22 November 2011 by

Business Rescue, insolvency and the new Companies Act dominate business dispute resolution

South African businesses should consider mediation

Business rescue, insolvency, company law disputes under new Companies Act and contractual disputes have kept dispute resolution lawyers busy in 2011. This is according to Richard Marcus, Director in the Dispute Resolution practice at Cliffe Dekker Hofmeyr business law firm in Cape Town.

“As the economy has weakened, the activity in debt collection, insolvency and business rescue has increased,” Marcus explains.

Marcus is currently engaged in the business rescue of a substantial road transport company, which he describes as both challenging and interesting job.

“If this businesses rescue works, it might be the first successful business rescue in South Africa and we will be sure to tell the South African business world what we learnt along the way,” he says.

Marcus is also currently handling the biggest arbitration in the history of a in international pharmaceutical company. It involves a dispute with a local listed company with a claim value in excess of R300 million. The arbitration is set to run for six months next year.

He is also involved in an interesting shareholder's action to investigate and remove directors of an investment company for fraudulent misconduct. This will be an interesting test of the new Companies Act against the old.

He says the textiles industry is struggling in the current economy, leading to Marcus having to assist with a debt restructuring of a substantial local textile manufacturer earlier this year.

Although mediation as an alternative form of dispute resolution is theoretically incorporated into Companies Act, Marcus says that, “Regrettably the mind-set of South Africa litigators is conservative with regards to dispute resolution methodology.

“I am a trained mediator and it is a very effective way to resolve a dispute quickly. However, there is not much buy-in as yet from the South African commercial public with regards to mediation.

“There is more emphasis in United Kingdom, Australia and Canada on alternative dispute resolution and mediation. European jurisdictions are still conservative in approach, and are more likely to resolve a dispute with litigation, the same as the United States, which is a lawyer’s paradise in terms of litigation,” he notes.

“South African businesses should consider mediation as an alternative form of dispute resolution. This method could save them a substantial amount of time and money as opposed to the more lengthy arbitration or litigation routes. This is an important consideration as we head towards another difficult year for the economy,” he adds.

Richard Marcus, Dispute Resolution

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