Arbitration as a means of dispute resolution is often overlooked in favour of litigation by parties to commercial disputes.
This is partly because it is a relatively new and not so well understood a concept in Rwanda in comparison to litigation which most Rwandan lawyers and lay people are familiar with.
Arbitration is a dispute resolution process where, by agreement, the disputing parties to a contract submit their dispute to one or more independent persons chosen by the party’s who examines all the evidence presented them and then resolves the issue by making a binding decision for the parties.
In Rwanda, arbitration in commercial disputes is recognized and provided for by the Law on Arbitration and Conciliation in Commercial Matters.
As per the aforementioned law, parties involved in commercial disputes are free to opt for arbitration as a means of settling disputes instead of referring them to courts of competent jurisdiction.
The law requires parties who intend to solve disputes through arbitration to stipulate this in the in written form.
This can be done in 2 ways; either, by including an arbitration clause in an ordinary contract or by writing and signing an agreement after a dispute has arisen, agreeing that the dispute should be resolved by arbitration (sometimes called a “submission agreement”).
Arbitration offers many advantages to disputing parties. Firstly, it is more flexible than litigation. Unlike litigation, the disputants can choose their own arbitrator(s) who they believe are impartial and knowledgeable on the matter in dispute irrespective of whether.
This makes arbitration especially useful in complex, technical commercial disputes where judges are not familiar with the subject matter e.g in construction contract dispute; the parties may choose to have an engineer or architect hear their dispute since he/she is more knowledgeable on construction matters than an ordinary commercial judge would be.
Secondly, under Rwandan arbitration law, the parties are also free to choose where the arbitration will take place, thus unlike litigation which must take place in court, with arbitration the parties are free to choose a venue convenient for them.
Also, parties to the arbitration are free to choose the language (s) to be used in the arbitral proceedings, unlike the Courts, where Kinyarwanda is the language of use. This is particularly important to foreign litigants in Rwanda most of whom have difficulty following court proceedings due to their limited knowledge of Kinyarwanda.
Moreover, the disputants are free to choose the rules of procedure to follow during the arbitration proceedings and this makes the process less formal and easier for parties to follow.
As a result of the above fact, arbitration is often cheaper because, disputants may not require the assistance of lawyers given that the language and rules of proceedings are less legalistic and thus easier for a lay man to understand.
Also, arbitration is private. Only parties to the dispute and their representatives can attend arbitration proceedings, unlike court which is open to the general public. This avoids the disclosure of trade secrets and potentially embarrassing information relating to the disputants.
On the flip side, arbitration can be counter productive. It may escalate a conflict, just as court-based adjudication is likely to do since its proceedings are adversarial and normally the decision of the arbiter favours one side.
In addition, the fact that arbitration is informal and less prone to make decisions based strictly on the law makes it potentially unjust as opposed to courts which apply carefully regulated procedures to ensure justice.
However, all things considered, arbitration is a very vital dispute resolution mechanism especially with regard to commercial disputes and should be promoted so as to play a complementary role to the courts in administering justice expediently in the field of commercial disputes.
Richard Balenzi is a lawyer