Introduction

The Small Arbitration Procedure was created by IG Bredenkamp SC specifically for matters between R 20 000.00 to R 350 000.00. As a commercial senior advocate, the importance of ensuring the longevity of SME’S has become a pivotal role in the protection of the economy and growth thereof. Commercial clients are denied access to a quick and efficient litigation process due to lacking infrastructure, poor administration, and poor judgments.

The Small Arbitration process was specifically designed to be as cost-effective and accessible as possible to clients. In a modern-day and age, if we don’t evolve, we die, change is inevitable.

Application

An agreement between you and your client needs to have a clause to refer the matter to arbitration – these clauses can be provided at no additional costs to you.

Any commercial matter where a dispute exists, and the quantum is between R 20 000.00 and R 350 000.00.

Matters between R 20 000.00 and R 100 000.00, no legal representatives are allowed – a panel of claimants will be created to appear.

The panel will comprise of credit controllers, claim administrators, third-party collectors, auditors.

Cross-border Arbitration in most East African countries is permitted.

Matters exceeding R 100 000.00, legal representation is allowed, but their fees are capped at 10% of the claim amount, including disbursements. A signed fee agreement needs to be handed over to the arbitrator before the process starts.

Arbitration clauses can be added in AOD’s, Settlement agreements, and the like.

Distribution of a divorced estate.

Exclusions

Matrimonial disputes.

Disputes in relation to children.

Interdicts.

Status of people – sequestrations- curator applications.

Procedure

1. Claimant pays the registration fee.
2. Claimant files his statement of claim.
3. The secretariat serves the statement of claim on Respondent – via email and courier.
4. 7 days later the respondent files a statement of defence – via email and courier.
5. 7 days later Claimant files a reply (if needed).
6. Claimant and Respondent pay Arbitrators fees shared 50/50.
7. Arbitrator may do the following –

• Request a pre-arbitration to limit disputes.
• Request a bundle be prepared by the parties respectively.
• Arrange a date for arbitration.
• Or decide the matter on the papers only.

8. 14 days after the hearing, the parties receive the award of the Arbitrator.

Role of the Arbitrator

The role of the arbitrator is an inquisitorial process. In simple terms, the arbitrator steps into the arena may ask questions may guide claimant and respondent and ensure all parties are treated fairly and without prejudice – keeping independence throughout the process. Evidence is presented by oral evidence and by documents. The arbitrator has the discretion to accept oral versions and documents and may disallow them as well.

Evidence is given under oath. The arbitrator will as far as possible apply the law of evidence as far as hearsay evidence is concerned regard will be given to section 3 of the Evidence amendment act.

Arbitration Act

The small Arbitration process roots are founded in terms of the Act. The Act provides that any award made could be made an order of court. In respect of cross-border arbitration, the new York convention allows all signatories to the convention to proceed with arbitration in a neutral district, and the award may be made an order of any relevant country which is a signatory thereto.

Comparison between litigation and arbitration

Arbitration:

• A filing fee of R 1000.00 is payable
• A pre-Arbitration fee of R 3000.00 to settle any disputes and exchange documents.
• An arbitrator fee of R 3 000.00 is payable.
• An additional R 750 is charged for the day.
• Writing the award R 500.00 is payable.

Litigation:

• Pleading Phase: – Summons and Particulars of claim – (10 hours).
• Plea and Counterclaim.
• Plea to the counterclaim.
• Reply.
• Discovery phase – Rule 23 notices; (10 hours).
• Plaintiff’s Discovery Affidavit.
• Defendants Rule 23 Notices.
• Defendants Discovery affidavit.
• Trial Phase – Pre-trial notices; (25 hours).
• Pre-trial conference.
• Pretrial minute.
• Application for a trial date.
• Allocation of trial.
• Indexes to pleadings.
• Indexes to Notices.
• Indexes to Discovered documents.
• Consultation with the client.
• Trial.
• Letters were written – 50.
• Telephone calls made and received – 50.

Comparison of Fees Arbitration vs Litigation

Arbitration – R 45 000.00. Total costs – defended – R 6 000.00. The turnaround time to award 60 days.

Litigation – R 45 000.00. Total costs – defended – on a fee structure of R 750.00 per hour estimated at R 41 250.00. The turnaround time to judgment 3 years.

This estimate is based on if both parties to the litigation never delay and file all processes on time and no interlocutory applications are heard- which is never the case in any litigation the writer has attended to in 10 years of practice. The costs of defended litigation realistically can be increased with 30% minimum. The writer confirms that the costs-to-cap ratio is almost equal, thus 100% making the process not financially feasible at all. As such, if your book consists of 40 of these matters @ R 45 000.00, your total exposure would be R 1 600 000.00 and your costs if all the matters are defended would be over a period of 3 years on the figures above R 1 856 250.00 – however, the comparison on Arbitration would be R 240 000.00.

Conclusion

THE SMALL ARBITRATION PROCESS IS:

• MORE EFFICIENT.
• MORE COST EFFECTIVE.
• SAME RESULTS.
• COSTING CAN BE DONE YEARLY OR ANNUALLY AND PROJECTIONS WILL BE SURE AND TRUE.

Join the revelation: “Destiny is not a matter of chance, but of choice. Not something to wish for, but to attain.” — William Jennings Bryan. “The dangers of life are infinite, and among them is safety.” — Goethe.