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Mediation lets parties solve their own disputes

KK Bose draws up a comparison between mediation and arbitration

KK Sarachandra Bose.
KK Sarachandra Bose.

KK Bose draws up a comparison between mediation and arbitration and explains why mediation is quickly becoming the popular choice to solve disputes.

The UAE construction industry should use mediation, instead of arbitration or litigation, to resolve the technical disputes that abound in the industry.

Though the principle of arbitration, as opposed to litigation, has been generally accepted in the region and arbitration centers have been set up, a major stumbling block is that arbitration tends to replicate litigation procedures.

Arbitration often leads to a waste of time, and difficulties for the contestants, which arbitration was supposed to eliminate in the first place.

Unlike in the common law countries, arbitration here is very expensive and time consuming.

Instead of paying a court fee, which is US $8000 (AED30,000) on the higher side, a litigant ends up paying arbitration fees, which are huge in some cases, coupled with a court fee to ratify the arbitration award.

And they end up going through the same procedures as they would have in court litigation. There are many chances of an arbitration award getting nullified by a court of law on various technical grounds.

I am of the view that the legal profession is “selling” arbitration as an inexpensive and quick method of dispute resolution. But once arbitration starts, the disputing parties often find that they are going through the same procedures they would, were they to take their case to court.

Normally, in litigation the judge gives judgment shortly after the conclusion of the case, whereas in arbitration, often the arbitrator gives an award many weeks or even months after the end of the hearing. There are instances that the arbitration awards are nullified by the courts due to delay caused by the arbitrators in
delivering awards.

In litigation, if an expert body is to be consulted, the decision is taken fast and the matter referred to the expert as soon as possible. But in arbitration, the decision to refer to an expert body is often arrived at, after time consuming deliberations between the arbitrators.

Most importantly, however, arbitrators are constrained by court procedures. Most of the disputes in the construction industry concern technical aspects, such as ‘reasons for delay’, ‘quality of materials supplied’ or ‘quality of work done’.

Such cases do not require the detailed treatment of court proceedings or arbitration.

These can be resolved on an ad hoc basis bypassing all matters irrelevant to the jurisdiction of a particular court, examining validity of trade licenses, asking for permission to sue a government body or department.

Mediation can lead to a mini-trial and it gives an opportunity for the parties to exchange information as a prelude to settlement negotiation.

Each party’s lawyer makes the presentation and thereafter settlement talks commence. If the parties cannot agree among themselves, then the neutral adviser may be called upon to give a non-binding opinion.

It is important to recognise that mediation is not a legal process – the emphasis is put on empowering the parties to settle their own disputes themselves.

Though mediation is not a legal process, it is finding increasing acceptance in the west, as well as in India because most technical disputes are founded on an inadequate understanding between the two disputants, and there is rarely a menacing intent on either side.

Mediation will benefit the economy as technical disputes, which hold up payments, will be resolved expeditiously.

Who is KK Sarachandra Bose?
KK Sarachandra Bose is a partner/corporate, commercial and contract lawyer at Dar Al Adalah Advocates & Legal Consultants, Dubai. He has been in practice for over 30 years and advises several banks and corporate bodies. He is also a member of the International Bar Association and a visiting professor in International Business Law. He obtained his law degree from RL Law College, Belgaun, Karnataka, India.

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