirability of uniformity of the
law of arbitral procedures and the specific needs of international commercial
arbitration practices.” So far a large number of countries have adopted UNCITRAL
Model Law on International Commercial Arbitration in their domestic legislation on
arbitration. It has resulted in achieving uniformity in the law relating to arbitration in
these countries.

In addition to the Model Law on International Commercial Arbitration, the

UNCITRAL has also prepared and published detailed “UNCITRAL Arbitration
Rules”. These Rules were adopted by the General Assembly through its Resolution
31/98 on 15th December, 1976, that is much before the adoption of the Model Law on
International Commercial Arbitration. Article 1 of these Rules provides that, “Where
the parties to a contract have agreed in writing that dispute in relation to that contract
shall be referred to arbitration under the UNCITRAL Arbitration Rules, then such
dispute shall be settled in accordance with these Rules subject to such modification as
the parties may agree in writing.” Thus, the parties to an agreement can adopt the

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UNCITRAL Arbitration Rules for the resolution of their international disputes.

Except the preparation and publication of these documents, the UNCITRAL as such
does not provide arbitration facilities.

The UNCITRAL has also brought out a publication called, “UNCITRAL Notes on
Organising Arbitral Proceedings”. These Notes were finalised at its twenty-ninth
Session held at New York in May-June, 1996. According to paragraph 1 of these
Notes, “The purpose of the Notes is to assist arbitration practitioners by listing and
briefly describing questions on which appropriately timed decisions on organising
arbitral proceedings may be useful.” These Notes provide guidance on all aspects of
arbitration proceedings like administrative services that may be needed for the arbitral
tribunal to carry out its functions; deposits in respect of its costs; confidentiality of
information relating to the arbitration, possible agreement thereon; routing of written
communications among the parties and the arbitrators; defining points of issue;
documentary evidence; witnesses, experts and expert witnesses; multi-party
arbitration; filing and delivering award, etc.

The most important and oldest institution in the field of arbitration is the International
Chamber of Commerce, Paris. The International Court of Arbitration of the
International Chamber of Commerce (the “ICC”) is the arbitration body of the ICC.
The Court does not itself settle disputes. The function of the Court is to provide
necessary facilities for the settlement by arbitration of business disputes of an
international character in accordance with the Rules of Arbitration of the ICC if so
empowered by an arbitration agreement between the parties.

Apart from ICC, another international body engaged in the arbitration is the
International Centre for the Settlement of Investment Disputes. It has also framed
rules of arbitration. As has been stated above, it is relevant for the resolution of
investment disputes only and not other commercial disputes.

Further, practically every country has one or more bodies or institutions which
provide facilities for arbitration and other alternative dispute resolution methods for
resolving commercial disputes. Even though they are national bodies or institutions,
they provide all the necessary facilities for resolution of both domestic and
international commercial disputes. Only to illustrate, some such bodies or institutions
are American Arbitration Association (AAA), London Court of International
Arbitration (LCIA), Permanent Court of International Arbitration, Hong Kong
International Arbitration Centre (HKIAC), Korean Commercial Arbitration Board
(KCAB), Kuala Lumpur Regional Centre for Arbitration, World Intellectual Property
Organization Arbitration and Mediation Centre, Geneva, International Centre for
Alternative Dispute Resolution, New Delhi, World Arbitrators and Mediators
Council, New Delhi, etc. Most of them have framed their own rules of arbitration.
They provide arbitration facilities and charge costs in accordance with their own
respective rules. The parties to an arbitration agreement can adopt in their
agreement any institution of their choice for the resolution of their disputes.

One of the essential requirements for resolution of a dispute through arbitration is the
existence of an arbitration agreement between the parties. An arbitration agreement
may be in the form of an arbitration clause in an agreement or in the form of a
separate agreement. Various institutions engaged in arbitration have drafted

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arbitration clauses and incorporated them in their rules for adoption by the parties in
their arbitration agreements. Some illustrations of arbitration clauses are as follows:

International Chamber of Commerce

“All disputes arising out of or in connection with the present contract
shall be finally settled under the Rules of Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in
accordance with the said rules.”

British Columbia International Commercial Arbitration Centre

“All disputes arising out of or in connection with this contract or in
respect of any defined relationship associated therewith or derived
therefrom, shall be referred to and finally resolved by arbitration under
the rules of the British Columbia International Commercial Arbitration
Centre. The appointing authority shall be British Columbia International
Commercial Arbitration Centre. The case shall be administered by the
British Columbia International Commercial Arbitration Centre in
accordance with its ‘Procedures for Cases under the BCICAC Rules’.

The place of arbitration shall be Vancouver, British Columbia, Canada.

The following matters also should be considered by parties for inclusion in the
arbitration provisions of contracts:

- governing or proper law;

- procedural laws;
- number of arbitrators;
- specific qualifications of the arbitrators or a presiding arbitrator including,
but not limited to, language, technical training, nationality and legal
training;
- language or languages of arbitration”

London Court of International Arbitration

“Any dispute arising out of or in connection with this contract, including
any question regarding its existence, validity or termination, shall be
referred to and finally resolved by arbitration under the Rules of the
London Court of International Arbitration, which Rules are deemed to be
incorporated by reference into this clause.”

Netherlands Arbitration Institute

“All disputes arising in connection with the present contract, or further
contracts resulting therefrom, shall be finally settled in accordance with
the Arbitration Rules of the Netherlands Arbitration Institute
(Nederlands Arbitrage Institut).

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Additionally, various matters may be provided for:

“The arbitral tribunal shall be composed of one arbitrator/three
arbitrators.”
“The place of arbitration shall be__________(city)”
“The arbitral procedure shall be conducted in the______language.”
“The arbitral tribunal shall decide as amiable compositeur.”
“Consolidation of the arbitral proceedings with other arbitral proceedings
pending in the Netherlands, as provided in art. 1046 of the Netherlands Code
of Civil Procedure, is excluded.”

Zurich Chamber of Commerce

“All disputes arising out of or in connection with the present agreement,
including disputes on its conclusion, binding effect, amendment and
termination, shall be resolved, to the exclusion of the ordinary courts by
an arbitral tribunal (or by a three person arbitrala tribunal/a sole
arbitrator) in accordance with the International Arbitration Rules of the
Zurich Chamber of Commerce. (Optional: The decision of the Arbitral
tribunal shall be final, and the parties waive all challenge of the award in
accordance with Art. 192 of the Private International Law Statute.)

It is not proposed to discuss the subject of arbitration any further, as arbitration is the
subject for discussion for the next four days in this Workshop.

FAST TRACK ARBITRATION

Fast track arbitration is nothing but a kind of arbitration. In fact, fast track arbitration
is a time bound arbitration. Fast track arbitration can be adopted for the resolution of
international as well as national disputes. Many international and national institutions
engaged in providing arbitration facilities have promulgated fast track arbitration
rules. These rules provide, in detail, the fast track arbitration procedure. The parties
can adopt the fast track arbitration rules of any international or national body or
institution for the speedy and time bound resolution of their dispute. The agreement
for the resolution of dispute through fast track arbitration is same as for the ordinary
arbitration, except that, in addition to the provision for arbitration, it provides that the
parties have agreed for fast track arbitration.

Generally, subject to the agreement between the parties, the fast track arbitral tribunal
consists of sole arbitrator. However, there is no legal bar to the arbitral tribunal
consisting of more than one arbitrator, that is, three arbitrators, if the parties so decide.
If the fast track arbitration is by three arbitrators, the third arbitrator is called the
“Presiding arbitrator”. The procedure for the appointment and challenge of
arbitrator(s) is the same as in the case of ordinary arbitration, except that all such
actions must be taken within the prescribed time limit. Fact track arbitration
commences when one party gives notice of its intention to commence fast track
arbitration and the said notice is received by the other party. The claimant is required
to submit his statement of claims within 15 days from the date of constitution of the
arbitral tribunal. Similarly, the other party is required to submit its statement of
defence, including counter claim, if any, within the next fifteen days. In another 15
days, the parties may submit their rejoinders. The arbitral tribunal decides about the
time limit for hearings of the case. It is also expected to deliver its award not later

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than 15 days from the close of the arbitration proceedings. It should be a reasoned
award, unless otherwise agreed by the parties.

The essence of the fast track arbitration is that the time limit is fixed for every action
to be taken by the parties or the arbitrator(s). The parties are not permitted or allowed
to seek extension of time or postponement of any matter by the arbitral tribunal. The
parties are expected to adhere to these time limits. If the claimant fails to observe the
time limits without sufficient cause, the arbitral tribunal is competent to terminate the
proceedings. If the respondent fails to observe the time limits without sufficient cause,
the arbitral tribunal is competent to proceed ex parte in the absence of the defaulting
party.

CONCILIATION
Conciliation is the process by which one or more independent person(s) selected by
the parties to an agreement generally by mutual consent, either at the time of making
the agreement or subsequently when a dispute has arisen between them, to bring about
a settlement of their dispute through consensus between the parties by employing
various persuasive and other similar techniques. It is a process of confidence and
faith. Sometimes, and in some systems it is also called mediation. There may be
technical or legal differences between the two expressions, namely, conciliation and
mediation, but for the present purpose the expression “conciliation’ is used to refer to
both the processes, namely, the conciliation and mediation. Conciliation is an
effective means of alternative dispute resolution and can be usefully deployed for both
international as well as domestic disputes, except that in the conciliation of an
international dispute certain facts assume greater importance than they would in a
domestic conciliation.

United Nations Commission on International Trade Law (UNCITRAL) has prepared

and circulated “Conciliation Rules’. These Conciliation Rules were adopted by the
UNCITAL at its thirteenth session after consideration of the observations of
Governments and interested organizations. The General Assembly of the United
Nations has also adopted them through a Resolution 35/52 on 4 December, 1980. The
U.N. has recommended, “the use of the Conciliation Rules of the United Nations
Commission on International Trade Law in cases where a dispute arises in the context
of international commercial relations and the parties seek an amicable settlement of
that dispute by recourse to conciliation”. The UNCITRAL Conciliation Rules contain
20 Articles.

The countries who have adopted the Model Law on International Commercial
Arbitration of UNCITRAL have also adopted the Rules of Conciliation of the
UNCITRAL or other international institutions and have enacted a composite law
called Arbitration and Conciliation Act. Such statutes provide for the resolution of
disputes through either of these methods, that is, arbitration or conciliation.

Many other international organisations and institutions have issued conciliation rules
for the resolution of disputes between the parties. The International Chamber of
Commerce has promulgated, “ICC Rules of Optional Conciliation”. The Preamble to
these Rules says that, “Settlement is a desirable solution for business disputes of an
international character. The International Chamber of Commerce therefore sets out

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these Rules of Optional Conciliation in order to facilitate the amicable settlement of

such disputes”.

The conciliation process can be commenced by either party to the dispute. When one
party invites the other party for resolution of their dispute through conciliation, the
conciliation proceedings are said to have been initiated. When the other party accepts
the invitation, the conciliation proceedings commence. If the other party rejects the
invitation, there are no conciliation proceedings for the resolution of that dispute.
Generally, only one conciliator is appointed to resolve the dispute between the parties.
The sole conciliator is appointed by the parties by mutual consent. If the parties fail to
arrive at a mutual agreement, they can enlist the support of any international or
national institution for the appointment of a conciliator. There is no bar to the
appointment of two or more conciliators. In conciliation proceedings with three
conciliators, each party appoints one conciliator. The third conciliator is appointed by
the parties by mutual consent. Unlike arbitration where the third arbitrator is called
the Presiding Arbitrator, the third conciliator is not terms as Presiding conciliator. He
is just the third conciliator. The conciliator is supposed to be impartial and conduct
the conciliation proceedings in an impartial manner. He is guided by the principles of
objectivity, fairness and justice, and by the usage of the trade concerned and the
circumstances surrounding the dispute, including any previous business practices
between the parties. The conciliator is not bound by the rules of procedure and
evidence. The conciliator does not give any award or order. He tries to bring an
acceptable agreement as to the dispute between the parties by mutual consent. The
agreement so arrived at is signed by the parties and authenticated by the conciliator.
In some legal systems, the agreement so arrived at between the parties resolving their
dispute has been given the status of an arbitral award. If no consensus could be
arrived at between the parties and the conciliation proceedings fail, the parties can
resort to arbitration.

A conciliator is not expected to act, after the conciliation proceedings are over, as an
arbitrator unless the parties expressly agree that the conciliator can act as arbitrator.
Similarly, the conciliation proceedings are confidential in nature. Rules of
Conciliation of most of the international institutions provide that the parties shall not
rely on or introduce as evidence in arbitral or judicial proceedings, (a) the views
expressed or suggestions made for a possible settlement during the conciliation
proceedings; (b) admissions made by any party during the course of the conciliation
proceedings; (c) proposals made by the
conciliator for the consideration of the parties; (d) the fact that any party had indicated
its willingness to accept a proposal for settlement made by the conciliator; and that the
conciliator shall not be produced or presented as a witness in any such arbitral or
judicial proceedings.

Model conciliation clause (UNITAR)

“Where, in the event of a dispute arising out of or relating to this
contract, the parties wish to seek an amicable settlement of that dispute
by conciliation, the conciliation shall take place in accordance with the
UNCITRAL Conciliation Rules as at present in force.”

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Model conciliation clause

“If any dispute arises between the parties out of or relating to this
contract, or in respect of any defined legal relationship associated
therewith, the parties agree to refer the same to sole conciliator for
amicable settlement. The conciliator shall be appointed by the parties by
mutual consent. If the parties shall fail to arrive at an agreement, the
conciliator shall be appointed by_________(give the name of any person
or institution)

The conciliation shall be conducted in accordance with the Rules of Conciliation of

__________(give the name of any institution).

(The parties can mention specific technical or other qualifications and experience, if
any, of the conciliator)

MINI-TRIAL
The resolution of disputes through this alternative dispute resolution method is called
mini-trial. It is relatively a new device for the resolution of disputes. Sometimes it is
also called as “exchange of information”. It has nothing to do with a criminal or any
other trial. This procedure is only named as a mini-trial. In fact, in this process, no
adjudication process takes place. Various national and international institutions
engaged in providing arbitration and mediation facilities have made rules for “mini-
trial”. The parties to a dispute can select and adopt any such institution and its rules
for the resolution of their dispute through mini-trial. It is also a time bound process. It
is expected that under normal circumstances, the entire process of mini-trial should be
completed within 90 days from the date of its commencement.

The major difference between the conciliation and the mini-trial is that in conciliation,
the conciliator tries to bring about an agreement between the parties. In mini-trial, the
neutral adviser tells the senior management personnel of the parties of the respective
strengths and weaknesses of the case to the parties. Thereafter, the senior management
personnel of the parties can take an appropriate decision about their dispute.
According to American Arbitration Association’s Mini-trail Procedures, “… The mini-
trial is a structured dispute resolution method in which senior executives of the parties
involved in legal disputes meet in the presence of a neutral adviser and, after hearing
presentations of the merits of each side of the dispute, attempt to formulate a
voluntary settlement.”

The process of mini-trial can be commenced by either party to the dispute. When one
party invites the other party for mini-trial and send a written invitation identifying the
subject of dispute, the process of mini-trial is said to have been initiated. When the
other party accepts the invitation in writing, the mini-trial proceedings are deemed to
have commenced. If the other party rejects the invitation, there is no mini-trial
proceeding. Generally, only one neutral adviser is appointed to resolve the dispute
between the parties. The parties, if they so desire, can have more than one neutral
adviser also. The neutral adviser(s) is appointed by the parties by mutual consent. If
the parties do not wish to appoint their own neutral adviser(s) or do not reach
agreement on any particular name, they may enlist the support of any national or
international institution for the purpose. The neutral adviser is expected to possess

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special legal or technical knowledge and experience about the subject matter of
dispute. Amini-trial is also a time bound process.

In mini-trial, first, the parties explain their respective cases and then the neutral
adviser discusses the nature of dispute with the senior executives of both the parties.
If necessary, he may also discuss the matter with the experts, if any, proposed to be
produced by the parties. Thereafter, he indicates his views of the respective strengths
and weaknesses of each side, the aspects of the case which are reasonably clear and
those which are uncertain. The neutral advise also answers the questions or doubts the
senior executive may have. This process helps the parties to gain a better
understanding of the issues and the merits of their respective case. The senior
executives are then expected to enter into a mutual discussion with a view to arriving
at a settlement. The neutral adviser only assists them in such discussions, as a
facilitator, and not as a judge of the dispute. The mini-trial terminates when the parties
have arrived at an agreed settlement or the neutral adviser makes a written declaration
to the effect that further efforts at settlement of the dispute through mini -trial are no
longer justified.

The model clause (mini-trial)

“The parties shall try to resolve any dispute, difference or claim arising
out of or relating to this agreement through negotiations. If it is not so
resolved, the parties shall resolve the same through mini-trial. The sole
neutral adviser shall be appointed by the parties by mutual consent. If the
parties fail to arrive at an agreement on any name, the neutral adviser
shall be appointed by ______ (give the name of any institution). The mini-
trial shall be conducted in accordance with the rules of procedure for
mini-trial of _______ (give the name of any institution).

If the dispute is not resolved by mini-trial procedure within 90 days of the initiation
thereof, or if either party will not participate in such procedure, the dispute shall be
referred to arbitration.”

EXPERT ASSESSMENT (ENGINEERS)

Certain contracts, particularly those involving complex and long term construction
projects, adopt the system of appointing “Experts” for the resolution of disputes that
may arise thereunder. Such experts are generally construction or civil engineers who
are regularly available at the construction site and are expected to resolve disputes
between the parties within a reasonable time. “Experts” can also be appointed for the
resolution of disputes arising under other kinds of contracts. The qualifications and
experience of an Expert depends on the nature of contract and the dispute that has
arisen thereunder.

The Experts are expected to be impartial. They undertake to interpret the provisions of
the contract and/or explain their practical application. Generally, only one expert is
appointed but there is no legal bar for the appointment of a Board of experts
consisting of two or three experts. In construction contracts, generally the Expert is
appointed by the Employer. Before making any such appointment, it is desirable that
the contractor is consulted and his opinion is given due consideration. The Expert can
give his opinion or determination during the progress of performance of the contract
or even after the termination of the contract. The Experts appointed in pursuance to

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this provision are not bound by the rules of procedure or evidence. They do not give
award or judgements. They express their opinion or give their determination
depending on the facts and circumstances of dispute between the parties. The opinions
given by the experts are not binding on the parties, unless the parties have by their
agreement given an authority to the Expert to make binding determinations. In such a
case, the decisions given by the Expert will be binding on the parties. An Expert is
expected to give his opinion or determination within the time prescribed by the parties
in the relevant clause.

The major advantages of this system are that if a dispute arises between the parties,
the Expert, for the resolution of the same, is instantly available. The time taken for the
process of appointment of the Expert is avoided. It is also a time bound system.
Further that, if a dispute arises between the parties to the contract, the work does not
suffer. The contractor is required to continue with the performance of the contract
with all due diligence during the period the determination of the said dispute takes
place. Thus, with the arising of a dispute between the Employer and the contractor,
the contractual relationship does not come to an end.

The International Chamber of Commerce has founded an organisation called the

International Centre for Technical Expertise. The functions of the Centre include
collaboration with similar international organisations or institutions and to identify
and make available experts in various technical fields for the resolution of disputes
between the parties.

The Federation Internationale des Ingenieurs-Conseils (FIDIC) has prepared

“Conditions of Contract for Works of Civil Engineering Construction”. Condition
67.1 of the said Conditions contains an “Expert Assessment” clause. It provides for
the resolution of dispute through an Expert Engineer. Those interested to have an
“Expert Engineer Assessment” clause in the agreements for the resolution of their
disputes can refer to it or adopt it.

DISPUTE REVIEW BOARD

The settlement of disputes through Dispute Review Boards, also known as Dispute
Resolution Boards, is another method of alternative dispute resolution system. It is
common in long term contracts involving construction works and similar contracts.
Resolution of disputes through Dispute Review Board is fast, inexpensive and avoids
disruption of the construction work. Dispute Review Board is generally set up or
established immediately after the contract is made. It functions with relative
informality.

It has many interesting features which are generally not found in other alternative
dispute resolution methods. First, the Dispute Review Board generally consists of
three members. There is no procedure of having a Dispute Review Board consisting
of only one member like sole arbitrator. Second, the Employer and the Contractor,
both have a right to select one member each on the Dispute Review Board. The
member of the Dispute Review Board selected by the Employer should be approved
by the Contractor and the member selected by the Contractor should be approved by
the Employer. Indirectly, it means that in fact the Board is constituted by both the
parties to the agreement with their mutual consent. It eliminates any subsequent

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dispute or disagreement between the parties about the selection of members of the
Board. The purpose and object of this approval is that the parties should have faith
and confidence in the Dispute Review Board and its recommendations. Third, the
third member of the Dispute Review Board is selected by the two selected Members
but he should be approved by the parties. Fourth, most of the actions like selection of
a Member, appointment of a Member, etc., have to be taken within the prescribed
time frame. If any party fails to take action within the prescribed time, it looses the
right to select the Member and in his place, the Appointing Authority selects the
Members. Fifth, the Members of the Dispute Review Board, before they can assume
office, have to sign a Declaration of Acceptance. Once a Declaration of Acceptance is
signed by a Member, he is presumed to be properly selected according to the
procedure prescribed by this clause. Sixth, the Dispute Review Board has power only
to make “Recommendations” to the parties. These recommendations do not have the
binding force. The parties are at liberty to disagree with the recommendations of the
Board. In such an event, the dissatisfied party can have recourse to arbitration.
Seventh, it is not bound by the rules of procedure or evidence. Eighth, if either party
does not express its disagreement with the recommendations of the Board within 14
days of its receipt, the recommendations become final and binding on the parties to
the agreement. Ninth, the recommendations of the Dispute Review Board are not
considered secret or confidential. The clause specifically provides that the
recommendations of the Board shall be admissible as evidence in any subsequent
legal or judicial proceedings between the parties like arbitration, litigation, etc. This is
not the case with the findings of a conciliator. The conciliation proceedings are
considered to be secret and confidential and cannot be disclosed in any legal or
judicial proceedings between the parties. Tenth, it consists of members who are
expected to be specialists or technically qualified in the construction projects. Last, if
the parties so agree, a Dispute Review Board can also act as an arbitral tribunal.

There is no law, rules or regulations in any country about the constitution and
working of the Dispute Review Boards. It is also not administered by any
international or national institution engaged in providing arbitration facilities or other
alternative dispute resolution methods. The Dispute Review Board is purely a
contractual institution. Therefore, the clause providing for the Dispute Review Board
in an agreement should cover all aspects of is constitution and working and has to be
comprehensive.

The best illustration of the clause regarding the Dispute Review Board can be found
in the Standard Bidding Documents for Procurement of Works prepared and issued by
the World Bank. Those who are interested in having Dispute Review Board as a
method of
dispute resolution in their agreement can adopt this clause with suitable or appropriate
modifications. It is a self-contained clause in every respect.

Apart from the above mentioned alternative methods for the resolution of disputes,
some more methods, such as Med-Arb, Medaloa, partnering, etc. are also adopted by
the parties from time to time. The purpose is that the dispute should be resolved
amicably, justly and as early as possible, whatever methods the parties adopt for the
same.

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DISPUTE RESOLUTION MECHANISMS

AND CONSTITUTIONAL RIGHTS IN
SUB-SAHARAN AFRICA
by Bolaji Owasanoye

Disagreements and misunderstanding are key characteristics of human relationships

whether the relationship is a domestic, national or international one. The potential for
disputes is even higher where the parties are from different cultural, economic and
political backgrounds with different legal systems. Since disputes are such a critical
part of human relationships, many countries have mechanisms to resolve them in a
manner, which maintains the cohesion, economic and political stability of the state.
This is particularly so with regard to disputes related to commerce because commerce
is the engine of growth.

The adjudicatory system of dispute resolution or the civil court system as we know it
today evolved to resolve disputes among citizens. In each country of the world, the
local court system has a history of development behind it but modern court systems
all over the world have been influenced by the common law system which originated
from England because England was at one time the dominant world power exporting
its culture, ideas and system of governance to the rest of the world through the
activities of its famous explorers. This adjudicatory or common law system is what
has been exported to many developing countries, which were former colonies of
Britain. In particular, many sub Saharan African countries which were colonies of
Great Britain have retained the system of dispute resolution inherited from the former
colonial governments.

The point made above is not to say that African nations did not have their own
indigenous system of dispute resolution before the advent of the colonial government.
In fact as we shall see, African traditional system of dispute resolution is closer in
nature and character to arbitration than to the colonial system of adjudication. But
since African lawyers are trained in the common law system of adjudication which is
integrated into the system of governance by the constitution backed by the
establishment of courts, judges, the rules of procedures and the enforcement of the
judgements, African lawyers have come to rely on and trust the common law system
more than any other form of dispute resolution.

But the common law adjudicatory system of dispute resolution is widely known to be
fraught with a myriad of shortcomings especially when applied to the resolution of
commercial disputes. These shortcomings range from the delay in the process of
litigation, the cumbersome rules of procedure, the corruption of judges and court
officials in some countries, the cost of litigation, the publicity which goes with the
hearing and the judgement etc. Whereas developed countries have managed to
develop dispute resolution mechanisms which reduce the impact of the shortcomings
identified here and conform with modernity and the demands of economic growth,
many developing countries especially in Africa are still saddled with old forms of
adjudication which they inherited from colonial governments. One of the reasons for
this is the conservatism of lawyers in these countries who prefer to resolve disputes
within their familiar adjudicatory system in spite of all the problems. Another reason
is that they are not familiar with the modern forms of dispute resolution. In spite of

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the imposition of the foreign system of adjudication and its promotion by British
trained African lawyers, many Africans still believe in and use the traditional system
of dispute resolution although its scope and application to commercial disputes is
limited.

Alternative Forms of Dispute Resolution

The shortcomings in the adjudicatory system of resolving disputes led to the
emergence of other methods of dispute resolution now popularly referred to as ADR.
The value of ADR over and above the common adjudicatory system is that any of the
techniques can be implemented very early in the dispute thereby giving the parties an
opportunity to air their views and to involve decision makers within their respective
organizations long before the subject of dispute eats deep into the fabric of the
relationship and cause irreparable damage.

ADR methods vary and their processes overlap but are all designed as alternatives to
litigation and complement arbitration which is the most popular form of ADR. The
methods include negotiation, early neutral evaluation or neutral fact finding,
conciliation, mediation, mini trial, med-arb etc. The key factor is that all these
methods are designed to assist the parties resolve their differences in a manner that is
creative and most suited to the particular dispute. Some people see ADR methods as
supplanting the adjudicatory system but if considered from the angle that the courts in
many jurisdictions are unable to resolve all disputes in a manner appealing to litigants,
then ADR methods will be accepted as complementary to the litigation system.

Negotiation
This is a voluntary and informal process by which the parties to a dispute reach a
mutually acceptable agreement. As the name implies the parties seek out the best
options for each other which culminates in an agreement. At their option, the process
may be private. In this process, they may or may not use counsels and there is no limit
to the argument, evidence and interests, which may be canvassed.

Early Neutral Evaluation/Fact Finding

This is an informal process whereby a neutral third party is selected by the disputants
to investigate the issue in dispute and submit a report or come to give evidence at
another forum like a court or arbitration. The outcome of a neutral fact finding is not
binding but the result is admissible for use in a trial or other forum. The method is
particularly useful in resolving complex scientific, technical, sociological, business or
economic issue. Using a neutral fact finder eliminates the strategic posturing which
characterizes the litigation or even arbitration process.

Conciliation
This mechanism is used to discover the whether there is room for the parties to a
dispute to make up. A third party, the conciliator is appointed who discusses the
dispute with the parties and then prepares a solution based on what he or she as the
conciliator considers to be a just compromise. The solution presented to the parties is
reviewed with all relevant documents after which the conciliator meets with the
parties separately for oral presentation of their cases. The conciliator may consult the
parties privately as often as necessary to reach a solution. The proceedings are
therefore flexible enough to accommodate this process. The conciliator tries to satisfy
both parties. In doing this he or she looks for a consensus and while not dictating a

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solution to the parties, nevertheless crafts one for them. In effect, the conciliator may
be regarded as designer of the solution. This may be contrasted with mediation where
the parties are guided to design their own solution.

Mediation
Parties to a dispute seek mediation when they are ready to discuss a dispute openly
and honestly. Usually in a dispute, there are varying degrees of interests and concerns
therefore it is usual that a trade off may be made in a creative manner which a court
may not consider. The underlying factor in mediation is that the parties have
bargaining power and that a continuing relationship is essential after the dispute
therefore trial is to be avoided.

In view of the factors recounted above, a neutral party, the mediator, is brought in to
help the parties find a solution to a dispute. The person controls the process while the
parties control the outcome. A mediator cannot impose a decision on the parties. In a
typical mediation session, the mediator opens the session by declaring how the
session will run, who will speak, when, for how long and the length of the session.
The parties are requested to confirm their good faith and trust in the process and to
agree that all that will be said will be confidential and therefore inadmissible in any
subsequent proceeding. After this, parties take turn to state their views of the dispute.
The mediator asks for clarification as may be necessary. If necessary, the mediator
may meet with the parties separately in a confidential caucus to assess position,
identify real interest, consider alternatives or help generate a possible solution. This is
called shuttle mediation. The process may involve several sessions before a solution is
arrived at. Mediation may be of different types but three popular variations are the
rights based mediation which focuses on legal rights of the parties, the interest based
mediation which focuses on the interests and compelling issues of the dispute and
therapeutic mediation which focuses on the problem solving ability of the parties or
the emotional aspects of the dispute.

A successful mediation affords the parties an opportunity to generate a creative

solution to their dispute in a manner that focuses on the future and not the past. Its
major benefits include that they control the process, choose their mediator and avoid
trial.

Mini-Trial
A mini-trial is a private abbreviated process of presentation by lawyers to the
disputants to help them assess the strength and weakness of their positions and to help
them reach a decision whether or not to proceed to trial. Usually there will be a third
party advisor who renders a non-binding opinion about the legal, factual and
evidentiary points of the case and what the outcome might be in court. The lawyers
can then use this information to come to a conclusion.

This is a two-part settlement process, which originates as mediation but may graduate
to arbitration using the neutral party as the arbitrator who gives an award.

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African Customary System of Dispute Resolution

Customary law is generally known to be the accepted norm of usage in any
community. A community may accept certain customs as binding on them. In Africa,
such customary laws may be accepted by members of particular ethnic groups and
may be regarded as ethnic customary law. Customary law is unwritten and one its
most commendable characteristics is its flexibility, apart from the fact that it is the
accepted norm of usage. In one Nigerian case, the court said

“One of the most striking features of West African native custom … is its
flexibility; it appears to have been always subject to motives of
expediency, and it shows unquestionable adaptability to altered
circumstances without entirely losing its character.”[1]

Resolution of disputes was a major function under the indigenous system of

governance. The role was taken up by the elders or the chief and was meant to
maintain social cohesion. In its operation, African dispute resolution was very much
like arbitration in that resolution of disputes was not adversarial. Any person who is
concerned that a dispute between the parties threatened the peace of the community
could initiate the process. In the process, parties have the opportunity to state their
case and their expectation but the final decision is that of the elders. Whereas the
western type arbitration is attractive because of its private nature, customary
arbitration is not private but is organised to socialise the whole society, therefore, the
community is present. Another distinction is that the process is gender sensitive as
such women were excluded from male driven communal dispute resolution. Parties
could arise from the whole process and maintain their relationship and where one
party got an award the whole society was witness and saw to it that it was enforced.
Social exclusion or ostracism was a potent sanction for any erring party therefore
enforcement of an award was not a problem.

There are however several limitations of this process in modern times. One is that it is
mostly applied to land and family disputes. It is hardly applicable to monetized
commercial transactions and certainly not to transaction of an international character.
Furthermore, it is community focused and does not contemplate transactions where
the parties are from different cultural backgrounds. The lack of privacy could be a
disadvantage in that the parties might not want the community involved.

[1] Lewis v Bankole (1908) 1 N.L.R 81 at 100.

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Arbitration
Arbitration is one of the various methods of dispute resolution but undoubtedly the
most popular. It is defined in the Halsbury’s Laws of England as “the reference of a
dispute or difference between not less than two parties for determination, after hearing
both sides in a judicial manner, by a person or persons other than a court of competent
jurisdiction”[2].

Similarly, one distinguished author said –

“where two or more persons agree that a dispute or potential dispute
between them shall be decided in a legally binding way by one or more
impartial persons in a judicial manner, that is upon evidence put before
him or them, the agreement is called an arbitration agreement or a
submission to arbitration. When, after a dispute has arisen, it is put
before such person or persons for decision, the procedure is called an
arbitration, and the decision when made is called an award”.[3]

Arbitration is a voluntary method of ADR, which is applied to both domestic and

international contracts and is founded on the present or future agreement of the parties
to submit any dispute between them to arbitration. By the above definitions it is clear
that parties to a contract can choose to resolve any dispute which arises between them
without reference to the regular courts. The reasons for sidelining the regular court for
arbitration have been outlined above.

In the case of international commercial agreements there are other reasons of great
importance why it is to be preferred. International arbitration as it is now well
recognized developed after the second world war and became popular as alternative to
litigation in contracts where the parties came from different national backgrounds and
one party was familiar with the legal system while the other was suspicious of it. In
such situations, the only viable alternative was international arbitration. In other
words, arbitration has the added advantage that in international contracts it gave the
parties opportunity to choose a forum neutral from their own national legal systems.

The basis for proceeding to arbitration is the arbitration agreement or the arbitration
clause, which has been voluntarily executed by the parties. For example, the Nigeria
Arbitration and Conciliation Act [4] provides in section 1(1)(a-c)

“Every arbitration agreement shall be in writing contained in a document signed

by the parties or in exchange of letters, telex, telegrams, or other means of
communication which provide a record of the arbitration agreement or in an
exchange of points of claim and of defence in which the existence of an
arbitration agreement is alleged by one party and not denied by the another”

[2] Halsbury’s Laws of England, 3 rd Edition, Volume 2 at pg.2 para 2.

[3] Bernstein, Ronald Handbook of Arbitration Practice quoted by Obi O,
“Introduction to Arbitration Clause” Continuing Legal Education Association of
Nigeria Lecture Notes No. 3a and 3b, December 1990.
[4]Cap 19, Laws of the Federation of Nigeria 1990 formerly Decree No 11 of 1988.

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Section 1(2) “ Any reference in a contract to a document containing an arbitration

clause constitutes an arbitration agreement if such contract is in writing and reference
is such as to make the clause part of the contract.” At common law, the parties could
have an oral agreement to submit a dispute to arbitration and such oral agreement
would be valid. But by virtue of the above provision every arbitration agreement must
be in writing. Section 1(1)(c) of the law implies that an allegation of the existence of
an arbitration agreement, which is not denied by the other party, will constitute a
written agreement.

The above provision in Nigeria’s arbitration statute is typical and is in fact based on
the UNCITRAL model law, which many countries have adopted[5].

A careful appraisal of the provision reveals that an arbitration agreement may arise in
different ways and that the agreement may be concluded during the negotiation of the
subject matter which has brought the parties together or after a dispute has actually
arisen. There is no doubt that it is better to conclude the arbitration agreement before a
dispute arises because once a dispute is called it is much more difficult for the parties
to be reasonable in negotiation.

Considering that the process is a voluntary one, the arbitration agreement may include
a variety of things but it must cover the important aspects of the expectation of the
parties. The clause must be carefully drafted and must be able to get the parties to
arbitrate when the need arises. Where there is an Arbitration Act, the matters to be
covered in the agreement may be identified and this may be sufficient for domestic
arbitration[6] but for international arbitration domestic laws were often inadequate to
deal with matters of international arbitration therefore, model clauses have been
proposed by treaty and the rules of some arbitration institutions. For example, the
United Nations Commission on International Trade Law (UNCITRAL) set up by the
General Assembly of the UN in 1966 to help remove or reduce legal obstacles to
international trade proposed in its draft rules the following clause –

“Any dispute, controversy or claim arising out of, or relating to this

contract, or the breach, termination or invalidity thereof, shall be settled
by arbitration in accordance with the UNCITRAL Arbitration Rules as at
present in force.
The Appointing Authority shall be … … . (insert)
The number of arbitrators shall be one or three (choose)
The place of arbitration shall be … . (insert)
The language to be used in the arbitration shall be . (insert)”

Another important issue to be covered in the arbitration agreement is the governing

law therefore, parties are advised to include the law governing the contract in the
arbitration agreement if the law has not been covered elsewhere in the main contract.
It is also helpful to assert that the award shall be final.
_____________________________________________________________________
[5] E.g. Bulgaria, Canada, Australia and also Nigeria have adopted the model law.
[6] Under Nigeria’s Arbitration and Conciliation Act the parties are advised to
provide for the number of arbitrators, (s.6) procedure for appointing and challenging
them, (ss 7(1) and 9(1) respectively, place of arbitration (s.16 (1) the language of
arbitration (s.18 (1), nature of evidence to be used (s.20 (1) etc.

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Although we have not discussed the requirements in detail each of these requirements
must be carefully considered as their impracticability may frustrate the whole
expectation of the parties. For example, the venue selected for arbitration must be one
which assures freedom from interference under the law of the situs and it must be a
place which is accessible to both parties in a somewhat equitable manner. The tiniest
detail must therefore be considered in order to get the best out of the agreement. The
clause must be clear and unambiguous.

Once the basic points are covered in the arbitration agreement, a party who obtains an
award from arbitration obtains a final award, which may not be appealed or
challenged except for very specific reasons recognized by law. The extent to which
this clause is enjoyed will depend on the governing law of the contract and whether or
not the countries to which the parties belong are signatories to the New York
Convention. The principle of finality of award is one of the factors which has pitched
arbitration against constitutional rights advocates. The argument is that every one has
a constitutional right to court for the determination of disputes therefore any
agreement which precludes a person from going to court must be unconstitutional.
The underlying principle is that an arbitration agreement is subordinate to the
constitutional right to go to court and have disputes resolved. Therefore, it is felt that
an arbitration agreement does not and cannot preclude the right to go to court.

Arbitration and Constitutional Rights

Access to court is a fundamental right recognized in civilized countries. Section 34 of
Chapter 2 on Bill of Rights of the South African Constitution Act No. 108 of 1996
provide

“Everyone has the right to have any dispute that can be resolved by the
application of law decided in a fair public hearing before a court or,
where appropriate, another independent and impartial tribunal or
forum.”

Similarly, section 6 of Nigeria’s 1999 Federal Constitution provides that the judicial
powers of the Federation shall be vested in the courts. In particular, section 6(6)(b)
says that the judicial powers “shall extend to all matters between persons, or between
government or authority and to any person in Nigeria, and to all actions and
proceedings relating thereto, for the determination of any question as to the civil
rights and obligations of that person”

The principle is linked to the concept of judicial independence and the separation of
powers which espouse that one arm of government i.e. the legislature cannot oust the
jurisdiction of the courts by legislation and thereby undermine the role of the court[7].
Similarly, at common law, an agreement by parties to oust the jurisdiction of court
was frowned upon by the courts and declared contrary to public policy even though
the common law recognised the use of arbitration to settle disputes.

_____________________________________________________________________
[7] See section 4(8) 199 Constitution of Nigeria

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In spite of these principles, parties have over the years executed arbitration
agreements by which they bound themselves not to resort to litigation in the event of a
dispute in respect of the contract. At common law, although arbitration agreements
were recognised, there was reservation as to the extent it could go. In Lee v
Showman’s Guild of Great Britain[8] Lord Denning said

“… parties cannot contract to oust the ordinary courts from their

jurisdiction. They can of course agree to leave questions of law, as well as
fact to the decision of the domestic tribunal. They can, indeed, make the
tribunal the final arbiter on questions of law. They cannot prevent its
decision being examined by the courts. If parties should seek by
agreement to take the law out of the hands of the courts and put it in the
hands of a private tribunal, without recourse at all to the courts in case of
error, then the agreement is to that extent contrary to public policy and
void.”

This weighty pronouncement by no less a jurist than the late law Lord Denning has
had profound impact on the attitude of lawyers in developing countries to arbitration
agreements. In particular, there is concern about the finality of an arbitration
agreement, which precludes the parties from resort to court for judicial review. But
the reasons, which made arbitration like all other ADR mechanisms popular over
litigation, have not disappeared. In many countries, litigation remains an expensive
and tortuous way to enforce a legal right aside from the delay, there is the question of
rigid formality, publicity, corruption in many judicial system, and in international
commercial disputes there is the question of multiple jurisdictions from which the
parties have to decide. Although these problems are associated with arbitration in
different degrees, there is the advantage that the parties can to an extent control their
impact.

Arbitration is not totally without disadvantages. Firstly is the question of its private
covenant nature, which removes it from the purview of the state. To compound this
the proceedings take place in secret, the award is private and may not contain reasons
for the award. It may never be published and where published the names of the
parties are omitted. In short it is too secret for comfort. Secondly, there is the fact that
its use has exploded beyond the traditional areas of commerce to areas like tort,
insurance, medical malpractice etc., such that excluding the scrutiny of courts may
deny parties to much precious constitutional rights.

Despite these shortcomings, however, arbitration is in most jurisdictions practiced in

accordance with law made by the state[9]. By implication, arbitration is part of the
legal system and if the law allows awards to be final by not allowing judicial review,
then it has merit. More importantly, is that in the case of international commercial
transactions, investors are not likely to invest in countries where the opportunity to
resolve disputes is bogged down by protracting procedural rules and the process is
fraught with other bottlenecks as identified above.

_____________________________________________________________________
[8] [1959] 1 All E.R. 1175
[9] see the Arbitration and Conciliation Act Cap 19, Laws of Nigeria 1990,
Arbitration Act of England, 1996.

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The final point is that once a party has signed an arbitration agreement which makes
the award final and not subject to judicial review except for express reasons, no court
should entertain any action from an aggrieved party. This will be a violation of the
spirit of the agreement and a further breach of the contract, a waste of the resources
expended in pursuing the arbitration and a triumph for the losing party.

Conclusion

As a dispute resolution method, arbitration ought to fascinate African lawyers. As can

be seen from the charts below it is close in many respects with the African traditional
dispute resolution methods. That it is not promoted as much as it ought to in Africa
can only be attributed to conservatism imbibed from the common law system.

Although African dispute resolution mechanisms cannot be applied to commercial

disputes except perhaps those dealing with community land, nevertheless, it offers an
insight into the options available outside the adjudicatory system offered by the
common law. By comparing it to arbitration and the parameters of litigation, lawyers,
particularly government lawyers ought to be able to advise their governments on the
need and basis for arbitration in commercial arrangements especially those of an
international nature.

DIFFERENCES IN ADR METHODS

WESTERN AFRICAN
1. CONFIDENTIAL OPEN TO ANYBODY
2. EXCLUSIVE TO DISPUTANTS COMMUNITY-FOCUSED OUTCOME
(MAY DISAGREE TO
MEDIATION)
3. NO POWER TO SANCTION COMMUNITY SANCTION AND
AGREEMENT MUNDANE POWERS
4. CONSENSUAL (INTER- CONSENSUAL INTER COMMUNITY
DISPUTANTS)
5. ADDRESSES EMOTIONS ADDRESSES SOCIAL NORMS
6. NON-SPIRITUAL ELEMENTS NON-SPIRITUAL INTEGRATION
(OATHS)
7. GENDER FREE GENDER SPECIFIC
8. FLEXIBLE CULTURE SPECIFIC
9. MEDIATION MED-ARBITRATION
10. PROFESSIONAL MEDIATORS ELDERS (IN ROLE PLAY)
11. WIN-WIN OUTCOME OFTEN RIGHT/WRONG VERDICT
12. ANYTIME CONVENIENT TIME
13. REMUNERATES MEDIATORS FREE
14. CAUCUS (MEDIATOR WITH CAUCUS (ELDERS ONLY)
ONE PARTY)
15. TRAINING EXPERIENTIAL LEARNING
16. SIGNED AGREEMENTS COMMUNITY MEMBERS ACT AS
WITNESSES TO DECISIONS
REACHED

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ADVANTAGES
WESTERN AFRICAN
1. SUITABLE IN MULTI ADDRESSES CULTURAL REALITY
CULTURAL SETTING
2. MEDIATOR DOES NOT ENHANCES RESPECT FOR ELDERS
INFLUENCE SOLUTION
3. CONSENSUAL PROBLEM DEMOCRATIC AND CONSENSUAL
SOLVING FREE PARTICIPATION
4. FLEXIBLE WIDE APPLICATION
5. EMOTIONAL HEALING RECONCILIATORY,
INTERPERSONAL AND
INTERCOMMUNITY
6. CONFIDENTIALITY OPENNESS EXPOSES OTHERS
TO SOCIAL JUSTICE
7. CHEAPER AND SAVES TIME CHEAPER, QUICKER AND
MORE THAN LITIGATION PEACE FOCUSED

DIS-ADVANTAGES
WESTERN AFRICAN
1. NOT COMMUNITY FOCUSED DIFFICULT IN MULTI CULTURAL
SETTINGS
2. PARTIES MUST AGREE BEFORE SOLUTION DOES NOT COME
MEDIATION/ARBITRATION FROM DISPUTANTS
3. NOT APPLICABLE TO APPLICABLE IN MOST TYPES OF
CRIMINAL CASES CASES
4. TOO INDIVIDUAL BASED WOMEN ARE EXCLUDED FROM
PROCESS
5. DIFFICULTY IN SANCTIONING -
AGREEMENT
Source:NIALS ADR Workshop Manual, March 1997

Undoubtedly, the desire of less developed countries to attract foreign investment can
only be assisted if they promote international arbitration because the balance comes
down in favour of international arbitration when a dispute between different nationals
arise. The starting point is to promote legislation which recognize arbitration as an
integral part of the legal system not as opposed to it. Secondly, countries which have
not adopted the widely accepted international instruments on the subject should do so.
These are the UNCITRAL Model Law, UNCITRAL Arbitration Rules and the 1958
New York Convention on the Enforcement of Foreign Arbitral Awards[10]. The
model law and rules may be modified for the domestic environment as necessary.
_____________________________________________________________________
[10] As at the end of 1999 the following African countries had ratified the New York
Convention Algeria, Benin, Botswana, Burkina Faso, Cameroon, Central African
Republic, Cote d’Ivoire, Djibouti, Egypt, Ghana, Guinea, Kenya, Lesotho,
Madagascar, Mali, Mauritius, Morocco, Mozambique, Niger, Nigeria, Senegal and
South Africa.

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Document Series No. 14: Alternative Dispute Resolution Methods
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_______________________________________________________________________________________________________

Finally, because the practice of arbitration has a long history in the developed
countries, it is common for most arbitration to take place in these countries with
experts drawn locally with all of the implications for bias which may exist.
Furthermore, the absence of suitable laws in developing countries fuelled this
practice. By updating their knowledge in the area of international commercial
arbitration through training seminars and workshops such as those of UNITAR and
UNDP and their regional partners, sub-Saharan African lawyers gain confidence to
practice in this area. They are also better able to promote regional institutions such as
the Cairo Regional Center for International Commercial Arbitration (CRCICA), the
Kuala Lumpur Regional Center for Arbitration (KLRCA), and the Lagos Regional
Center for International Commercial Arbitration (LRCICA) all devoted to promoting
the resolution of international commercial disputes in accordance with principles
agreed to under the international instruments mentioned above.

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Document Series No. 14: Alternative Dispute Resolution Methods
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PROFILE OF THE AUTHORS

Dr. Vinod K. AGARWAL has LL.M and Ph.D (Law) degrees from
the University of Bombay, India. He obtained a Certificate in
Comparative Law from the Institute of European Studies, University
of Brussels and has attended the External Session of the Hague
Academy of International Law. He has been a Visiting Fellow at the
Institute of Advanced Legal Studies, University of London.
Presently, he is the Secretary General of the International Centre for
Alternative Dispute Resolution in New Delhi after retiring from the
Government of India as Secretary, Ministry of Law, Justice and Company Affairs. He
has held various positions in the Government of India. He has been a member of
many delegations sponsored by the Government of India for negotiation, both in India
and abroad, of loan agreements entered into by public sector undertakings such as
Industrial Development Bank of India, Industrial Finance Corporation of India,
Railway Finance Corporation, Shipping Credit and Investment Corporation of India,
Oil and Natural Gas Commission, Air India, Indian Airlines, etc. with the
international financial and other institutions like Export-Import Bank of Japan,
Export-Import Bank of Korea, Export-Import Bank of America, Caisse Nationale de
Credit Agricole S.A. Paris, Bank Paribas, Kreditanstalt für Wiederaufbau, Chase
Manhattan Asia. As part his work with the Government of India, Dr. Agarwal was
responsible for examination, vetting and negotiation of international loan agreements
entered into by the Indian borrowers with lenders and other international financial
institutions. He was also responsible for attending negotiations on behalf of the
Government of India as well as advising the government on various legal issues and
the conduct of litigation and arbitration.
_____________________________________________________________________

Mr. Bolaji OWASANOYE has sixteen years of professional

experience as a legal practitioner, lecturer and researcher (from 1985
to 2000) as well as Undergraduate and Graduate teacher and
Tutorial Master. As a Research Fellow of the Nigerian Institute of
Advanced Legal Studies (NIALS) he has researched several aspects
of law and served as faculty member of the Institute’s Continuing
Legal Education Programmes on Legal and Legislative Drafting,
Negotiation of International Contracts, Legal Aspects of Debt and
Financial Management, Human Rights, and Judicial Education and Capacity Building
Programmes for Financial and Capital Market Operators. Since 1995, he is a UNICEF
consultant on the Implementation of the UN Convention on the Rights of the Child
involved in developing Children Legislation for Nigeria. Since 1995, he has also been
Head of the Department of Commercial and Property Law which is responsible for
packaging and implementing programmes on Economic and Regulation Laws in
Nigeria. He is an Associate Research Professor since 1998. Mr. Owasanoye has
published several articles and books relating to debt and financial management issues.

Copyright © 2001 United Nations Institute for Training and Research (UNITAR). All Rights Reserved. 26
Document Series No. 14: Alternative Dispute Resolution Methods
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_______________________________________________________________________________________________________

About UNITAR

UNITAR is an autonomous body within the United Nations which was established in
1965 to enhance the effectiveness of the UN through appropriate training and
research. UNITAR’s programmes in the legal aspects of debt, financial management
and negotiation are among a wide range of training activities in the field of social and
economic development and international affairs carried out, generally, at the request
of governments, multilateral organizations, and development cooperation agencies.
UNITAR also carries out results-oriented research, in particular research on and for
training, and develops pedagogical materials including distance learning training
packages.

UNITAR’s Training and Capacity Building Programmes in the Legal Aspects of

Debt, Financial Management and Negotiation are conducted for the benefit of over
35 partner countries mainly from sub-Saharan Africa and Vietnam. These
programmes aim at meeting the priority training needs of senior and middle-level
government officials through a wide range of seminars, workshops, and training of
trainers workshops. In parallel to training activities, the programme also assists in
strengthening local capacities of governmental and academic institutions through
distance learning training packages, up-to-date publications as well as networking
activities.

During 2001, the programme will focus on:

- Training government officials through short-duration regional seminars and
workshops on various aspects of debt, financial management and negotiation;
- Developing On-line Training Courses (in parallel with its traditional regional
training) with a view to tapping a wider audience and reducing cost of training per
participant;
- Strengthening existing ties with regional training centres and offering joint
courses with partners in the field;
- Creating awareness among senior government officials of the importance of the
legal aspects in the borrowing process and of putting together a multidisciplinary
team for loan management and public administration;
- Providing in-depth training and skills development for accountants, economists,
financial experts and lawyers coming from government ministries and
departments involved in negotiation, financial management and public
administration; and
- Developing and disseminating training packages and ‘best practice’ materials
directly related to the practicalities of legal aspects of debt and financial
management, with a view to strengthening existing human resources and
institutional capacities at the national level.

A description of UNITAR’s latest activities and training programmes in the area of

debt and financial management is available on its website at: www.unitar.org/dfm.
Street Address: Postal Address: Tel: +41 22 917 1234
Chemin des Anemones 11 -13 UNITAR Fax: +41 22 917 8047
CH-1219 Châtelaine Palais des Nations E-mail: [email protected]
GENEVA CH-1211 GENEVA 10 WebSite:http//:www.unitar.org/dfm
SWITZERLAND SWITZERLAND

Copyright © 2001 United Nations Institute for Training and Research (UNITAR). All Rights Reserved. 27