By David A. ASIEDU
The courtroom is packed. Two former business partners sit on opposite sides, stiff, not speaking to each other.
Their lawyers, hunched over thick case files, wait for their turn to argue – again. Four years had passed since the dispute began. Four years of mounting legal fees, procedural delays, and strained emotions.
What started as a straightforward contract disagreement has morphed into a war of attrition. The frustration in the room is palpable. The verdict, whenever it comes, won’t even be final. The losing party may appeal. Even twice. All at what cost?
Disputes have existed as long as business itself. They start as hairline fractures—small, almost imperceptible—but left unchecked, they can threaten the very foundation of an enterprise. When they surface, emotions flare, and the instinctive reaction is often to head straight to court. Yet, in a world where business moves fast and certainty is paramount, litigation is not always the wisest route.
Arbitration offers an alternative—a private process where parties entrust an impartial third party, the arbitrator, to decide their dispute. Think of it as hiring a private judge, one focused solely on your issue, without the baggage of a congested court docket. Arbitration brings distinct advantages that explain why it is fast becoming the preferred mechanism for resolving commercial disputes.
- Confidentiality: protecting secrets and reputations
Court cases are typically public. This means sensitive information (like trade secrets, financial records, internal communications) can easily become accessible to the public. Such exposure can harm competitive standing and damage reputations with clients, partners, and other stakeholders.
On the other hand, arbitration is private. Hearings are closed, and the decision (known as an arbitral award) remains confidential, unless both parties decide otherwise. This discretion allows businesses to protect their sensitive information while maintaining trust with those who matter. For companies in industries where secrecy is critical, such as technology or pharmaceuticals, this is a vital benefit.
- Speed: time is money
Litigation often drags on for years, slowed by procedural delays, court backlogs, and the potential for appeals. The result? Uncertainty, disruption to business, and mounting costs. Arbitration moves faster. Parties can agree on timelines and streamline the process, avoiding unnecessary delays.
Arbitrators, unburdened by crowded court dockets, focus solely on the case at hand (although they also have their day jobs). For businesses that need quick resolutions to maintain operations and avoid prolonged uncertainty, arbitration offers an effective solution.
- Expertise: decision-makers who understand your industry
In litigation, judges know the law. But it’s not unusual for them to lack familiarity with complex industries or specialised areas of business. This can lead to decisions that overlook key details or fail to address the nuances of the dispute. Yes, courts (and even parties) can obtain help from industry experts, but the ultimate decision is still taken by the judge. And they can still misunderstand the experts’ positions and make mistakes in the judgment.
Arbitration allows parties to choose arbitrators with the right expertise for the matter at hand. Whether the issue involves a construction contract, a patent dispute, or a finance agreement (for example), arbitrators bring relevant knowledge to the table. This ensures that decisions are informed by the realities of the specific industry, leading to outcomes that better reflect the challenges involved.
- Flexibility: breaking free from legal rigidities
Litigation follows strict rules of procedure and evidence, which can make the process rigid and time-consuming. For example, admissibility rules may exclude important evidence, or procedural requirements may delay hearings.
Arbitration is much more flexible. Parties can agree on the rules that govern the proceedings, from how evidence is presented to how hearings are conducted. This adaptability ensures that the process remains focused on resolving the dispute efficiently. It also allows businesses to shape the process to suit their needs, rather than being bound by the one-size-fits-all nature of court procedure.
- Global enforcement: reaching across borders
Winning a court judgment in one country does not guarantee that it can be enforced in another. Different countries have varying rules for recognising foreign judgments. This can create barriers for businesses with international interests.
Arbitration provides a clearer path. Thanks to the New York Convention (a treaty signed by more than 170 countries) arbitral awards are enforceable in multiple jurisdictions. This is a major advantage for businesses with cross-border operations, offering certainty and reach that litigation often cannot match.
- Preservation of relationships: repairing, not burning bridges
Disputes often arise between parties who have ongoing business relationships – such as joint venture partners, suppliers, or long-term clients. With its so-called adversarial nature, litigation tends to damage these relationships, making future collaboration nearly impossible. Arbitration is less confrontational.
The process encourages cooperation and dialogue, allowing parties to resolve their differences without escalating hostilities. This makes it easier for parties to preserve relationships and to continue working together after the dispute is resolved. For industries where partnerships are critical, this can be a decisive factor.
- Cost-effectiveness: value for money
Litigation can be expensive. Legal fees (in particular) can add up quickly in extended proceedings. Then there are court costs. The longer a case drags on, the more it costs. Then are appeals (possibly two rounds of appeals). More costs, more time wasted. Arbitration is not cheap, to be honest.
But it offers cost advantages in the long run. Faster resolutions mean fewer billable hours for lawyers. Flexible procedures reduce unnecessary expenses. And the ability to select knowledgeable arbitrators ensures that disputes are resolved efficiently, avoiding costly missteps or delays. For businesses, arbitration offers a cost-effective way to achieve fair outcomes without the financial strain of prolonged litigation.
- Finality: no endless appeals
Court cases don’t always end when the judge gives a decision. If one side isn’t happy, they can appeal. Then appeal again. And maybe even again. That means more waiting, more legal fees, and more time wasted before anything is actually settled.
Arbitration doesn’t work like that. Once the arbitrator makes a decision, it’s final. No second chances, no dragging things out for years. Unless there’s proof of something seriously wrong—fraud, bias, or a major legal mistake—the award stands. Businesses get a clear answer, wrap things up, and move forward instead of getting stuck in a legal merry-go-round.
Conclusion – A smarter way forward
Disputes happen. They’re part of doing business. But how you handle them – that’s where it counts. Arbitration gives you a way to sort things out fast, keep it private, and avoid the headache of a long courtroom battle (or a series of them, through appeals). Arbitration lets you focus on what really matters – keeping your business running smoothly. When you’re putting together a deal or starting a new partnership, take a moment to think about it.
Does arbitration belong in your contract? It’s worth considering. A simple clause could save you time, money, and stress if a dispute ever comes up. Planning ahead might not seem urgent now, but if things were ever to get tricky, you’d be glad you did.
>>>The writer is Partner-in-Charge, Commercial Dispute Resolution, at ENSafrica Ghana. He can be reached at [email protected]
