One evening in 1994, I sat in the living room with my siblings. We had just downed a heavy dish, and the kids we were, we launched into a very excitable state. Our parents had gone out so the house filled with much animated conversation and noise followed by a lot of laughter and mirth. As all this was going on, I noticed that my younger sister stuck her left index finger in her ear and began wiggling it. After a bit, her face wore a frustrated look from not getting enough satisfaction from using the finger and her eyes began darting round the room for a better scratching tool. Like me, my sister had developed a bad habit of sticking anything thin enough into the itching ear. Mum, had often scolded us for this habit and forced us to use a cotton bud to clean out the ear. But on rare occasions like this, when she was not around, we indulged in the sinful act with abandon. Moments later, my sister spotted a pencil lying on the floor behind the coffee table.
Unless somebody hypnotizes me and takes me through the sequence of events of that evening, I cannot remember what the noisy conversation was all about or even the dish we had just eaten. But, I can never forget the next few micro-seconds that followed as my sister reached for the pencil lurking behind the table. With left finger still in the ear, she bent and stretched her right hand to pick the tail of the pencil. As she pulled it up, it started becoming long and then its underside began turning to another colour and in a split second the pencil became squirmy. Suddenly, my sister screamed, “Snake!!!” How I jumped over the chair I was sitting on still eludes me to date. Everyone scampered for safety and the laughter and mirth gave way to the patter of feet and screams. Luckily, we got a neighbour to kill the unwanted thin and long guest and ever since I have stopped using pencils to scratch my ear. Nowadays, I only use keys, pen covers and, when Mum is around, the cotton bud too.
But, it is not only snakes disguising as pencils that can become long and nasty as they are drawn out; court cases can be too. A matter that begins as a simple irresolvable difference gets to the court and develops into a hydra-headed monster, wreaking so much havoc as it is drawn out. By the time the judge bangs his gavel for the last time on the case, relationships would have become ruined, hopes dashed, dreams put on hold and what’s more, tons of money spent on litigation costs and retaining lawyers. I am particularly pained about many known businesses that have folded up, workers laid off and assets degrading as I write (because they cannot even be sold) due to long-drawn-out court cases. The situation has been a worrisome one tucked somewhere in the back of my mind until I met a brilliant young lawyer who took his time to explain the alternatives there are.
A business doesn’t exist in a vacuum, therefore it is at risk of crossing paths with other entities that can either make it a plaintiff or a defendant. It will take an angel to run a business that will never face the hazard of suing or being sued. As humans, if someone does not trip us up, we will definitely trip up someone else. If it is not an employee, it could be a customer. If it’s not a supplier, it could be a distributor. There will be someone who just wants to make money off your business and others who just want to rubbish your business name. And worse still, there are those who inexplicably nurse a perennial grudge against you and must have an axe to grind. Good news is that most disputes can be resolved in a faster, neater and, in the long run, cheaper manner. The way to do this is to go the way of arbitration instead of litigation.
Arbitration is a procedure for resolving disputes outside the court. The two parties take their matter to an arbitrator(s) and assent to abide by their decisions. Whatever decision an arbitrator awards is as enforceable as any obtained in the court. That is not all, arbitral decisions are so powerfully binding because, in most cases, the parties only have limited rights of appeal. What this means is that unlike litigation where a case can sojourn in the lower court for years and then proceed on appeal at snail pace through the high court and appeal court, arbitration can begin and end in a matter of weeks; and it may not be appealable. I have a friend who filed an employer-employee related case in a court in September 2009; till date it has not come up for hearing. In fact, it appears that he is beginning to forget why he sued his former employers in the first place. All manner of lame justifications have been offered as reasons for adjournment and it seems that the defendants have not run out of excuses to delay, if not scuttle, the whole process.
When you know the latitude that arbitration offers you as an entrepreneur, litigation will never appeal to you again. First, you can choose the location where to resolve the dispute. Many settle for hotel rooms or the conference room in a hotel. It affords some privacy, especially if yours is a business that needs to avoid all forms of negative PR. A courtroom is a public building that anyone, as long as he pays his tax, can walk into and make your business his business. But arbitration keeps out the prying eye and gossipy ear. Closely related to this, is the fact that arbitral proceedings are confidential and may be made known to only those whom both parties decide to. This is unlike court proceedings, which are public records and can be easily obtained by anyone who applies for it and pays a tiny fee.
Another freedom you enjoy is that you can choose your arbitrator. Imagine having a judge that needs to consult a manual before he understands the technical jargon used by both parties. It is not so trust-inspiring, some might argue, but that may be the case when you go to court. Arbitration allows both parties to choose a ‘judge’ who is knowledgeable about the case at hand. When the lawyer friend told me that the parties can also choose the language of arbitration as well as the contract law to be used, I burst into laughter. It sounded incredible and too good to be true and maybe that’s why many don’t explore it. Let me bring it closer home; he said, “If both parties are Nigerian companies operating in Senegal, arbitration allows them to conduct the proceedings in English and use the Nigerian contract law, instead of French, obtainable in Senegalese courts, and the Senegalese contract law.” That is power in your hands, why would you want to yield it to another?
Finally, on cost, arbitration tends to be cheaper. Some will argue that you will have pay for the venue (unlike the courthouse that is a public building) and pay the arbitrator (unlike the trial judge who is a public servant) but in the long run arbitration is still cheaper. When you think about the cost of fulfilling some of the requirements of litigation, arbitration may be cheaper. In Nigerian high courts, for instance, every deponent needs to be physically present while signing the written statement on oath. Picture a case where a company sues Google in a Nigerian high court, the principal officer representing Google will need to fly down to Nigeria just to sign any sworn statements. Then he will need to come back when the court proceedings start and be there on all the numerous adjournments. Any business worth its salt not only understands the time value of money but also appreciates the monetary value of time and will not be interested in wasting it on frivolities.
So how do you opt for arbitration? Ensure that while preparing your contracts you include a binding arbitration clause; especially the contracts with individuals or organizations that you don’t want to waste a lifetime with in court. Many companies love to put this clause in fine print and it’s another reason you want to thoroughly read any contract before signing it. Arbitration is not without its drawbacks and they can still come to bite you on the butt. One is the limited rights of appeal, which may work against you in the case of decisions you believe need to be overturned. Another is that if your agreement doesn’t include the recovery of lawyers’ fees and other related costs, you will forfeit them even if you win the arbitration (this is a relief that you can expect to get in court if the judge finds for you). Also if you are the smaller party in the dispute, the more powerful firm can put pressure on the arbitration process which is more difficult in the case of litigation.