ARBITRATION REFERRED TO AS AN ADR: A CLASSIFICATION ERROR 2

By Olayemi Japheth

Introduction
Arbitration as a means of dispute resolution was conceived as an alternative to the adjudication of disputes by the courts of law. It was intended to be a cheap and expeditious mode of dispute resolution. Its purpose was to lessen the burden on the judiciary by allowing the parties’ peers and experts to resolve the dispute between them. Unfortunately, most experiences from various jurisdictions have shown that arbitration has virtually become a pre-litigation procedure as eventually every award lands up being challenged in court. The proceedings which were supposed to be alternate, cheap and expeditious are neither cheap nor expeditious or alternate. Arbitration is now maligned, dreaded and hated by the litigants who are forced into it. Reasons for the same are manifold and everyone concerned with the system is to blame.

Definition
Arbitration is a non-judicial process of settling disputes with the help of an independent agent, known as an arbitrator, who gives a binding judgment and renders arbitral award. Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the courts. The dispute will be decided by one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), which renders the "arbitral award". Arbitration is a flexible and consensual means of resolving commercial disputes through a binding and enforceable process. From the definitions above, it can be deduced that Arbitration can be defined as an Alternative Dispute Resolution (ADR) method employed instead of Litigation to settle disputes between two parties with the aid of an arbitrator. It is the process of referring a dispute to an impartial intermediary chosen by the parties who agree in advance to abide by the arbitrator’s award that is issued after hearing at which all parties have the opportunity to be heard. The decision in arbitration is binding; however, it can be appealed by either of the parties. Like other alternative dispute resolution techniques, arbitration is believed to save time, costs significantly less money and flexible.

Types of Arbitration
The following are types of arbitral proceedings:
-Ad hoc arbitration
-Institutional arbitration
-Fast track arbitration
-Statutory arbitration

Ad hoc Arbitration
Where the parties choose to administer the arbitration proceedings they have subjected themselves to, entirely by themselves, such proceedings known as Ad hoc arbitration proceedings. Ad hoc arbitration” is arbitration agreed to and arranged by the parties themselves without recourse to an Institution. The proceedings are conducted by the arbitrator(s) as per the agreement between the 'parties' or with concurrence of the parties. It can be domestic, international or foreign arbitration. The distinction between ad hoc arbitration proceedings and institutional arbitration proceedings has been described as the distinction between a tailor-made suit and a suit that is store bought .  Ad hoc  arbitration proceedings allow the parties to tailor the procedure to be adopted before the arbitration tribunal to suit their specific needs and requirements whereas a party would be required to follow the rules of procedure laid down by the institution to which they refer the settlement of the dispute if they opt for institutional arbitration. The advantage of ad hoc arbitration is that the parties are free to determine any rules of procedure that they see fit as long as these rules conform to the fundamental principles of law. This allows the parties to adopt the procedure which will ensure that the peculiarities of their disputes are taken into consideration.

Institutional Arbitration
Institutional arbitration” is arbitration conducted under the Rules laid down by an established arbitral organization. Such Rules are meant to supplement provisions of the Arbitration and Conciliation Act in matters of procedure and other matters the Act permits. The rules may provide for domestic arbitration or for international arbitration or for both and the disputes dealt with may be either general in character or specific. There are certain institutions set up with the express purpose of administering arbitration proceedings. Such institutions generally have an established set of rules of procedure, which shall govern the arbitration proceedings being administered by them.it is common practice for parties to an arbitration agreement to refer to such institutions in terms of their agreement. Some of the well-known arbitration institutions at the international level are: the Court of Arbitration of the International Chamber of Commerce, the London Court of International Arbitration, the Permanent Court of Arbitration, the International Centre for the Settlement of Investment Disputes, and the American Arbitration Association. The parties may state in their arbitration clause that any and all disputes arising between the parties shall be referred for resolution by arbitration at such an institution.

Fast-track Arbitration
Fast-track arbitration proceedings are those where the parties decide that no oral hearings will be held, and the arbitral tribunal would be required to make its decision based entirely on the documentary evidence placed before it. A major advantage of fast-track arbitral proceeding is that it would prevent the parties from weighing down the arbitral tribunal with unnecessary waste of time and admission of irrelevant documentary evidence.

Statutory Arbitration
Certain laws passed by government provide for the arbitration of disputes that arise out of or in respect to the substantive law. The provisions in the statute itself which requires parties to settle their dispute by arbitration may be deemed to be an arbitration agreement.

ARBITRATION REFERRED TO AS AN ADR: A CLASSIFICATION ERROR?
Arbitration is the process by which parties by an agreement between them, choose an alternative forum i.e. a forum other than the court of law, to resolve any dispute between them.
Arbitration is not an ‘out of court settlement’ of a dispute per se, in the sense that the parties do not ‘settle’ the dispute by themselves. They appoint a tribunal consisting of members known as arbitrators to decide upon the dispute. As opposed to general knowledge that arbitration involves more control by the parties, more informality, more speed, more efficiency, and in some cases more self-fulfillment, binding arbitration today is increasingly controlled by attorneys who treat it like litigation, conducting discovery and filing motions with the arbitrators and indeed filing motions to compel arbitration or for enforcement in court. This does not seem like an alternative to the traditional way of settling disputes which is through litigation because the system employed in carrying out arbitration is closely similar to the litigation system/ court system. This is a complex system which bores dispute resolution, one of many reasons for the introduction of Alternative Dispute Resolution methods, an ailment which arbitration has not been able to cure.
Some delays are peculiar to arbitration. For example, there are those than can occur at the beginning of the proceeding as a result of the procedure for appointing the tribunal, particular if challenges are made to the arbitration agreement or to an arbitrator. Also, due to the complicated system of arbitration resulting from involvement of attorneys in the process, arbitration has become a very long/time consuming and tedious form of dispute resolution. According to a study, arbitral process takes an average of 5-12 months. This is a direct opposite of ADR which saves time and money.
Conclusively, the employment of the service of attorneys has made arbitration a very expensive option due to less number of experts and high charge by the few available. ADR should be a cost effective option to parties who wish to resolve their dispute through such means. This defeats the ‘cheap’ characteristic of ADR and goes on to disprove Arbitration as a viable alternate method of dispute resolution.

Olayemi Japheth is a 300L Student of the Faculty of Law, Lagos State University, he has remained a very active member of the Chambers since his admission into the faculty.