Wednesday, 5 November 2014


Voluntary associations often draft inadequate Constitutions, oblivious to the possibility they could become embroiled in bitter internal disputes , which then lead onto litigation and court hearings running into six figure sums. However , if an arbitration clause was present, being an essential part of the agreement between all members , then any unresolved dispute between a member and the committee would automatically go to arbitration. With both sides having agreed to accept the arbitrator's ruling , the specter of a prolonged , costly and unnecessary litigation process can be banished for good.
The obvious problem that an arbitration clause solves is one of ignorance on the part of the committee , whose members are likely to know very little about the rules of natural justice , let alone the precise legal requirements , which guarantee that the procedures laid down in the Constitution are correctly and properly followed. Paying lip service to laid down procedures is not the same as implementing them with integrity and good faith. Therefore , if mistakes are made then qualified , completely impartial arbitrators are more than likely to pick them up and correct any wrongful decisions made : all at a minimal cost, and within a very short time-frame.
Also , whenever there are highly charged emotions , the chance of rationally and soundly resolving disputes under the existing methods of dispute resolution are both unrealistic and unlikely. Adding to this improbability is the robust position of the association’s management committee. The management committee here is at the forefront of disputes and their position is supported by their qualified power and control over and in handling all disputes within a private and protected sphere. This private sphere provides the opportunity for dominant individuals to project their personal agenda and to protect their self-interests, which is not always altruistic. This private sphere coupled along with the power and control also offers the opportunity for the dominate committee members to hold meetings outside official meetings to decide the fate of a member by influencing others. Such conduct within a voluntary association does falls outside the spirit of the association’s purpose and is unacceptable. A member would feel powerless in this situation and to bring some fairness to the situation there needs to be a check point where management’s powers are not exceeded. 
Whenever both parties elect to go down the road to a courtroom resolution , costs just escalate far beyond the damages one party may be seeking from the other. Moreover , the litigation process is emotionally crippling , causing deep concern and stress to all those involved. There will be no winners except the lawyers. Clearly , the arbitration option saves both sides from financial ruin and nervous breakdowns. Indeed , all voluntary clubs should dwell upon the succinct observations expressed by Lord Woolf :  “....our present system ..... is too expensive in that the costs often exceed the value of the claim; too slow in bringing cases to a conclusion and too unequal; there is a lack of equality between the powerful, wealthy litigant and the under resourced litigant. It is too uncertain: the difficulty of forecasting what litigation will cost and how long it will last induces the  fear of the unknown.” Moreover , Walker J had this to say about why clubs should ever allow themselves to get sidetracked into pursuing courtroom resolutions:    “Charities  solicit donations from the public ... in the expectations that donations will be well spent on furtherance of the charity’s purposes. Even for a lawyer it is a difficult mental feat to recognise this very expensive litigation as helping the diabetics whose subscriptions and gifts will be the ultimate source for payment of the lawyers’ bills.” The same argument applies equally to say bridge club members , regarding what priorities their subscriptions and table monies should be put towards.
Reading the case law regarding the expulsion of members one can clearly see how individuals end up painfully investing so much of their emotions, their energy and their time to achieve an end to the dispute through litigation , none of which can ever be recovered. Therefore all voluntary associations would be well advised to take more care and attention to managing and resolving internal disputes without seeking recourse to the courts.
Prevention makes far better sense than pursuing a pipe-dream cure , and ADR is the perfect way to prevent both parties from acting like fools , willing to take lemming-like leaps of faith in a dark financial abyss.  

( The following suggestion for an arbitration clause reads as follows :
All unresolved disputes arising out of , or in connection with , a member’s legal challenge to decisions made by the Club committee and/or the Club's internal appeal panel shall be finally settled under the Rules of Arbitration ( see appendix ) , by one or more arbitrators appointed in accordance with the said Rules.
This clause has been said to contain the three “key expressions” for an arbitral clause – “All disputes”. . . “in connection with”. . . “finally settled”. The term “all disputes” encompasses all types of controversies, without exception. The language, “in connection with”, creates a broad form clause that will cover non-contractual claims such as tort and fraud , while “finally settled” indicates the parties intend the arbitrator’s ruling to be final so a court will not try the case de novo. )

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