Wednesday 19 October 2011

Arbitration and ADR for Landlords and Tenants in The Bahamas

Arbitration

 

The law of real property goes back an extremely long time.  The Bahamas is presently in the midst of proposed property law reform, which will revolutionise the law relating to land ownership and title.

Property law is complicated, but if you are involved with property you need to know the rules.
  • Arbitration - A means of resolving disputes using an independent arbitrator as opposed to a court of law.
  • Often used for lease contract disputes, rent reviews etc.

The Courts & Property Dispute Resolution  

 

The courts are one means of resolving disputes between individuals, companies and landlords and tenants, but they are not necessarily the most effective, particularly where the parties previously enjoyed and may well want to continue to enjoy a close working relationship. 

The main problem with the court system is that it is primarily an antagonistic process: it pits one party against the other in order to determine ultimately a winner and a loser. 

As a consequence the court system tends to emphasise and heighten the tension and conflict between the parties as each tries to show the other in the worst possible light, rather than trying to reach an amicable compromise.

Alternative Dispute Resolution (ADR)  

The courts themselves recognise the effectiveness and increasing importance of alternative means of resolving disputes, and indeed judges will sometimes suggest this course of action prior to a court hearing.

What is Arbitration 
 
This is a procedure where the parties to a dispute refer the issue to a third party (usually an expert in the field) for resolution rather than taking the matter to the law courts. 

Section 3 of the Arbitration Act 2009 states:
  • The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.
  • The parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.
Your lease agreement may make provision for disputes arising between landlord and tenant to be dealt with by arbitration as opposed to a court of law, and usually specify how the arbitrator is to be appointed.

If one party seeks to start a court action in the face of a prior agreement to arbitration, the other party can request a stay of litigation from the court. If, on the other hand both parties opt for court action the arbitration agreement can be ignored.

There are limited rights of appeal after an arbitration decision is made and may only be allowed at the discretion of the courts on a point of law.

The court has the power to order a party to comply with an order of an arbitration tribunal.

In general the courts have no objections to individuals settling their disputes by voluntary means such as arbitration though they are careful to maintain their supervisory role.

Arbitration agreements are no different to other forms of contract and as with other forms of contract law disputes the courts will strike out any attempt to oust their ultimate jurisdiction as being against public policy.

Both parties to an arbitration dispute will be jointly and severally liable for the costs and fees involved.

The Advantages of Arbitration: 
  • Privacy - Arbitration tends to be a private procedure so outsiders do not have access to sensitive information and the parties do not have the risk of bad publicity arising from newspaper reports.
  • Informality - the proceedings are much less formal that a court case and scheduling is often more flexible.
  • Speed - The process is usually much quicker that a court case. However, if one party decides to challenge the decision through the courts then the process will be ultimately longer and greater in cost.
  • Expertise - The person appointed is usually someone with expert knowledge of actual practice in the filed, whose decision should reflect this.
  • Cost - Arbitration is usually a much cheaper process. However, the cost of expert's fees should not be underestimated.

The Advantages and Disadvantages of Arbitration 

  • Lower cost
  • Accessible
  • Expert knowledge of their particular subject 
  • Balance
  • The no-costs rule and lack of legal aid penalise poor litigants, although they do keep costs down.
  • The procedure means that if you do not know what you are doing the arbitrator will help you.
  • Arbitrators’ local knowledge can be beneficial.
  • They help reduce the workload of the judiciary.
  • They reduce the workload of government departments.

How are Arbitrators Controlled 

  • Judicial review
  • Appeals are to the Supreme Court on points of law
This is for your information only and nothing contained in this Memorandum is intended to constitute a legal opinion.  If you require any detailed advice you may contact an experienced Bahamian arbitration attorney by clicking here.
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