SCHOOL OF LAW

PIONNER CAMPUS

MODULE L 420

ALTERNATIVE DISPUTE RESOULTION (ADR)

COURSE AIMS

This course examines the law on various alternative dispute resolutions with
emphasis placed on mediation, negotiation and arbitration. It also discusses their
differences and how they can be applied in a dispute.

COURSE OBJECTIVES

On completing this course, a student should:

 Be acquainted with the objectives and principles of alternative dispute

resolutions as they exist internationally and more importantly in Zambia.

 Be able to nurture and develop their negotiation skills through practical

demonstration in real life situations.

 Be able to know when to and when not to use certain strategies in negotiations.

 Be able to understand and apply the law as it exists in arbitration.

COURSE OUTLINE

UNIT 1: INTRODUCTION TO ADR

- Overview and definition

- ADR v Litigation (pros and cons)
- Types of ADR: mediations, negotiation and mediation.

UNIT 2: NEGOTIATION

- Introduction
- Theories, strategies, style
- Principled and positional bargaining
 UNIT 3: MEDIATION

- Introduction
- Role of mediator
- Mediation in Zambia

UNIT 4: ARBITRATION

- Introduction and definition

- Law binding arbitration: Arbitration Act 2000
- Forum: choice of law
- Enforcement of arbitral award: NY Convention

METHOD OF TEACHING

Sixteen hours split into eight hours per session (two sessions).

COURSE ASSESSMENT

Continuous Assessment: 50%

(Two assignments of 15 marks each; 5 % each for 2 surprise tests; and 5% class
attendance per session)

Final Examination: 50%

UNIT 1 Alternative Dispute Resolution (ADR)

The term "alternative dispute resolution" or "ADR" is often used to describe a wide
variety of dispute resolution mechanisms that are short of, or alternative to, full-scale
court processes. It is an effort to arrive at mutually acceptable decisions and an
alternative to adversarial processes such as litigation or administrative processes that
result in "win/lose" outcomes.

The term ADR can refer to everything from facilitated settlement negotiations in
which disputants are encouraged to negotiate directly with each other prior to some
other legal process, to arbitration systems or mini-trials that look and feel very much
like a courtroom process. Processes designed to manage community tension or
facilitate community development issues can also be included within the rubric of
ADR. ADR systems may be generally categorized as negotiation,
conciliation/mediation, or arbitration systems.

Negotiation systems create a structure to encourage and facilitate direct negotiation

between parties to a dispute, without the intervention of a third party. Mediation and
conciliation systems are very similar in that they interject a third party between
parties to the dispute, either to mediate a specific dispute or to reconcile their
relationship. Mediators and conciliators may simply facilitate communication, or may
help direct and structure a settlement, but they do not have the authority to decide
or rule on a settlement. Arbitration systems authorize a third party to decide how a
dispute should be resolved.

Negotiation, mediation, and conciliation are non-binding and depend on the

willingness of the parties to reach a voluntary agreement. On the other hand,
Arbitration may be either binding or non-binding. Binding arbitration produces a
third party decision that parties to the disputes must follow even if they disagree
with the result, much like a judicial decision. Non-binding arbitration produces a
third party decision that the parties may reject.
1.1 Elements essential for successful ADR

There are four elements essential to the successful use of any ADR method. These
are:

1) existence of an issue in controversy;

2) voluntary agreement by both parties to participate in the ADR process;

3) voluntary agreement by both parties on the type of ADR method to be used

in lieu of formal litigation;

4) participation in the process by officials of both parties who have authority to

resolve the issue in controversy.

1.2 Characteristics of ADR methods

Although the characteristics of negotiated settlement, conciliation, mediation,

arbitration, and other forms of community justice vary, all share a few common
elements of distinction from the formal judicial structure. These elements permit
them to address development objectives in a manner different from judicial systems.
They include the following:

1) Informality

ADR processes are less formal than judicial processes. In most cases, the rules of
procedure are flexible, without formal pleadings, extensive written documentation, or
rules of evidence. This informality is appealing and important for increasing access to
dispute resolution for parts of the population who may be intimidated by or unable
to participate in more formal systems. It is also important for reducing the delay and
cost of dispute resolution. Most systems operate without formal representation.
2) Application of Equity

ADR processes are instruments for the application of equity rather than the rule of
law. Each case is decided by a neutral third party, or negotiated between parties to
the dispute themselves, based on principles and terms that seem equitable in the
particular case, rather than on uniformly applied legal standards. ADR systems
cannot be expected to establish legal precedent or implement changes in legal and
social norms. Thus, ADR systems tend to achieve efficient settlements at the expense
of consistent and uniform justice.

3) Direct Participation and Communication between parties

ADR systems involve more direct participation by parties to the dispute in the
process and in designing settlements, more direct dialogue and opportunity for
reconciliation between them, potentially higher levels of confidentiality since public
records are not typically kept, more flexibility in designing creative settlements, less
power to subpoena information, and less direct power of enforcement.

1.3 Benefits of using ADR

The benefits of ADR include the following:

 Voluntary nature of processes:

All ADR methods are voluntary in nature i.e. No one is coerced into using ADR
procedures. Parties choose to use ADR procedures because they believe that
ADR holds the potential for better settlements than those obtained through
litigation;

 Expedited procedures:

All ADR procedures are less formal. This prevents unnecessary delays and
expedites the resolution process;
 Active participation of the parties:

Parties to the dispute actively participate in the;

 Confidential nature of Processes:

Parties can participate in ADR procedures, explore potential settlement

options, and still protect their right to present their best case in court at a
later date without fear that data divulged in the procedure will be used
against them;

 Greater Flexibility in the Terms of Settlement:

ADR procedures provide an opportunity for parties to craft settlements that

can better meet their combined interests than would an imposed settlement
by a third party. This is because ADR enables parties to avoid the trap of
deciding who is right or who is wrong, and to focus on the development of
workable and acceptable solutions. ADR procedures also provide greater
flexibility in the parameters of the issues under discussion and the scope of
possible settlements. Participants can "expand the pie" by developing
settlements that address the underlying causes of the dispute, rather than be
constrained by a judicial procedure that is limited to making judgments based
on narrow points of law;

 Savings in Time:

With the significant delays in obtaining court dates, ADR procedures offer
expeditious opportunities to resolve disputes without having to spend years
in litigation. In many cases, where time is money and where delayed
settlements are extremely costly, a resolution developed through the use of
an ADR procedure may be the best alternative for a timely resolution.
 Cost Savings:

ADR procedures are generally less expensive than litigation. Expenses can be
lowered by limiting the costs of discovery, speeding up the time between
filing and settlement, and avoiding delay costs. These front-end expenses are
often the most costly components of legal costs. These savings are in turn
passed on to the taxpayer. Relieving the burden on the courts caused by
unnecessary or inappropriate lawsuits can help save valuable public resources.
UNIT 2 MEDIATION

Mediation, as used in law, is a form of alternative dispute resolution (ADR), a way of

resolving disputes between two or more parties. A third party, the mediator assists
the parties to negotiate their own settlement (facilitative mediation). In some cases,
mediators may express a view on what might be a fair or reasonable settlement,
generally where all the parties agree that the mediator may do so (evaluative
mediation).

Although the mediator makes recommendations about the process, the parties
themselves make the important decisions about the problem-solving process and
the outcome. A successful mediation can give the parties the confidence in
themselves, each other, and consensual processes, to negotiate without a third party
in the future.

2.1 CHARACTERISTICS OF MEDIATION

The main characteristic features of mediation include the following:

(i) The aim of mediation is to reach at a decision that is ‘mutually beneficial’ to

all the parties to the dispute. It is not a ‘winner takes all situation’;

(ii) Mediation is ‘consensual’ in nature: parties can only go to mediation if they

have all agreed that the dispute be referred to mediation;

(iii) In mediation proceedings, parties themselves make the decision, not the
mediator;

(iv) The mediator is appointed by the parties to the dispute and his/her role is not
to make the decision for the parties but to assist parties reach at a decision;
(v) A decision arising out of mediation proceedings is not binding and parties are
at liberty to abandon the proceedings at any stage before the decision is
made;

(vi) The venue, time and language for mediation proceedings are all agreed by
the parties themselves;

(vii) Mediation proceedings are confidential in nature and may only be disclosed
with the express permission of all the parties concerned; and

(viii) Mediation proceedings are informal in nature when compared to litigation.

2.2 MEDIATION PROCESS IN ZAMBIA

Mediation in Zambia is court annexed. This entails that for mediation to take place,
there must already have been court process. This is provided for under the High
Court and Industrial Relations Act.

1. The High Court Act

Order 31 rule 4 of High Court Act provides that: “every action may, upon being set
down for trial, be referred by the trial judge for mediation and where the mediation
fails the trial judge shall summon the parties to fix a hearing date.”

Order XXXI.5 mandates the court to keep list of mediators. These are persons who
have been trained as mediators. The court will choose such a person from the list.

Order XXXI.6 directs the mediator to collect record of the matter that has been
referred to mediation by the court. Thereafter, the mediator by virtue of Order
XXXI.7, the mediator must contacts the parties to the dispute and set a time, place
and date for the hearing of the matter. The parties will then appear before the
mediator either by themselves or their representatives- who could also be lawyers
(Order XXXI.8). Upon appearing for mediation, the mediator will read out a
statement of understanding to the parties explaining his role. If parties agree, he will
then proceed to ask them to sign (Order XXXI.9). The statement of understanding is
in form 5 and it states that: “I will serve as a neutral party to help you resolve your
dispute. I will not act as an advocate for any party. This mediation is strictly
confidential. No party shall be bound by anything said or done in mediation unless
a settlement is reached. If a settlement is reached, the agreement shall be reduced
to writing and, when signed, shall be binding upon all parties to the agreement.
Each party agrees not to request that, I the mediator testify against the other party,
nor ask me or the other party to testify regarding statements made in the
mediation.” He will then open the case by asking the parties to state what their
claims are. The parties will continue to deliberate while the mediator facilitates.

It is noteworthy that mediation is a confidential process and hence a mediator is not

to keep any record. If the mediator made any notes or documents during the
process, such must be destroyed in the event that the mediation failed (Order
XXXI.10). If ultimately parties fail to agree, the mediator will return the record to the
Court upon which the matter shall be put back to the active cause list after which a
date of hearing shall be fixed (Order XXXI.11).

If there is an agreement, the mediator will return the record and it will be registered
and will have the same effect as a judgment (Order XXXI.12). There is paid to a
mediator a fee at every sitting. The mediator is given power to bar a party who has
neglected or failed to pay the mediation fee and can take legal action to claim his
fee (Order XXXI.13).

Unlike the common law position that alternative dispute resolutions (ADR) are non-
binding, mediation is binding if there is an agreement (Order XXXI.14). Hence, there
is no appeal against a mediated settlement.

2. Industrial Relations Court

Mediation under the Industrial Relations Court is provided for under S.I no. 26 of
Industrial Relations (Arbitration and Mediation) Rules 2002. It provides in section 12
(1) that, the Court or Judge may refer any action to mediation at any stage of
proceedings except where: (a) the case involves an injunction; or (b) the Court or
Judge considers a case unsuitable for reference to mediation.

Section 13 (1) provides, a mediation officer shall keep a list of mediators who have
been trained and certified to act in this capacity. Section 14 (1) states that, where a
mediator is appointed in respect of a matter, the mediation officer shall handover
the record of the suit, action or legal proceedings.

2.1 Procedure during mediation

The mediator soon after collecting record contact parties to the action state time,
date and place of the mediation (s.15). A party to mediation shall appear in person
and where represented, with their legal practitioner (s. 16). At the commencement of
mediation, the mediator shall read out to the parties, and their advocates the
statement of understanding which the mediator shall request the parties to sign (s.
17). The mediator shall not keep a record of the mediation (s. 18). Where the
mediator prepares any document during proceedings and the mediation fails, the
mediator shall destroy such document in the presence of both parties at the end of
the mediation (s. 18 (2)). Any statement made during mediation is confidential and
privileged and may not be used as evidence in any matter (s. 19). A mediator may
not communicate with any trial Judge in relation to any matter which is subject of
mediation (s. 20).

Where mediation fails, the mediator shall within ten days after the close of mediation
proceedings return the record (s. 21). Where the Court or Judge receives a report, the
Court or a Judge shall, within fourteen days of such receipt, summon the parties for
purposes of fixing the date of hearing for the pending action or application (s. 21
(3)). However, where mediation ends in a settlement, it shall be registered and sealed
by the Court (s. 22 (2)). A mediation settlement sealed and registered by the Court
shall have the force and effect of a judgment, order or any decision of the Court or
Judge and shall be enforced in the like manner (s. 22 (3)). There shall be no appeal
against a mediated settlement (s. 27).
2.2 Powers of the mediator

A mediator may postpone or adjourn a mediation hearing at any stage if

considerations of justice so demand or if that postponement or adjournment is likely
to facilitate a possible settlement (s. 26). Such postponement or adjournment of a
matter under this rule shall be granted by a mediator only within the ninety days
period- s. 26 (2). Where on the request of the mediator after expiry of the ninety day
period the Court or a judge is of opinion that the chances of settlement are still
feasible, the Court or a Judge may grant a further period as may be thought
reasonable by the mediator- s. 26 (3). To decipher section 26, one might be inclined
to conclude that mediation is not supposed to take more than 90 days.

The mediator has power to collect a mediation fee paid to the mediator in equal
proportions by the parties to the suit a mediation fee at each sitting (s. 28). Where a
party fails to pay a mediation fee: (a) that party shall be barred from taking any
further proceedings in the matter until payment of that fee; or (b) and judgment has
been entered against that party, execution will be levied against that party by the
Court to recover the fee on behalf of the mediator.
UNIT 3 NEGOTIATION

Negotiation is defined as a formal discussion between parties who are trying to

resolve their dispute without involving third party. In a negotiation, the parties must:
identify issues; disclose their needs and interest; identify possible settlement options;
and negotiate terms and conditions. It must be stated that negotiation is a fact of
life- everyone negotiates something every day. Thus, any method of negotiation may
be judged by three criteria: (a) should produce wise agreement if agreement is
possible; (b) should be efficient; and (c) should improve or at least not damage the
relationship between the parties.

Negotiation takes place on two levels: (a) addresses the substance; and (b) focuses
on the procedure for dealing with the substance.

3.1 NEGOTIATION STAGES

There are 8 negotiation stages in negotiation. These are:

1. Prepare: Know what you want. Understand them.

2. Open: Put your case. Hear theirs.

3. Argue: Support your case. Expose theirs.

4. Explore: Seek understanding and possibility.

5. Signal: Indicate your readiness to work together.

6. Package: Assemble potential trades.

7. Close: Reach final agreement.

8. Sustain: Make sure what is agreed happens.

3.2 NEGOTIATION STYLES

Negotiators are often viewed as either: (a) “Hard” and (b) “Soft”. By “Hard” what is
meant is that: (1) participants are adversaries; (2) goal is victory; (3) demand
concessions as a condition of the relationship; (4) distrust others search for the single
answer: the one you will accept; (5) try to win a contest of wills; and (6) apply
pressure.

By “Soft” what is meant is that: (1) participants are friends; (2) goal is agreement; (3)
make concessions to cultivate the relationship; (4) be soft on the people and the
problem; (5) trust others; (6) change your position easily; (7) make offers; (8) search
for the single answer: the one they will accept; (9) insist on agreement; (10) try to
avoid contest of will; and (11) yield to pressure.

Other than “hard” or “soft” bargainers, there are also other negotiating styles. These
are:

Accommodating: Accommodators are sensitive to the emotional states, body

language, and verbal signals of the other parties. They can, however, feel taken
advantage of in situations when the other party places little emphasis on the
relationship.

Avoiding: When negotiating, avoiders tend to defer and dodge the confrontational
aspects of negotiating; however, they may be perceived as tactful and diplomatic.

Collaborating: Collaborators are good at using negotiations to understand the

concerns and interests of the other parties. They can, however, create problems by
transforming simple situations into more complex ones.

Competing: Competitive negotiators have strong instincts for all aspects of

negotiating and are often strategic. Because their style can dominate the bargaining
process, competitive negotiators often neglect the importance of relationships.
Compromising: Compromisers can be useful when there is limited time to complete
the deal; however, compromisers often unnecessarily rush the negotiation process
and make concessions too quickly.

3.3 NEGOTIATION STRATEGIES

There are two main negotiation strategies: principled negotiation and positional
negotiation.

1. PRINCIPLED NEGOTIATION

Principled negotiation is the name given to the interest-based approach to

negotiation set out in the best-known conflict resolution book, Getting to Yes, by
Roger Fisher and William Ury first published in 1981. Fisher and Ury lay down four
basic points: (1) Separate the people from the problem; (2) Focus on interests, not
positions; (3) Generate a variety of possibilities before deciding what to do; and (4)
Insist that the result be based on some objective standard.

A. Separate the people from the problem

Negotiators on both sides of the issue bring emotion, perceptions, and values to the
negotiations.

 Misunderstandings or personal perceptions of “facts” of negotiation may lead

to reactions that produce counter-reactions that leads to failure of
negotiation.

 Perceptions: (a) Conflict lies in each side’s perception of the problem; (b)
Ability to see the situation as the other side sees it is one of the most
important skills a negotiator can possess; (c) Understanding other side’s
position does not mean agreeing with it; (d) One way to deal with differing
perceptions is to make them explicit and discuss them; (e) Look for
opportunities to act inconsistently with other side’s perceptions—may lead
 to change of perceptions; (f) Allow “face-saving”—reconciling an agreement
with principle and self-image of the negotiators.

 Emotions:

When parties have a dispute, emotions do come into play. As a negotiator,

you must: firstly, recognize and understand emotions—yours and theirs. This
entails that: (1) Identify source of emotions; (2) Make emotions explicit and
acknowledge them as legitimate. Secondly, allow other side to let off steam.
This means that: (1) Listen without responding; and (2) Don’t react to
emotional outbursts. Thirdly, use symbolic gestures: (1) Apology can defuse
emotions; and (2) Even when don’t acknowledge personal responsibility.

 Communication:

Communication is very important. However, there may be some problems that

might permeate the negotiation: (1) Negotiators may not be talking to each
other; (2) Other side may not be hearing you; (3) Misunderstanding with
regard to the issues. Therefore, as a negotiator, one must: (1) Listen actively;
(2) Acknowledge what other side is saying; (3) Talk—don’t debate; (4) Speak
about yourself-not about them; (5) Speak with a purpose.

B. Focus on interests, not positions.

Interests define the problem. As a negotiator, one must: (a) Identify the relevant
parties; and (b) “Whose decision do I want to affect?”

The negotiator must look for the interests behind the position. This entails that a
negotiator must ask: Why does party hold that position? Ask why not?—why hasn’t
other side taken the action you desire?

It is of importance that a negotiator prioritizes his or her interests- considers the

other side’s priorities as well while keeping in mind that the most powerful interests
are basic human needs. Negotiations are not likely to make progress if one side
believes basic human needs threatened.

Thus a negotiator must be specific and set forth the seriousness of the concerns,
without implying other side’s interests are unimportant. In doing that, a negotiator
will be helping the other side understand how important and legitimate your
interests are.

C. Invent Options for Mutual Gain.

This requires creativity and the commitment to brainstorm options that will be
acceptable to both parties. In brainstorming, negotiators need to separate the
stage of evaluating options from the stage of generating options. Both parties
need to broaden the number of possible options and not search for just one
option. Both parties also need to think about options that will satisfy the
interests of the other side.

There are however four major obstacles that inhibit invention of options: (a)
premature judgment; (b) searching for the single answer; (c) assumption of a fixed
pie; and (d) thinking that “solving the problem is their problem.”

There are also four basic steps for inventing options: (i) define the problem; (ii)
analysis- diagnose causes of the problem; (iii) approaches- what are possible
strategies? and (iv) action ideas.

The question which then arises is: how can one invent creative options? There are
four suggestions:

(a) Separate the act of inventing options from the act of judging them. This entails
that: (1) Brainstorming: (a) Define purpose; (b) Choose a few participants; (c)
Clarify ground rules—including no criticism rule. (2) Post-brainstorming: (a)
Identify most promising ideas; (b) Invent improvement of promising ideas; (c)
Evaluate ideas and decide.
(b) Broaden the options on the table rather than looking for a single answer: (1)
Examine problem from view of different professionals and disciplines; (2) Invent
agreements of different strengths; (3) Change scope of proposed agreement.

(c) Look for mutual gain: (1) Identify shared interests: (a) Shared interests lie latent in
every negotiation; (b) Shared interests are opportunities; (c) Stressing shared
interests can make the negotiation smoother. (2) Dovetail differing interests: (a)
Different beliefs?; (b) Different valued placed on time?; (c) Different forecasts?; (d)
Differences in aversion to risk?

(d) Make their decision easy: (1) Without some option that appeals to other side
there will be no agreement; and (2) Option must be viewed as legitimate.

D. Insist on using objective criteria.

How do you develop objective criteria? (a) there must be independence of either
side’s will: (1) Fair standards for the substantive question; or (2) Fair procedure for
resolving conflicting interests. (b) apply to both sides.

E. Alternatives

In the advocacy approach, a skilled negotiator usually serves as advocate for one
party to the negotiation and attempts to obtain the most favourable outcomes
possible for that party. In this process the negotiator attempts to determine the
minimum outcome(s) the other party is (or parties are) willing to accept, then adjusts
their demands accordingly.

A "successful" negotiation in the advocacy approach is when the negotiator is able to

obtain all or most of the outcomes their party desires, but without driving the other
party to permanently break off negotiations, unless the best alternative to a
negotiated agreement (BATNA) is acceptable- a BATNA is an alternative approach to
a negotiation agreement. This is the approach that can be used in the event that a
negotiation stalls. In developing a BATNA, one must: (i) invent a list of actions
possible if no agreement; (ii) improve some of ideas from list, create practical
alternatives; and (iii) select the alternatives that seem best.

Strengthen your BATNA:

(1) How can you make BATNA easier, more probable, or better at satisfying interest;

(2) If you only accept a deal that is better than BATNA, improving BATNA leads to
better result, either through better agreement or going to the BATNA.

It is important to consider their BATNA too:

(1) Understanding BATNA helps you understand how to make agreement easier;

(2) Understanding their BATNA allows you to estimate whether agreement is

possible.

Advantages of principled negotiation

The advantages of principled negotiation over positional bargaining can be

summarised as follows.

 Principled negotiation provides more satisfying results for the parties, as it

deals with their underlying needs and interests and thereby establishes
agreements which are more likely to be adhered to;

 It is efficient, in that parties look more creatively at a range of options for

dealing with their problem, and reduces the likelihood of stalemate or leaving
anything of value at the negotiation table;

 It provides a basis for a better relationship between the parties by dealing

with emotional and interpersonal dimensions of conflict and taking account of
future relations between the parties;
  It provides legitimate standards (objective criteria) for evaluating and
accepting settlement options, without the parties appearing to be unduly
compromising.

2. POSITIONAL NEGOTIATORS

Positional negotiation is essentially adversarial. The negotiators see the process as

"win-lose," in which any gains by the opponent are losses by the home team.

Positional negotiation can be illustrated on a more personal basis by the bargaining

that accompanies the purchase of a new car. The salesman has a sticker price to
begin with. The customer has a desired purchase price. Each wants to come as close
to his own figure as possible. The salesman's commission is based on the profit
margin achieved, directly from the customer's pocket. The customer wants the lowest
possible profit margin, directly from the salesman's commission. Each gains at the
other's expense. It is true zero-sum and adversarial. These are examples of "hard"
positional negotiation. The negotiators are demanding and unyielding.

Positional negotiation can also be "soft” bargainers- is quite willing to make

concessions to "keep the ball rolling." The two negotiators start at different positions
in a bargaining range and compromise toward the middle. In "soft" bargaining,
agreements are reached quickly. However, "soft" bargainers run a great risk if they
happen to encounter a "hard" bargainer. Furthermore, "hard" and "soft" bargaining is
zero-sum in nature. Both aim at splitting the pie in order to get what they want. In
positional negotiation, each side stakes out its position, and simultaneously (a)
attacks the other position and (b) defends its own.

The problem of positional negotiation is that an opponent may become an enemy

by a demeaning personal attack. Fisher and Ury and Colosi consider this a big
mistake- they think the goal of every effective negotiator is to get the opponent
onto their turf-essentially onto their side of the bargaining table-so viewpoints will
be similar.
Dangers of “positional” negotiations:

(a) Produces unwise agreements:

- Positions are tied to ego.
- Negotiators are locked into positions.
- As more attention is paid to positions, less attention devoted to meeting the
underlying concerns of the parties.

(b) Arguing over positions is inefficient:

- Incentives to stall settlement.
- Agreement requires concession.

(c) Endangers on-going relationships:

- It is a contest of will.
- Anger or resentment may result from concessions required to reach
agreement.

(d) Multi-party negotiation complicates positional bargaining:

- The varying positions make “common” position difficult
- Changing the position is difficult.

3.4 Guiding elements in negotiation

There are seven elements that seem to guide negotiations. These are: (1) Interests
(focus on interests); (2) Options (know your options); (3) Alternatives (have
alternatives); (4) Legitimacy; (5) Communication; (6) Relationship; and (7)
Commitment.
UNIT 4 ARBITRATION IN ZAMBIA

Introduction

This aim of this section is to enunciate and highlight the salient provisions of the law
that governs arbitration in Zambia. The section also covers various issues, that is to
say, what arbitration is; who an arbitrator is; who has power to choose an arbitrator;
the procedure during arbitration; the powers of an arbitrator; and the effect of an
award.

The material is not to be cited as an authority but is rather only a guide to the
student. Therefore, it is incumbent on the student to be more resourceful and go
beyond these guidelines. It is noteworthy that the principal legislation applicable to
arbitration in Zambia is the Arbitration Act No. 19 of 2000 (Arbitration Act). The First
Schedule of the Arbitration Act contains the UNCITRAL Model Law. In interpreting
the Arbitration Act, an arbitral tribunal or a court can refer to the documents
contained in the Model Law (section 2(3), Arbitration Act). In addition: Where the
place of an arbitration is in Zambia, the First Schedule of the Act applies to the
arbitration, subject to the other provisions of the Act ( section 8(1), Arbitration Act);
and where the place of arbitration is not in Zambia, only Articles 8, 9, 35 and 36 of
the UNCITRAL Model Law apply ( section 8(2), Arbitration Act). The Small Claims
Court Act also makes provision for arbitration. Section 5 provides the jurisdiction of a
small claims court shall be limited to liquidated claims of not more than four
thousand fee units and shall be exercised by way of arbitration.

4.1 What is arbitration?

There are many interpretations of what the term “arbitration” means. The HG
dictionary defines Arbitration as “a legal technique for the resolution of disputes
outside the courts, wherein the parties to a dispute refer it to one or more persons
(the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award")
they agree to be bound.”1  The Answer.com defines it as “a mini-trial, which may be

1
http://www.hg.org/arbitration-definition.html (accessed 12.01.2011)
for a lawsuit ready to go to trial, held in an attempt to avoid a court trial and
conducted by a person or a panel of people who are not judges. The arbitration may
be agreed to by the parties, may be required by a provision in a contract for settling
disputes, or may be provided for under statute.”

However Section 2 of Act defines an arbitration as referring “to any arbitration

whether or not administered by a permanent arbitral institution and means the
conduct of proceedings for the determination of a dispute by an arbitral tribunal in
terms of this Act.” Section 2 has been modified under the UNCITRAL Rules article 7
which provides that, an arbitration, “is an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which may arise between
them in respect of a defined legal relationship, whether contractual or not. An
arbitration agreement may be in the form of an arbitration clause in a contract or in
the form of a separate agreement.”

The key elements are: (i) resolution of a dispute; (ii) by an independent panel
(tribunal)2; (iii) chosen by the parties; (iv) to render a decision; and (v) which the
parties would be bound by. Put simply, arbitration is a non-court procedure for
resolving disputes by using one or more neutral third parties (called the arbitrator or
arbitration panel) who render a decision binding on the parties.

4.2 To what matters does the act apply?

By virtue of section 3, of the Act, arbitration applies to: (a) every arbitration
agreement; and (b) every arbitral award (a decision given by an arbitral panel after
hearing the dispute). Further, section 5 instructs that the Act shall apply to every
arbitration under any other written law. However, there are exceptions to the
foregoing: firstly under section 4, the Act does not apply to the Republic and the
government of a foreign country, or (b) the Republic and any undertaking which is
wholly owned by, or is under the sole control of, the government of a foreign
country unless otherwise agreed between the Republic and that undertaking.

2
This should not be confused with an arbitral tribunal
Secondly, in section 6, the arbitration does not apply to: (a) an agreement that is
contrary to public policy; (b) a dispute which, in terms of any law, may not be
determined by arbitration; (c) a criminal matter or proceeding except insofar as
permitted by written law or unless the court grants leave for the matter or
proceeding to be determined by arbitration; (d) a matrimonial cause; (e) a matter
incidental to a matrimonial cause, unless the court grants leave for the matter to be
determined by arbitration; (f) the determination of paternity, maternity or parentage
of a person; or (g) a matter affecting the interests of a minor or an individual under a
legal incapacity, unless the minor or individual is represented by a competent
person.

4.3 What are arbitration clauses? What is the effect on an agreement?

An arbitration clause is a provision in a contract which requires a party to refer a

dispute to arbitration. Most commercial contracts contain such clauses. Though the
Act does not define what an arbitration clause is, however section 9 (1) of the Act
provides that an arbitration agreement may be in the form of an arbitration clause in
a contract or in the form of a separate agreement.

From the aforementioned, the question which then arises is the effect of such a
clause in the contract. Section 10 states that: A court before which legal proceedings
are brought in a matter which is the subject of an arbitration agreement shall, if a
party so requests at any stage of the proceedings and notwithstanding any written
law, stay those proceedings and refer the parties to arbitration unless it finds that the
agreement is null and void, inoperative or incapable of being performed. 10 (2)
Where proceedings referred to in subsection (1) have been brought, arbitral
proceedings may nevertheless be commenced or continued, and an award may be
made, while the issue is pending before the court. This entails that, where a contract
has an arbitration clause, the Court is obliged to refer such matter to arbitration.
The Republic of Botswana, Ministry of Works Transport and Communication,
Rincheau Design Consultants (sued as a firm previously T/A KZ Architects v
Mitre Limited (1995) S.J.
The first appellant and the respondent entered into a building contract for the
construction of buildings. Such construction work was to be supervised by the
second appellant. Clause 35 of the Contract provided for reference of any dispute or
disputes between the parties to arbitration. In the course of construction work a
dispute arose between the parties which made it necessary to refer the dispute to
arbitration. Prior to the appointment of the arbitrator, the respondent had obtained
an interim injunction against the appellants. The matter then went to arbitration and
an award made on 31st March 1995. Subsequent to the arbitrator’s award the
respondent filed an application to set aside the award and upon amending the
originating notice of motion obtained an extension of time within which to apply to
set aside the award.

It was held that the court ought not to have entertained the respondent's application
let alone order continuation the exparte order.

4.4 Reliefs that can be sought

Section 11 allows a party whose matter is before an arbitral tribunal to seek an

interim relief such as, an order for the preservation, interim custody, sale or
inspection of any goods which are the subject matter of the dispute; (b) an order
securing the amount in dispute or the costs and expenses of the arbitral
proceedings; (c) an interim injunction or other interim order. However, the Court
cannot grant an order or injunction unless: (a) the arbitral tribunal has not yet been
appointed and the matter is urgent; (b) the arbitral tribunal is not competent to
grant the order or injunction; or (c) the urgency of the matter makes it impracticable
to seek such order or injunction from the arbitral tribunal.

4.5 Who is an arbitrator and how is (are) that person appointed?

An arbitrator is a private neutral person chosen to arbitrate (hear or resolve) a

dispute as opposed to going a court of law. In accordance with section 12 provides
no person shall be precluded by reason of that person's nationality, gender, colour
or creed from acting as an arbitrator. To this end, the parties are free to agree on a
procedure of appointing the arbitrator or arbitrators. The most common being: each
party chooses an arbitrator and then the two arbitrators choose the third one. 3
However, in the event that: (a) a party fails to act as required under such procedure;
or (b) the parties, or two arbitrators, are unable to reach an agreement expected of
them under such procedure; or (c) a third party, including an arbitral institution, fails
to perform any functions entrusted to it under such procedure, any party may
request the court to take the necessary measures, unless the agreement on the
appointment procedure provides other means for securing the appointment.

4.6 Challenging the competence of an arbitrator

An arbitrator’s appointment may be challenged by either party to a dispute. Article

12 of UNCITRAL rules spell out the grounds as where “any circumstances likely to
give rise to justifiable doubts as to his impartiality or independence or if he does not
possess qualifications agreed to by the parties.” If such is the case, an arbitrator shall,
from the time of his appointment and throughout the arbitral proceedings and
without delay disclose any such circumstances to the parties unless they have already
been informed of them by him.

By virtue of article 13, parties are free to agree on a procedure for challenging an
arbitrator. If parties fail to do so, a party who intends to challenge an arbitrator has
fifteen days in within which to send a written statement of the reasons for the
challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his
office or the other party agrees to the challenge, the arbitral tribunal shall decide on
the challenge. If a challenge is not successful, the challenging party may request,
within thirty days that the court decide on the challenge, which decision shall be
subject to no appeal. But while such a request is pending, the arbitral tribunal may
continue with the arbitral proceedings and make an award.

4.6.1 The doctrine of “kompetenz-kompetenz”

3
Section 12 (3), see also article 11 of First Schedule
Kompetenz-kompetenz means an arbitral tribunal is allowed to make a decision on
whether it has jurisdiction over an issue that needs to be settled and whether an
arbitration agreement is valid. In line with the principle of kompetenz-kompetenz,
validity or expiry of an agreement that includes an arbitration clause does not
necessarily mean that an arbitration agreement is invalid or has expired. The doctrine
of competence-competence, which holds that an arbitral tribunal may determine
questions as to its own jurisdiction, is an important aspect of arbitration law. It is
observed that if arbitrators could not determine questions as to their own
jurisdiction, a recalcitrant respondent could easily frustrate the parties' agreement to
have their dispute decided by arbitration or at least create considerable delay by
merely contesting the existence or validity of the arbitration agreement in court.
Further observation also shows that such a situation would seriously undermine
arbitration as an effective means of private dispute resolution and deprive it of its
attraction.

This doctrine is largely based on Article 16 of the UNCITRAL rules. Article 16 which
provide that the arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement. For
that purpose, an arbitration clause which forms part of a contract shall be treated as
an agreement independent of the other terms of the contract.

4.7 Conduct of arbitral proceedings

Parties to arbitral proceedings are to be treated equally and given an opportunity to

present their case (art. 18). During the proceedings, parties have the liberty to define
the rules of procedure, place of arbitrations and when proceedings shall commence.
In default of such, an arbitral tribunal may be called upon to act. 4

4.8 Arbitrator’s professionalism and protection

An arbitrator is expected to be professional in his execution of duties and hence

cannot act in a situation where it would lead to a conflict of interest. Section 22 of

4
See: article 19, 20, 21, 22 of the Arbitration Act No. 19 of 2000 (First Schedule)
the Act provides that a person who has acted as arbitrator in arbitral proceedings
shall not act as counsel for, or representative of, any of the parties in legal
proceedings which were the subject of the arbitral proceedings. Further that, a party
to legal proceedings shall not be allowed to present a person who has acted as
arbitrator as a witness in legal proceedings which were the subject of the arbitral
proceedings.

An arbitrator is immunity with regard to any to any function performed in

connection with arbitral proceedings is not liable for anything done or omitted in
good faith in the discharge or purported discharge of that function. 5

4.9 What are the powers of the arbitral tribunal?

Section 14 of the Act, spells out the powers of the arbitral tribunal which, inter alia,
are:

(a) The tribunal can at the request of a party, order any party to take such interim
measure of protection

(b) Can choose a third arbitrator

(c) to grant an interim injunction or other interim order

(d) to order the parties to make a deposit in respect of the fees, costs and
expenses of the arbitration

(e) to make any order it considers appropriate to compel the attendance of a

witness before it to give evidence or produce documents

(f) to order any witness to submit to examination on oath or affirmation before

the arbitral tribunal, or before an officer of the tribunal or any other person in
order to produce information or evidence for use by the arbitral tribunal

5
Section 28
 (g) to order the discovery of documents and interrogatories

(h) to issue a commission or request for the taking of evidence out of jurisdiction

(i) detain, preserve, or inspect any property or thing in the custody, possession or
control of a party which is in issue in the arbitral proceedings and to authorise
for any of the those purposes any person to enter upon any land or any
building in the possession of a party, or to authorise any sample to be taken
or any observation to be made or experiment to be carried out which may be
necessary or expedient for the purpose of obtaining full information or
evidence.

(j) The arbitral tribunal may request from the court executory assistance in the
exercise of any power conferred upon it

(k) Terminate shall the proceedings if claimant fails to communicate his/her

statement of claim (sec. 15(1))

(l) Rule on its own jurisdiction (article 16 of the UNCITRAL rules)

(m)Render an award (sec. 16)

5.0 The effect of an award

Upon hearing the dispute, the arbitral tribunal renders an award in line with section
16. The award is final (art. 32) and will not be set aside unless the requirements of
section 17 and article 32 are met. These requirements are that: (i) a party to the
arbitration agreement was under some incapacity; or the said agreement is not valid
under the law to which the parties have subjected it; (ii) the party making the
application was not given proper notice of the appointment of an arbitrator or of the
arbitral proceedings or was otherwise unable to present his case; (iii) the award deals
with a dispute not contemplated by, or not falling within the terms of, the
submission to arbitration, or contains decisions on matters beyond the scope of the
submission to arbitration; (iv) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the parties or, failing such
agreement, was not in accordance with this Act or the law of the country where the
arbitration took place; or (v) the award has not yet become binding on the parties or
has been set aside or suspended by a court of the country in which, or under the law
of which, that award was made. By virtue of section 17 (3), any application for setting
aside may not be made after three months have elapsed from the date on which the
party making that application had received the award.

NOTE: Read- Zamtel v Celtel SCZ Judgment No.34 of 2008

UNIT 5 RECOGNITION AND ENFORCEMENT OF AN AWARD

When an award has been rendered by an arbitral tribunal, the next question is
whether it is recognised and can thereby be enforced. Section 18 provides that a n
arbitral award, irrespective of the country in which it was made, shall be recognised
as binding and, upon application in writing to the competent court. However, by
virtue of section 19, the Court may refuse to recognise or enforce the arbitral award
if: a party to the arbitration agreement was under some incapacity; or the said
agreement is not valid under the law to which the parties have subjected it or under
the law of the country where the award was made; (ii) the party against whom the
award is invoked was not given proper notice of the appointment of an arbitrator or
of the arbitral proceedings; (iii) the award deals with a dispute not contemplated by
or not falling within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to arbitration; (iv) the
composition of the arbitral tribunal or the arbitral procedure was not in accordance
with the agreement of the parties or, failing such agreement, was not in accordance
with the law of the country where the arbitration took place; or (v) the award has not
yet become binding on the parties or has been set aside or suspended by a court of
the country in which, or under the law of which, that award was made. The award
once granted, is binding on the parties (section 20).

5.1 New York Convention on the Enforcement of Arbitral Awards

The New York Convention makes provision for the enforcement of awards rendered
outside Zambia. Section 30 (a) of the Act provides that a New York Convention
award means “an award made in pursuance of an arbitration agreement, in the
territory of a state (other than the Republic of Zambia) which is a party to the New
York Convention.”

The question then arises: to whom does the New York Convention apply? Article 1
(3) of the New York Convention provides that, any State may on the basis reciprocity
declare that it will apply the Convention to recognition and enforcement of awards
made only in the territory of another Contracting State. It may also declare that it will
apply the Convention only to differences arising out of legal relationships, whether
contractual or not, which are considered as commercial under the national law of the
State making such declaration. This entails that a state has to be party to this
Convention for it to rely on it. In accordance with article 2 and 3 of the Convention,
States are obliged to recognise and enforce arbitral awards.

5.2 Choice of law

As already discussed, for an arbitration to take place, parties must have expressly
stated in their contract- parties must put in an arbitration clause. One aspect that is
usually contentious is what law will govern such a contract in an event of a breach or
dispute arising assuming that the parties to a contract reside in two different
countries. Therefore it is necessary that a contract contains a choice of law clause.
A choice of law clause is a term of a contract in which the parties specify that any
dispute arising under the contract shall be determined in accordance with the law of
a particular jurisdiction. Thus, if all the parties and the relevant factual elements
affecting formation, validity, and performance are geographically located in the same
state, it will be obvious that, if the contract is silent on the point, the local municipal
law (usually called the lex loci contractus, i.e. the law of the place where the contract
was made) will be applied as the law governing substantive issues.

The lex fori, i.e. the law of the local forum court, will be applied to procedural matters
(such as evidentiary rules). But, as people and transactions now more frequently
cross border lines both physically and electronically, it becomes necessary to
consider which law will be applied in the event of a dispute. Should the laws be the
same, the question will be academic. But, if the laws are sufficiently different that
the judgment will change depending on which law the court applies, the issue
of choice of law becomes highly significant.