See you in court (eventually) – or arbitrate now

Groenewald also points out that arbitration has international appeal. The American Film Market, for example, compels all disputes between exhibitors to be determined by arbitration and there are very good reasons for this.

“Although this is a common and every day concept for any attorney, too few people in the entertainment industry understand that arbitration is available as an alternative to litigation,” he adds.

Seldom the best solution

Groenewald argues that in real life, litigation is seldom the best solution to a contractual dispute. This is particularly the case in disputes involving amounts of more than R100 000 or pertaining to intellectual property matters, as these have to be adjudicated by the High Court.

And to litigate in the High Court can take years.

According to Groenewald, any action instituted in the Pretoria High Court with its congested court roll is unlikely to be adjudicated within four years from date of summons. In Los Angeles (depending on the various jurisdictions) it could take seven years.

“Think what that would mean should a dispute cause a film production to be halted. For example, the scriptwriter could have a payment dispute with the producer and refuse to relinquish the script. There could be a four-year wait for a trial date, and hopefully the matter will not be postponed – although there is a 75% chance of this. Only once the trial is complete and a court ruling obtained, can production continue.

“This is simply not viable,” Groenewald says, pointing out that production of what was to have been the first James Bond movie, Thunderball, was interrupted by a copyright infringement claim. Producers Broccoli and Saltzman – rather than becoming embroiled in a legal dispute, and notwithstanding whether they were right or not – simply switched to Dr No. Thus Dr No, rather than Thunderball, has the honour of being the first James Bond move while two other productions – From Russia With Love and Goldfinger – saw the light of day before Thunderball.

“The moral of the story is that when time and money is of the essence, litigation is seldom the answer. Arbitration provides an alternative. Simply put, arbitration allows you to legally fight your battle outside court. Although always subject to statutory and common law, it allows you to determine the rules on how to resolve your dispute,” he adds.

How it works

Arbitration basically works like this:

The parties will agree on who the arbitrator (ie the adjudicator or ‘the judge') of the particular matter should be.

Typically it would be an advocate or attorney, but it could also be someone who has no legal background, but who is well-versed in matters to which the specific dispute pertains. For example, should there be a dispute regarding the calculations or amounts of the below-the-line budget, a line producer or chartered accountant, well-versed or experienced in these matters, could be a better arbitrator than an advocate who has no experience in these matters.

Thus you can ensure that whoever is to adjudicate on your matter, is also an expert in that particular field to which your dispute has reference.

You also agree on the rules of the game – that is how the process will run. How many days do the opposition have to plea to your claim, when and how are documents to be discovered, and so on. Thus, you can agree to every detail that could be applicable to the process.

In some instances, parties simply agree to the Rules of the High Court. Although this does imply a more time-consuming procedure, it is also one that is properly structured and will protect both parties against so-called “ambush” litigation.

Arbitration according to High Court rules can be very effectively finalised within five months, rather than four years. There are also arbitrations in which the whole process has been finalised in two weeks.

Enforceable

Unless expressly agreed to the contrary, determinations granted in arbitrations are final. The unsuccessful party is not allowed an appeal. In addition, awards granted in arbitrations are just as enforceable as a court order.

Thus, it does not matter whether the court, or an arbitrator made the decision or ruling – it carries the same weight, and it usually heralds the end of the matter as the general rule is that arbitration bars litigation.

“That means that should the parties have agreed to arbitration, one party cannot later decide to rather go to court. The arbitration covenant is binding.”

“However, arbitration is only possible when all the parties involved have agreed to it. This agreement must be in writing and this is usually achieved by inserting an arbitration clause in your agreement – prior to any dispute arising,” Groenewald says

“And that's why I believe that arbitration is probably the most important clause in any agreement. It's not particularly useful after becoming embroiled in a dispute, to be advised by your attorney that you are in the right, and should get the relief you claim – but only in five years.

“An arbitration clause will allow you to settle the matter almost immediately. And with deadlines of such vital importance to the success or failure of a film project, an arbitration clause in every contract cannot be regarded as an optional extra,” Groenewald concludes.