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Alternative Dispute Resolution (ADR) in Africa

By Ronald Mutasa

DLA Piper Africa is uniquely positioned to handle Alternative Dispute Resolution cases in the African region as it has lawyers based in different countries who understand local nuances and policies.

Resolving business disputes without resorting to traditional litigation has many benefits. However, without knowledge of local policies, the use of Alternative Dispute Resolution (ADR) techniques in different African countries can result in unfavourable dispute resolution terms as each country follows different rules that may not be known to a lawyer from another region.

“Often, due to lack of knowledge, parties may find themselves in unfavourable dispute resolution terms with an arbitration being held in an unfamiliar country and according to rules they do not recognise. ADR clauses are only as good as their customisation,” said Ronald Mutasa, who is a senior associate at Manokore Attorneys, a DLA Piper Africa member firm.

He added, “ADR is increasingly being used in countries across Africa because the techniques used, which include negotiation, conciliation, mediation and arbitration, fit comfortably within traditional concepts of African justice, particularly its core value of reconciliation.”

Due to its global reach, DLA Piper is uniquely positioned to handle ADR within Africa. Its lawyers in African countries, who have a full understanding of the local business climate, can connect with a global network, providing the best resources for effective implementation within each country that is part of DLA Piper Africa. The firm recently held an event in Zimbabwe, attended by DLA Piper lawyers from Zimbabwe as well as from France and the UK, to educate interested clients and colleagues on the complexities of ADR clauses and the importance of using the correct clause in an agreement.

The increase in investment and trade in the region has led to growth in commercial arbitration. This is because, while there have been significant inflows taking place across the banking, real estate, infrastructure, telecoms and consumer goods sectors, there are still significant risks of doing business in Africa.

“The risks are related to execution, operational, political as well as fiscal risks. These factors increase the complexity and risk of investing and doing business in the region. This will, therefore, increase the likelihood of disputes arising,” said Mutasa.

There are many benefits to choosing the ADR route instead of traditional arbitration. Often, although parties may have a dispute, they may wish to continue to work together in the future. ADR is often less adversarial than litigation and is, therefore, a good tool for preserving business relationships.

While a common argument for ADR has been that it is cost-effective, according to Mutasa: “In recent times we have seen the cost of ADR increase and at times compete with litigation costs. Nonetheless, particularly where communication between the parties is not completely broken, ADR can provide for faster and somewhat cheaper dispute resolution.”

The most important benefit of using ADR, however, especially when conducting business in Africa, is that it offers both parties confidentiality, and flexibility to choose who they would like to arbitrate their case. “Litigation is generally public, not only in terms of the process, but also in terms of access of documents to the general public. ADR on the other hand, is largely private and only once there is an award, do parts of an ADR become public record. This is significant for businesses who do not wish to air their disputes publicly,” said Mutasa.

“Another advantage to ADR is the flexibility it allows the parties. For example, the parties can choose who will arbitrate their case depending on the subject matter of the dispute. Parties are largely able to control the rules and law that will apply to their arbitration as well as limit the rules on disclosure to be less onerous compared to litigation. Having a negotiated arbitration clause in a contract means that the parties are certain on the way in which disputes will be settled.”

DLA Piper Africa has pioneered ADR projects in Ghana, Ethiopia, Nigeria and South Africa which have generated positive results and illustrate the suitability of ADR in African contexts.