Whenever I reflect on my over one decade of practice as a litigation lawyer between the years 1988 and 2000, I regret the disturbing thought that I should have entered the arena of ADR sooner than later. But 2000 was a transformative year in my professional life, thanks to my friend and now Judge of the High Court, who held my hand into the world of commercial arbitration, which soon opened my eyes to mediation and other ADR mechanisms. The ensuing years have been satisfying, particularly when I see disputants take control of their respective claims and reach settlement on mutually agreeable terms to their satisfaction and deep appreciation of the services we render in ADR.
I never forget the vicious manner in which, as litigation counsel, I waged legal battles against loan defaulters to my client’s delight until one legal officer at an asset finance bank told me that the trail of successes in obtaining judgment and executing decrees against defaulting customers only served to destroy lives and eroding the goodwill of my client bank. We had to think again. According to Reuben, we had to put a “human face” on the asset financier to the delight of their struggling clients.
Not long before this conversation, we had put an elderly and sick man into civil jail at the bank’s expense. Soon thereafter, we had crippled a rural business tycoon by repossessing sixteen of his trailers at a great expense, having traced them as far as Uganda and South Sudan. Their sale left him impoverished and unable to service the bank loan. He lost his buildings yet to another banker, and only had his home and a small saloon car to hold on. Round about the same time, we succeeded in attaching for sale a Nyali home of a prominent politician and a couple of prime plots of yet another to recover arrears on account of loan balances and interest. In effect, we slayed the geese that laid the golden eggs.
The change of heart paid huge dividends. Negotiating with defaulting customers paid off. We were able to reschedule the loans, waive substantial amounts of interest, recover legal costs and have the agreed sums settled by instalments to the delight of borrowers who were going through hard times. They needed not go to civil jail, lose their entire capital assets or be brought to their knees by attachment and sale of their business assets. Of course, the listed auctioneers were unhappy, but I couldn’t care less, having seen one sell a petrol tanker at KShs.300,000 (or so he declared), which went to the auctioneer’s charges with nothing left for my client bank and I. But that is now behind us.
The Value of ADR
Let us begin with commercial arbitration. Though adversarial by nature, arbitral proceedings are voluntary. They are speedy and conducted by a tribunal of the parties’ choice with experience in the particular area of law governing the contract from which the dispute arises. It is private and cost-effective in time and money. The simplified procedures help parties take control of the process and accept the outcome, having narrowed issues in the process. The arbitrator’s award is final. They are likely to shake hands and engage in business again. This market mechanism is the process of choice where the parties are in serious disagreement on technical issues touching on their business relationship, thereby requiring determination by a third party.
Mediation is equally voluntary. The high degree of party control guarantees their satisfaction. The mediator is neutral and does not determine any of the issues in contention. He or she only facilitates a collaborative process characterized by improved communication between them, leading to mutually agreed terms of settlement. The process lasts only a few hours and saves the parties costs that are normally prohibitive in litigation. And this is what brightened the faces of my client’s customers. They were able to sit and agree with the asset financier on the best way they could discharge their outstanding loan obligations. Good faith on both parties paid off as the bank wrote off substantial amounts in compound interest and relaxed the repayment schedule.
Other popular ADR strategies include negotiation, conciliation and adjudication. While negotiation does not involve a third party to facilitate, conciliation takes the form of mediation, except that the disputants need not meet as the conciliator shuttles between them to communicate the respective offers and positions. On the other hand, adjudication is determinative and the adjudicator makes an award pending final determination in either arbitration or litigation. It is suitable for resolution of disputes of a technical nature where the adjudicator is an expert in the field.
And Why Do Parties Litigate?
Bank recoveries are vicious. Bankers stop at nothing to enforce securities even if they obtain paper judgment and decrees with little to pounce on by way of assets. The judgment and decree would support their disclosure of bad debts in their statements of accounts. On the other hand, litigation offers their defaulting customers with an opportunity to have execution stayed through injunctive relief that are not accorded in ADR. They are able to stall the process of recovery in exercise of the bank’s statutory powers at least for a while as they consider what to do next. In the end, it is a losing game that only buys them time at an exorbitant cost. In retaliation, the financiers fight to their last tooth and nail. To put it in a few words, both parties are losers.
Conclusion
While ADR affords parties the invaluable opportunity to explore the possibility of settlement on terms that all can live with, litigation is a battle between two gladiators that results in the death of either one or both. More often than not, though, it is a scenario in which the financier slays the goose that lays the golden eggs. How so? The process of summary recovery of loans by exercising its statutory power of sale leaves the defaulting borrowers penniless and erodes the banker’s goodwill. It sends the message that borrowing is dangerous, unless one wants to face the same fate. But supposing they did not slay the goose and instead sought recovery through amicable means for the benefit of all. No doubt, a financier with a human face is likely to gain more, and its borrowers are likely to continue in business relationships with them for much longer. That way, the golden eggs might be few, but would nonetheless be laid for a much longer period.
When things go sour, as they sometimes do, turn to us. Premier ADR Consultants work hand-in-hand with banking institutions, insurers and entrepreneurs with strained business relations on the verge of breakup to resolve their disputes by means of our transformative conflict management and dispute resolution strategies. We help parties salvage, restore and maintain healthy business relationships in a safe and peaceful environment with guaranteed privacy and confidentiality.
Our expeditious, cost-effective and party-controlled techniques guarantee consumer satisfaction resulting from the voluntary and jointly generated win-win outcomes. We provide the best alternative to the all-familiar costly, time-consuming, adversarial and often emotive court litigation that only works to weaken and ultimately destroy business relations.
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