JUN 19 EDITIONLawTrending

ARBITRATE, DON’T LITIGATE: The Value of Alternative Dispute Resolution (ADR)

By: Uwem Essien

Dispute is an inevitable phenomenon in human interactions. They are bound to occur whether on inter- personal, family, matrimonial, commercial, socio-political or industrial. Most times contract agreements are faced with problems, and hardly any two parties totally agree on whatever binds them together. Whenever or however disputes occur, they must be resolved either by inter-party settlement or through an unbiased third party. This method is known as the Alternative Dispute Resolution (ADR). The ADR or Arbitration basically refers to the procedure for settling disputes without resorting to litigation in courts. It means the methods of resolving disputes outside of the traditional or formal judicial process or litigation. It is a collective term that parties can settle disputes, with or without the help of a third party.

One of the characteristics of ADR is that it is usually less formal, less expensive and less time-consuming than litigation in courts. One of the primary reasons parties prefer ADR proceedings is that, unlike adversarial litigation, ADR procedures are more often than not, collaborative and allow the parties to understand each other’s position. It also allows parties to come up with more flexible solutions that the court may not be legally allowed to impose. In Nigeria, the practice of ADR is on the increase as a result of some factors which among others include;

a. The increasing case-load or number of cases in traditional courts leading to protracted delays in the resolution of conflicts.
b. The perception that ADR is relatively affordable compared to the high cost of litigation and in obtaining quality litigation services in Nigeria.
c. Crises of confidence in the ability of the rank and file of Nigeria’s judiciary to deliver justice on the merits of particular cases and on time.
d. Preference for confidentiality especially among large corporations to maintain long standing relations and goodwill with their disputants.
e. An urgent need to provide another pathway to justice resolution that can act as a counterpoint to violent self-help methods in the guise of militancy, insurgency and extremism especially among the younger groups of the country.

Although there are different methods of settling disputes that exist in various jurisprudence such as litigation, mediation, conciliation, negotiation and arbitration, the purpose of this piece is to consider ‘Arbitration’ as a form of dispute settlement method; its merits and demerits over other forms of disputes settlement methods available.


ADR is as old as the history of human civilisation and dates back to the medieval time. It is said that of all mankind’s adventures in search of peace and justice, arbitration is amongst the earliest. Long before law was established, or courts were established man had resorted to arbitration for resolving discord and settling disputes. Although it is difficult to note the date of early decisions of arbitral bodies under customary and common law in Nigeria, the earliest case involving arbitration in English common law was found in the Year Book of 21 Edw. 111F. 15, 1340.

(Cited in Nigerian Law and Practice Journal, vol. 6, No. 2, October 2002) Before now, the courts were reluctant to recognise arbitration and enforcing arbitral awards. This attitude later gave way to the desire of persons, businessmen and merchants who preferred arbitration to litigation. The change of attitude was reinforced by the decision of the court in the case of Mitsubishi Motor Corporation vs. Soler Chrysler Plymouth Inc. (1985) US. 614, where Blackman J of the United States Supreme Court observed that, “we are well past the time which judicial suspicion of the desirability of arbitration and the competence of arbitration and competence of arbitral tribunal inhibited the development of arbitration as an alternative means of dispute resolution”.

In Nigeria, Oguntade J.C.A who delivered a dissenting judgement in the case of Okpuruwu v. Okpokam (1988) 4 NWLR (pt 90) 544 declared, “the regular courts in the early stages of arbitration were reluctant to accord recognition to the decisions or awards of arbitrations.

This attitude showed substantially from reasoning, that arbitration constitutes a rival body to the courts. But it was soon realized that arbitration may in fact prove the best way of settling some types of disputes. The attitude of the regular courts to arbitration therefore gradually changed. It was then realized and acknowledged that if parties to disputes voluntarily submit their disputes to a third party as arbitrator and agree to be bound by the decision of such arbitration then the court must clothe such decision with the garb of estoppels per rem judicatam”.

Today, thing have changed both in English and Common law countries and courts are playing facilitative roles in the arbitral process. In Nigeria for instance, provisions for arbitration now exist in the High Court Rules of States in Nigeria The courts also refer disputes to arbitrators for consideration, subject however to the agreement of the parties. To that extent, there is now a holy relationship between the courts and arbitration.

Types of Alternative Dispute Resolution:

a. Mediation: This is a collaborative process where a mediator works with parties to come to a mutually agreeable solution. In mediation, an impartial person called a ‘mediator’ helps the parties to reach a mutually acceptable resolution of the dispute. The mediator doesn’t decide the dispute but helps the parties to settle their dispute themselves. Mediation leaves the control of the outcome with the parties. Mediation may be particularly useful when parties have a relationship they want to preserve. So when family members, neighbour or business partners have a dispute, mediation maybe the appropriate ADR process to use. Mediation may not however be effective if one of the parties is unwillingly to corporate. It may not also be effective if one of the parties has an advantage in power over the other. It is not also a good choice if the parties have a history of abuse or victimisation.

b. Arbitration: Arbitration is the reference or subjection of a dispute for adjudication to a third party chosen by the parties in dispute’. According to Gilbert Law Dictionary, ‘It is the submission of a dispute between two parties to a third, impartial party, and known as arbitrator, with the agreement that the decision of the arbitrator will be binding and final. Arbitration is a quasi-judicial procedure that avoids the formality, delay and expense of normal trial1. In arbitration, a neutral person an ‘arbitrator’ hears argument and evidence from each side and then decides the outcome of the dispute. Arbitration is less formal than trial, and the rules of evidence are often relaxed.

Arbitration may be either ‘binding’ or ‘non-binding’. Binding arbitration means the parties waive their right to a trial and agree to accept the arbitrator’s decision. Non-binding arbitration means that the parties are free to request a trial if they do not accept the arbitrator’s decision.

c. Neutral Evaluation: In neutral evaluation, each party gets a chance to present his case to a neutral person called an ‘evaluator’. The evaluator, who is normally an expert in the subject matter, then gives an opinion on the strength and weakness of each party’s evidence and arguments and how the dispute could be resolved. Such opinion of the evaluator is not binding on the parties.

d. Settlement Conferences: Settlement conferences may be either mandatory or voluntary. In both types, the parties and their attorneys meet a judge or a neutral person called a ‘settlement officer’ to discuss possible settlement of their dispute. The judge or the ‘settlement officer’ does not make a decision in the case but assists the parties in evaluating the strength and weaknesses of the case and in negotiating a settlement.
Settlement conferences are appropriate in a case where settlement is an option. Mandatory settlement conferences are often held close to the date a case is set fortrial.

Merits of Arbitration:

1. In Arbitration, the parties have the liberty to choose the rules and procedure, e.g industry standards, domestic or foreign laws they want to adopt to settle their dispute. This is against the strict rules and procedures involved in litigation.
2. The parties have the choice of selecting their arbitrator or mediator that will hear their case based on expertise and experience in the substantive field. In litigation the parties to a cause have no choice but to go on with the judge they meet in court:.
3. Arbitration is cheaper and cost effective as it offers the benefit of getting the issue resolved quicker than would be in trial. Litigation costs money to secure the services of a lawyer to defend one in a case.
4. The Alternative Dispute Resolution (ADR) is faster in resolving issues compared to litigation that takes years to settle. In ADR the evidence can be submitted by documents rather than by calling witnesses. The ADR, can be scheduled by the parties and the panel list as soon as they are able to meet together.
5. There is confidentiality in ADR. The parties can agree that information disclosed during negotiations or arbitration hearing should be kept confidentially and should not be used even if it results in litigation. Litigation on the other hand, most trials are open to public domain and the press.
6. In ADR, there is full participation by parties as they could tell their side of the story and have control on the outcome than in normal trials where they speak through a lawyer and presided over by a judge.
7. There is greater co¬operation among parties in ADR, as parties work together with neutral arbitrator or mediator to resolve dispute than through a lawyer in courts.

Demerits of Arbitration:

Notwithstanding the benefits of the Alternative Dispute Resolution (ADR), there are a number of setbacks against the process. Among the mare;
a. Most times there is no guaranteed resolution of the dispute in ADR. It is possible that you could invest time and money in trying to resolve the dispute out-of-¬court and end up having to proceed to litigation.
b. There is the limitation that ADR can only handle disputes that involve money. It cannot issue orders compelling a party to a dispute to do or not to do.
c. The Arbitrator or mediator charges fee for his services which could be very high. Though, such amount is shared by the parties, in litigation. Apart from filling fees which are essentially minimal, the judge is not paid by the litigant:,
d. There is a danger of being caught up with the Statute of Limitation while pursuing ADR process. Once the Statute of Limitation expires, judicial remedy
may no longer be available,
e. Often times, Arbitration could be non – binding and the court may order for non – binding or Judicial Arbitration. This means that if a party is not satisfied with the decision of the arbitrator, they can file a request for trial with the court within a specified period after the arbitration award.

While the decision to use the ADR process depends on the circumstances of each case, parties are advised to weigh and analyse the situation properly before embarking on it, noting that ADR can only be used to settle civil and monetary issues and not criminal matters.

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