Despite the attempts by some to portray ADR (Alternative Dispute Resolution) as being something recently developed and institutionalized by western professionals, it is not new. It has been used by different societies to resolve disputes without having to resort to judicial processes. Having said this it is not uncommon for some legal professionals to state on their websites and promotional material that "In many parts of the Middle East, arbitration is seen as unfamiliar and unnecessary". You will see from this article that this is technically incorrect. The Middle East/ Muslim world is familiar with arbitration but perhaps not in the same formal way that is expected from these legal professionals. The Middle East and in particular the Muslim world, has centuries old worth of experience and a deep understanding of how to resolve out of court disputes.
This article looks at dispute resolution from an Islamic theological perspective and ends with legal considerations when dealing with arbitration in the modern commercial world. Before looking at examples of ADR in Islam it is apt to describe what ADR is.
ADR put simply is the resolving of a conflict between disputing parties through an equitable settlement by mutual agreement. ADR refers to the wide spectrum of legal avenues that use means other than trial to settle disputes.
The main ADR alternatives to civil litigation are negotiation, arbitration, conciliation and mediation. Disputing parties use these ADR methods because they are expeditious, private, and generally much less expensive than a trial.
ADR is not new in Islamic thought. Islam recognizes the distress a trial can cause and therefore encourages ADR whenever possible. The Holy Quran states:
"If ye fear a breach between them (husband and wife) twain, appoint (two) arbiters, one from his family and the other from hers; if they wish for peace, Allah will cause their reconciliation: for Allah hath full knowledge, and is acquainted with all things." (Chapter 4 Verse 35)
The Quran encourages settling disputes amicably as such actions are ennobling. Allah states in the Quran:
"O you who believe! Stand out firmly for Allah as witnesses to fair dealings and let not the hatred of others to you make you swerve to wrong and depart from justice. Be just, that is next to piety. Fear Allah, indeed Allah is well-acquainted with all that you do." (Chapter 5 Verse
The Quran encourages the arbitrator to be objective even if it means ruling against someone close to them. Allah states in the Quran:
"O you who believe! Stand out firmly for justice, as witnesses to Allah, even if it be against yourselves, your parents, and your relatives, or whether it is against the rich or the poor..." (Chapter 4 Verse 135)
Throughout the Prophet Muhammad's life there are numerous examples of his settling disputes in an amicable and equitable manner.
In the reconstruction of the Holy Kaaba in Mecca, a serious quarrel arose over the setting of the Hajr-e-Aswad- the black stone in one corner of the Kaaba. Each one of the four leaders of the Quraish tribe disputing over the issue was eager to have his way and ensure he was not outdone by the others. There was an impasse. They could not agree. One of the leaders suggested that the first person to arrive the next morning could be the one to place the Hajr-e-Aswad. As it transpired, the Prophet Muhammad was the first person to arrive. Not wishing to have the privilege himself, he asked the leaders of the four tribes to spread a sheet of cloth and place the Hajr-e-Aswad on it, and then told them to hold it at its four ends and together they raised it. Thus a serious conflict was avoided thanks to the Prophet's prudent action.
In various Islamic societies ADR has been developed to the society's cultural understandings and appreciations. For example the jirga system has been employed in South Asia for centuries. Usually it is a group of senior and experienced people who preside over the jirga and arbitrate. A few years ago whilst on a trekking trip to the tribal belt of NW Pakistan, I was fortunate to have witnessed firsthand the jirga system. The matter being arbitrated related to a land dispute.
It is now apt to look into greater detail as to the techniques that have been developed in the resolution of disputes, from an Islamic context. The methods can be categorized as follows:
1) Expert Opinion/ Mediation
2) Negotiation
3) Arbitration
1) Expert Opinion/ Mediation
Conflicts between groups can be caused by different perceptions of the reality or by different understanding of some matters. On many occasions, the groups involved in the conflict do not have enough knowledge to judge with authority which view is right or which isn't. The Syrian scholar Jawdat Said is reputed to have said "The judge of a conflict is only knowledge."
In such disputes, particularly in commercial disputes, it is best to bring in an expert to make a judgment on the issue. This expert should be able to win the trust of the conflicting groups and should possess the necessary professional credibility. The expert shall be able to convince both parties, which is instrumental in the settlement of the conflict.
2) Negotiation
Negotiation is the bargaining between the two parties that have recognized their conflict. Representatives of the conflicting groups can handle it. This negotiation process is very efficient when there is a tendency for reconciliation or agreement. It is not as effective as when the settlement will require judging in favor of one side. Some negotiators could view negotiation as a win-lose situation where gains by one party mean losses by the other. Negotiations can also be viewed as a win-win situation where the interest of both parties can be maintained. This situation appears to be unrealistic; however, there is usually an innovative potential solution that offers greater joint benefits than compromise. These solutions are termed integrative agreements.
3) Arbitration
As the degree of communication between conflicting groups decreases, the need for arbitration becomes urgent. Delays in arbitration can worsen the conflict. Arbitration can take various forms. An accepted neutral person or committee, or an official authority can handle it. In all cases, the arbitrators have to show knowledge of the issue, understanding of the overall interest of the organizations, and especially impartiality and justice. Allah states in the Quran:
"Allah does command you to render back your trusts to those to whom they are due, and when you judge between people, that you judge with justice, verily how excellent is the teaching which He gives you! For Allah is He who hears and sees all things." (Chapter 4 Verse 58)
In another verse Allah states in the Quran:
"If you judge, judge in equity between them, for Allah loves those who judge in equity." (Chapter 5 Verse 42)
Arbitration should involve conflict smoothing by emphasizing the common interests of the groups and de-emphasising their differences. Allah has ordained Muslims to reconcile the differences between one another, emphasizing the bonds of brotherhood that exist among them, belief and awareness of Allah.
"The believers are but a single brotherhood; so reconcile between your contending brothers; and fear Allah, that you may receive mercy." (Chapter 49 Verse 10)
The use of authoritative command can be very efficient in arbitration. However, if it is not coupled with justice and a clear explanation of the reasons behind the authoritative decision, it will only work in the short run. Authoritative command is needed when conflicts persist and start hurting the organization, or when one party is determined to be right while the other is at fault. In fact, if one party has transgressed upon another, Muslims are ordained to firmly stop this transgression. Once this aggression is stopped, Muslims have to reconcile between the two parties. Allah states:
"If two parties among the believers fall into a quarrel, make you peace between them; But if one transgresses beyond the bonds against the other then fight against the one that transgress until it complies with the command of Allah, but if it complies, then make peace between them with justice, and be fair for Allah loves those who are fair." (Chapter 49 Verse 9)
What is also important is that an arbitrator has good understanding of the matter and also has good knowledge of any legal issues that are involved. Allah states in the Quran:
"Ask the people of knowledge if you do not know." (Chapter 16 Verse 43)
Thus, and in the light of the aforementioned verse, it is critical that the arbitrator is an expert in the area of dispute. For example the writer who has legal experience in property, business and finance law has arbitrated matters involving property and business disputes. The writer would not arbitrate in family disputes as this is not an area of his expertise. Knowing one's limits as an arbitrator is important.
Another important factor for legal professionals to bear in mind is that in commercial matters the option to arbitrate is not always available if there is no such option available in the contract. This was reiterated in the recent case of Deutsche Bank AG v Tongkah Harbour Public Company Ltd [2011] EWHC 2251 (Comm).
I am of the opinion that under Islamic principles of equitable justice the option of arbitration and other ADR methods would and should always be available at the parties' discretion. Human error by omitting a clause from a contract should not bar parties from settling conflicts using ADR. I also believe that the Egyptian law, which states that unless there is a provision in the contract, ADR is not an option, contravenes Islamic law. In my opinion the position of the UAE is a more satisfactory one and one which follows the spirit of Islam. In 2009 the Dubai government passed a law establishing a new Centre for the Amicable Settlement of Disputes which is affiliated to the Dubai courts. The law makes it compulsory for the parties to refer disputes to the centre before commencing any trial. Cases only proceed to the courts once the parties have been unable to reach settlement within one month of referral.
To avoid difficulties in the future, the following clauses should be included in commercial contracts and leases to ensure the option of ADR, specifically arbitration, is open to the parties in the event of a dispute arising:
1) "Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the (country) Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. " (Excerpted from the American Arbitration Association.)
2) "Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be determined by arbitration administered by the International Centre for Dispute Resolution in accordance with its International Arbitration Rules." (Excerpted from the International Centre for Dispute Resolution)
Or
3) "Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be determined by arbitration administered by the (country) Arbitration Association in accordance with its International Arbitration Rules." (variation of option 1)
The parties may wish to consider adding:
1. "The number of arbitrators shall be (one or three)";
2. "The place of arbitration shall be (city and/or country)"; or
3. "The language(s) of the arbitration shall be ________________."
Arbitration in Different Jurisdictions
Arbitration administered by the Centre for Effective Dispute Resolution (CEDR).
"If any dispute arises in connection with this agreement, directors or other senior representatives of the parties with authority to settle the dispute will, within [ ] days of a written request from one party to the other, meet in a good faith effort to resolve the dispute. If the dispute is not resolved at that meeting, the parties will attempt to settle it by mediation in accordance with the CEDR Model Mediation Procedure. Unless otherwise agreed between the parties, the mediator will be nominated by CEDR. To initiate the mediation a party must give notice in writing ('ADR notice') to the other party(ies) to the dispute requesting mediation. A copy of the request should be sent to CEDR Solve."
Arbitration administered by Chartered Institute of Arbitrators (CIArb)
"Any dispute or difference arising out of or in connection with this contract shall be determined by the appointment of a single arbitrator to be agreed between the parties, or failing agreement within fourteen days, after either party has given to the other a written request to concur in the appointment of an arbitrator, by an arbitrator to be appointed by the President or a Vice President of the Chartered Institute of Arbitrators."
Arbitration administered by Dubai International Arbitration Centre (DIAC)
"Any dispute arising out of the formation, performance, interpretation, nullification, termination or invalidation of this contract or arising there from or related thereto in any manner whatsoever, shall be settled by arbitration in accordance with the provisions set forth under the Rules of Commercial Conciliation and Arbitration ("the Rules") of the Dubai Chamber of Commerce & Industry, by one or more arbitrators appointed in compliance with the Rules."
Arbitration administered by London Court of International Arbitration (LCIA)
"Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause.
The number of arbitrators shall be [one/three].
The seat, or legal place, of arbitration shall be [City and/or Country].
The language to be used in the arbitral proceedings shall be [ ].
The governing law of the contract shall be the substantive law of [ ]."
The above clauses can of-course be modified to include mediation and any other ADR methods to be made available to the parties.
About the Author
The writer is an experienced solicitor from England specializing in Islamic Finance, Construction, Real Estate and Commercial matters. He is also an arbitrator for the Muslim community in Birmingham. He has offered to mediate between the Pakistan government and Tehreek-e Taliban in Pakistan.
© Business Islamica 2012
