This article is only intended to be a very high-level overview of some of the differences between litigation and arbitration. It is not intended to cover all of the differences, nor is it intended to provide legal advice.
The fundamental difference between litigation and Arbitration is the forum.
Litigation is conducted in the Courts and is generally presided over by a Judge. In arbitration proceedings, the parties either agree on the person who will act as the Arbitrator or agree on a mechanism by which the Arbitrator will be appointed.
In many commercial agreements, the parties pre-agree to have any disputes which arise between them resolved by Arbitration, and there is a growing trend to include a referral to arbitration in commercial agreements, when these are drafted.
The reasons for parties often preferring to resolve disputes through arbitration are that:
- The parties are at liberty to choose their Arbitrator, which is especially advantageous when the dispute involves a question where an expert in a particular field might have better knowledge in that particular field than a judge;
- Arbitration proceedings are not open to the public and the details of the dispute, therefore, remain private;
- Arbitration proceedings are generally (but not always) completed faster than litigation proceedings;
- The parties are at liberty to choose whether the arbitration proceedings will be conducted formally, or informally, and are at liberty to choose the rules which will govern the proceedings.
Where formal arbitration proceedings are held, the procedure is very similar to that of litigation. The parties exchange Submissions (the Pleadings in litigation) which set out the nature of the claim or defence, as the case may be. Pre-arbitration meetings are held with the Arbitrator in order to regulate the proceedings and the issues to be decided (similar to Case Management Conferences in the High Court); and the dispute(s) to be decided by the Arbitrator may or may not require the leading of evidence through witnesses in the same manner as matters which go to litigation.
There are, however, some fundamental differences between litigation and arbitration. The most important of these are:
- The Arbitration Act requires that there must be a “submission to arbitration” which requires a written agreement between the parties to refer the dispute(s) to Arbitration;
- Generally, an Arbitration Award is final and binding on the parties, and is usually not subject to an Appeal;
- The parties are jointly and severally liable to pay the fees of the person appointed as the Arbitrator;
- The basis upon which the Courts can intervene in Arbitration proceedings, or an Arbitrator’s Award can be reviewed and set aside by the Courts, is very limited.
In the event that the parties pre-agree to arbitrate disputes, such as when they agree in a written contract to refer any and all disputes to Arbitration, then they are generally bound by that agreement and may not choose to litigate instead.
Section 6 of the Arbitration Act gives the High Court the power to stay any proceedings commenced in a court where the parties have agreed to refer any dispute to Arbitration. Any party wishing to stay the court proceedings must make application to the High Court for a stay of proceedings pending the outcome of the Arbitration.
Where the parties have agreed to refer disputes to arbitration, the court will usually stay any legal proceedings commenced in court and will generally require the matter to be determined by arbitration.
In the case of in BM Packaging (Pty) Limited v. PPC Botswana (Pty) Limited [1998] BLR 309 HC, the court held that once it is satisfied that a dispute falls within the ambit of an arbitration agreement, the court will require the dispute to be submitted to arbitration and will stay the action before the court, pending the delivery of the Award by the Arbitrator. The court stated that it would require a strong reason to refuse to exercise its discretion to enforce the operation of the arbitration agreement. This decision has been followed in numerous other Judgments of the High Court.
That having been said, in the case of Fencing Centre (Pty) Limited v. Murray & Roberts Construction [2002] (2) BLR 269 HC, the Court held that the existence, or otherwise, of an arbitration agreement between the parties (a submission to arbitration) is a matter of interpretation and is an issue solely for determination by the court.
The courts have the power to assist arbitral proceedings and have various powers to order interim measures, as provided by section 16 of the Arbitration Act. These powers include ordering security for costs, ordering document discovery, preserving the subject matter of the arbitration and issuing subpoenas.
Every so often, it happens that one party (having agreed to arbitrate a dispute) is dissatisfied with the result and because (generally) there is no right to appeal an Arbitrator’s Award, the dissatisfied party seeks the intervention of the Court to try and set aside the decision or Award.
There are very limited grounds on which an Arbitral Award can be reviewed and set aside in Botswana. Section 13 of the Arbitration Act limits the grounds on which an Arbitral Award will be set aside to the grounds of (i) where the Arbitrator has misconducted the proceedings; or (ii) where the Award has been improperly procured.
Arbitration Awards are recognised by the Botswana Courts and may be made an Order of a Court of competent jurisdiction and then enforced in the same way as a Judgment. Section 20 of the Arbitration Act provides that ‘[a]n award on a submission may, by leave of the Court or a judge thereof, be enforced in the same manner as a judgment or order to the same effect, and where leave is so given, judgment may be entered in terms of the award.’
In summary, unless the parties have pre-agreed to resolve disputes by Arbitration, the decision on whether to litigate or arbitrate is a matter of personal choice. Where, however, the subject matter of the dispute involves a highly technical or specialized field or where the parties require their dispute to be resolved quickly and informally, arbitration proceedings will generally be preferred.
