Interesting Trends That Are Being Noticed In Litigation & Dispute Resolution In Botswana

By Luke and Associates

Posted: 18th August 2014 09:27

Recent trends show a positive approach to arbitration as a preferred means of dispute resolution as opposed to litigation.  Firstly, there has been an increased use of arbitration in Botswana; this is mostly because of a rise in commercial disputes, international and regional transactions between state parties and/or business men.  Furthermore, disputes connected with the terms and conditions of employment are now being referred to arbitration.  Secondly, it is for these reasons that the Botswana courts have taken a positive approach to arbitration proceedings.
 
Increased Use Of Arbitration In Botswana
 
Commercial Disputes
 
Generally arbitration is preferable to litigation as a means of settling commercial disputes.  Even though there are exceptions in individual cases, arbitration has its advantages over litigation and these include informality, the choice of process and venue and finality in the award made by an arbitrator(1).
 
In Botswana arbitration is becoming a recognised means of resolving commercial disputes, an example could be where an amount of money is in dispute, or there is a dispute over the supply of goods and/or services.  In terms of money, it is believed that the largest dispute arbitrated in Botswana probably ran an amount of over US$ 30 million.  However, it is said that most disputes are generally in the range of US$ 200,000 to 500,000(2)
 
Trade Disputes
 
Apart from mediation, it is common cause that where there is deadlock in a trade dispute, parties normally agree to have the dispute settled by arbitration.  Once more, this is mainly because not only is the process private, it is faster and less costly.  Usually in such cases the arbitrator shall attempt to settle the referred dispute within 30 days.  The Trade Dispute Act(3) provides for arbitration process in trade disputes.  Part II of the Act includes, inter alia, the establishment and process of Arbitration. 
 
SADC
 
Another reason for this increase may also be the fact that Botswana hosts the headquarters of the SADC group of countries, which has led to an increase in the use of arbitration.  SADC has currently engaged upon an exercise to unify, as far as possible, the arbitral codes within the SADC countries, and to encourage arbitration as the most expeditious means of settling cross-border commercial disputes.
 
Botswana Courts Approach to Arbitration
 
According to Section 2 of the Arbitration Act:
 
‘Arbitration means any proceedings held pursuant to a submission; submission means a written agreement, wherever made, to submit present or future differences to arbitration, whether an arbitrator is named therein or not.’
 
Parties are mainly guided by the arbitration agreement or submissions into which they have entered.  Generally an arbitration clause is inserted into an agreement contract between the parties which specifies how the dispute will be resolved.
 
Botswana courts have adopted a positive approach towards the enforcement of arbitration agreements and it is expected that this trend will increase, more especially since there are waiting lists growing longer in our Courts.
 
Botswana has its arbitration legislation based primarily on the 1950 English Arbitration Act.  Even though this legislation allows for greater court interference in arbitration proceedings, the courts rarely do so once the matter has been referred to arbitration.  A review of the cases shows a general recognition by our courts in upholding arbitration proceedings.  The Botswana legal system acknowledges and appreciates arbitration as a good and valid alternative dispute resolution mechanism.
 
Therefore, the general rule is that an arbitrator’s award is final in nature.  Were the parties consent to submit a decision to a tribunal, they are bound by its decision and review can only lie if the fundamental principles of justice have been violated(4).

Section 20 of the Act, titled Enforcement of Award reads as follows;
 
‘An 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.’
 
Where there is an arbitration clause in a contract which is the subject of court proceedings, a party to the court proceedings may promptly raise the issue of an arbitration clause and the courts will stay proceedings and refer the parties to arbitration.

According to Section 6 (1) of the Act:
 
‘any party to a submission or any person claiming through or under such party, can apply to that court to stay the proceedings, and that court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission, and that the applicant was, at the time when the proceedings commenced, and still remains, ready and willing to do all things necessary for the proper conduct of the arbitration, may make an order staying the proceedings subject to such terms and conditions as may be just.’
 
Therefore, the court has discretion as to whether or not to stay proceedings, but it would generally do so once satisfied that a dispute fell within an ambit of arbitration, and a very strong case would have to be made before a court would exercise its discretion to preclude the operation of an arbitration agreement.
 
In the case of Bm Packaging(Pty) Ltd v PPC Botswana (Pty) Ltd(5) it was held that if either party required that a dispute should be referred to arbitration, the other party must accede to it in that the parties had agreed to do so in advance in terms of the contract.  A party to the agreement could not unilaterally elect to proceed to court for the purpose of resolving any dispute and thus deprive the other party of its contractual right to arbitration.
 
In the case of Three Partners Resort (Pty) Ltd v KPMG Botswana and African Sun Limited PPC(6), a matter in which we appeared for the respondents, the courts referred to the English courts of appeal decision of Mercury Communications Ltd v The Director General of Telecommunications 1994 (CLC 1125 CA) where Hoffmann LJ observed that:
 
‘...  in question in which the parties have entrusted the power of decision to a valuer or other decision maker, the courts will not interfere either before or after the decision.  This is because the courts’ views about the right answer to the question are irrelevant.  On the other hand the court will intervene if the decision maker has gone outside the limits of his decision-making authority.’
 
In terms of Section 13(2) of the Arbitration Act, an arbitral award can be reviewed only on the ground of procedural irregularities.  An arbitrator is considered to have misconducted the proceedings where he conducted them wrongfully, dishonestly or improperly; the arbitrator’s conduct should have disclosed either mala fides or bias on his part(7).
 
Section 13(2) titled The Court’s powers to remove an arbitrator or umpire, to set award aside and to award costs reads as follows:
 
‘Where an arbitrator or umpire has misconducted the proceedings, or an arbitration or award has been improperly procured, the Court may set the award aside, and may award costs against any such arbitrator or umpire personally.’
 
The words ‘misconduct of the proceedings’ covers both the behaviour of the arbitrator (when she/he misconducts himself) and/or the process (when he misconducts the proceedings).  The misconduct should be of such a nature that it undermines the entire process.  It should be shown to refer to some wrongful, dishonest and improper conduct on the part of the arbitrator(8).  In conclusion, even though Parties are free to choose the law governing the arbitration proceedings, but where they have not predetermined the law, the arbitral proceedings are governed by Arbitration Act.  The courts will generally uphold arbitration proceedings.
 

(1) C. S. Kian , Tay Resolving Disputes by Arbitration: What You Need to Know, NUS Press(1998) pp 18
 
(2) Tony Allen, Botswana Institute of Arbitrators
 
(3) http://www.natcomreport.com/botswana/livre/botswa_3/article26.html 3 Chapter: 48:02
 
(4) Reference made to African Tourism Group v Modibedi (2009)1 BLR 262 in Complant Botswana (Pty) Ltd V Anthony Michael Dawson Allen and Dawson and Fraser Mechanical Contractors (Pty) Ltd
 
(5) 1998 BLR 309 (HC)
(6) CVHGB-000257-13
(7) The decision of Champion Construction (Pty) Ltd v Allen and Another [2006] 2 B.L.R.  was applied in the case of Southern District Council v Vlug And Another 2010 3 BLR 315 HC
(8) St Joseph’s college v Dawson and another (Pty) ltd and others (2002) 2 BLR 419

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