Settlement of Disputes - Arbitration
Untitled Document
The court can settle disputes, however because of lengthy delays and high costs involved in ordinary court, it was agreed to settle disputes by arbitration.
The advantages of arbitration in comparison to normal court proceedings:
- Arbitration is by far quicker in reaching a decision
- Arbitration is much cheaper than court proceedings
- Impartiality of arbitrators
- Consistent in the application of rules
The disadvantages of arbitration:
- Private hearings
- Result of the proceedings is confidential
The Sectional Titles Act provides that any dispute between the body corporate and an owner, or even between owners in relation to the Act, management rules or conduct rules would be resolved by arbitration.
Of course, some disputes cannot be taken to arbitration and would need to be dealt with in court e.g. non- payment of levies due to lack of funds, but a dispute between to owners where the trustees could mediate and resolve the problem need not be addressed by arbitration either.
For instance - Monica decided to run a business from her unit, and after countless unheeded warnings and letters, the trustees decided to take Monica to arbitration.
The trustees must give the other parties:
• A written notice to declare a dispute must be given to Monica, the other trustees and the managing agent.
• If the dispute is not resolved within 14 days of the notice, either of the parties can demand that the dispute may be referred to arbitration.
• The arbitrator must be independent, experienced and qualified. The parties have 3 days to agree on the appointment of an arbitrator once the notice of is served.
• If they cannot agree, the Registrar of Deeds, will appoint an arbitrator.
• The arbitrator has 7 days to set an appointment for the arbitration.
• The arbitrator may demand that the party requesting the arbitration (the trustees in this case) pay the costs as security, failing the payment of costs will result in the arbitration not proceeding.
• The arbitration proceedings must be held within 21 days of the appointment of an arbitrator or 21 days from the payment of costs.
• The award has to be made within 7 days from the completion of the arbitration, unless the parties extend this date by agreement or the court extends the time. Should the arbitration be of a complex nature the arbitrator may request an extension and the parties should then grant an extension.
• The arbitrator may determine the costs to be paid by anyone of the disputing parties or jointly depending on the outcome of the arbitration.
• The arbitrator's decision is final and binding. The affected party may apply for the decision to be made an order of court. Failing to abide will result in contempt of court.
However if Monica loses the arbitration and still refuses to stop running her business from her unit, the next step for the Trustees is to make it an order for the high court. This can prove to be a costly exercise, as the arbitration costs and high court expenses have to be paid by the Body Corporate in the interim.
It is always wiser to solve disputes amicably rather than to spend money and time with legal matters.
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