Companies Tribunal’s free ADR services resolve disputes speedily

Company disputes are often complex. Litigation through the courts can prove extremely costly and, given the ever-burgeoning court rolls together with the litany of potential appeals, the delay in an ultimate resolution has the potential to create considerable uncertainty.

In short, when a company is involved in long-running litigation, its productivity can be disrupted significantly. Key personnel will spend substantial amounts of time dealing with lawyers and attending court, as well as possibly handling media-related enquiries.

A speedy and cost-effective alternative is for companies to use the free alternative dispute resolution (ADR) services of the Companies Tribunal, which is an agency of the department of trade, industry & competition, established in terms of the Companies Act.

ADR is the process of resolving disputes through mediation, conciliation and arbitration. It has a distinguished history in SA, to the extent that a significant amount of commercial disputes are litigated by way of arbitration as opposed to the courts. 

According to the Companies Act, any person — including a company — that has a complaint relating to company law that can be referred to the court, such as a dispute among directors or shareholders, may approach the Companies Tribunal.

Section S166 of the Companies Act has been amended to provide that only the Companies Tribunal can conduct ADR in respect of a dispute sourced in the act.

Benefits of ADR 

The benefits of using the Companies Tribunal’s ADR services are that they are free of charge, and ADR, by its nature, is far more expeditious compared to litigation conducted through the courts.

Furthermore, ADR is much quicker than waiting for a court date and is scheduled at the parties’ convenience. The Companies Tribunal has jurisdiction throughout the country, and proceedings are normally conducted at the nearest town to where both parties reside.

The speedy and cost-effective resolution of disputes via ADR enables companies to focus on their core business, save costs and reduce the risk associated with litigation.

The idea that the legislature had in mind when it created the Companies Tribunal was that a statutory body would be constituted to deal with disputes sourced in the Companies Act and that parties — particularly SMEs which are incorporated — would have access to ADR that did not incur the higher costs associated with private arbitration. That decisions, on an anonymous basis could be recorded, would only assist in jurisprudential development.

Mediation in respect of complex commercial disputes is regrettably an underutilised mechanism.

With mediation, the parties retain ultimate control of the process and its outcome as a Companies Tribunal mediator serves to help them find mutually acceptable solutions to the dispute. The mediator cannot impose the terms of the settlement; the parties must be able to find a mutually acceptable settlement. Once a settlement agreement is reached the Companies Tribunal member(s) assist the parties to draft the settlement agreement at no cost. This agreement may be submitted to court and made an order of court at the request of a party.

Mediation has a far better chance of success in the context of commercial complexity if the mediator has expertise in the relevant area, together with the necessary training to conduct mediation.

The need for universities to rethink their moot court programmes to incorporate ADR processes — including mediation — was recommended by academics and law practitioners at a recent seminar, hosted by the Companies Tribunal in partnership with UKZN’s School of Law.

These legal professionals strongly advised companies to use the Companies Tribunal’s ADR services as their primary mechanism for resolving civil matters.

Other recommendations included:

• The Companies Tribunal should encourage companies to voluntarily agree to arbitrate their disputes by incorporating it in the commercial agreements they conclude;
• The Companies Tribunal’s ADR process, just like the CCMA, must be become the default mechanism where company disputes are concerned; and
• The Legal Practice Council should partner with the Companies Tribunal in training legal professionals about ADR.

How to use the Companies Tribunal's free ADR services

Applications for ADR with the Companies Tribunal may be filed with the registrar via:

• Hand delivery: Companies Tribunal, dti Campus, Block E, 3rd Floor, 77 Meintjies Street, Sunnyside, Pretoria;
• Registered mail: Companies Tribunal, PO Box 27549, Sunnyside, Pretoria; or
• Email: registry@companiestribunal.org.za

For more information, visit the Companies Tribunal website.

This article was sponsored by the Companies Tribunal.