Business Dispute Resolution

Introduction A dispute means a disagreement In business law it is a disagreement concerning the rights and obligations of parties to a transaction This arises when a party fails to honour his obligations under a business relationship, i.e. buyer/seller; principal/agent; hirer/owner etc

Causative factors of business disputes Parties failure to clearly indicate their respective rights and duties Conditions over which parties may have no control and which prevents them from fulfilling their obligations Bad faith – a party agrees to perform certain acts and finding out he has made a bad deal may try to use clever means of not performing his duties Incompetence which may cause parties to perform in a shoddy manner

Regardless of how the dispute is created, the point of the law is that the failure of a party to fulfill his obligations, not having the right to do so, entitles the other party to take legal steps to deal with the breach. Not fulfilling obligations not only disappoints the party to whom the duty is owed but may also cause him to incur debts or suffer some injury because of the breach. As a way of mitigating/assuaging his legal pains/loss/disappointment, the law entitles him to take lawful steps against the defaulting party for the appropriate legal remedy. The role of the judiciary at this point is very important because of its key role in resolving legal disputes.

Litigation: Role of the Judiciary Judiciary comprises the various courts of law set up to resolve legal disputes – Supreme court – Appeal court – High court – Circuit court – District court Basic function of the courts is to interpret and apply the laws of the country to resolve disputes Attitude of the courts is that it is not their responsibility to make contracts or agreements for the parties. It is the responsibility of the parties themselves to decide and agree on terms they consider satisfactory.

Give effect to the intentions of the parties as indicated by their agreements Find out if the elements of a valid agreement exists in relation to the business relationship in which the dispute has arisen If elements exist, then they will go ahead to enforce the agreement Role therefore is to give effect to voluntary agreements of the parties to the relationship

Challenges Time consuming Costly process – Filing fees and other costs – Legal fees – hourly/sometimes a % of the value of the subject matter – Transportation – The longer a case takes to settle, the more expensive it becomes

Destroys existing relationships – Plaintiff is angry, defendant is embarrassed – Any existing cordial relationship is destroyed – This destroys any hope of future collaboration Ineffective remedies – Basic remedy available is one of damages. Court however does nothing to ensure the payment. Where the person is a man of straw, despite judgment victorious party has still lost.

Alternative Dispute Resolution (ADR) These are other means of resolving disputes other than litigation. ADR is appreciated as a quick, effective and painless means of resolving commercial disputes The main forms used in Ghana are: – Negotiation – Mediation – arbitration

Negotiation – Parties themselves settle without the involvement of a third party – To ensure success parties must be willing and ready to compromise – Act in good faith and be responsive to the legitimate interest, concerns and fears of each other – Atmosphere of openness to facilitate a frank discussion of the issues

Mediation – Parties settle disputes with the assistance of a third party – The mediator is just a facilitator and must be neutral – He must be capable of identifying the real interests and fears of the parties and get them to focus on those interests and fears – He cannot favour one party over another and his key role is to ensure that parties reach agreements in a voluntarily and informed manner, and not as a result of coercion or intimidation.

Arbitration – Parties refer their dispute to a third party called the arbitrator for resolution – Required by law to listen to the parties in a judicial manner and make a determination as to who is right or wrong – The decision is called the arbitration award – Binding on the parties and enforceable as a binding contract – Whereas the mediator plays a passive role, arbitrator plays an active role and actually decides who is right or wrong and parties are required to abide by it

Court connected ADR – Came about as a response to the need for a fast and efficient mechanism for adjudication of cases pending in the courts. – ADR is part of the adjudicating process of the Judicial Service of Ghana – Option available to parties in dispute who file cases in the courts or whose cases are already pending in court

Suitable cases are referred to ADR by the judge or Magistrate Parties can select their own mediator from a list of mediators assigned to the court A date is agreed for the mediation session after which an agreement signed by both parties is adopted by the Court. Judgment adopted by the court is enforceable as any other judgment of the court When a case is not resolved at mediation, it is referred back to court by the mediator for continued trial.

Advantages of ADR over litigation – Effective in reducing backlog of cases in the courts as well as enhance access to justice to the poor and vulnerable – Cheaper Court and legal fees are reduced, where option of negotiation is pursued, there is no need for legal representation – Faster and simpler – Effective in restoring strained relations between parties – Provides a win-win outcomes for both parties – Flexible

Legal basis for ADR – Section 72, 73 of Courts Act, 1993, (Act 459), mandates a court to promote reconciliation, encourage and facilitate the settlement of disputes in an amicable manner among litigants who have appeared before it. – Sarfo & others v. Adu & others: CA stated that there is no rule in Ghana or practice of the court that inhibits parties from settling their disputes out of court. The view of the court was that the law rather encourages settlement of disputes out of court irrespective of the stage of proceedings. – Labour Act, 2003, (Act 651), mandates that industrial disputes be resolved through negotiation, mediation and arbitration

Arbitration Act, 1961, (Act 38) Section 29 of Ghana Investment Promotion Centre Act, 1994, (Act 478) Section 32 of Free Zone Act, 1995, (Act 504) Chief Justice established the commercial division of the High Court for the settlement of disputes in an efficient, effective and speedy way. Use of ADR is compulsory in the commercial courts – Started operating in 2005 – Commercial cases including banking and finance issues, debt etc.

Its jurisdiction is not restricted territorially, i.e. cases from all over Ghana can be brought before it. Mediation is handled by judges who are trained mediators.

Further reading Chapter 12 and 13 of text books