Arbitrating & Mediating Tax Disputes
Before a detailed discussion into the applicability of mediation and arbitration in the resolution of disputes pertaining to Tax matters, these two key words; mediation and arbitration should be expounded. It is well known that the aforementioned terms are major aspects of Alternative Dispute Resolution, ADR for short. Alternative Dispute Resolution can be defined in a broad sense as any method of resolving a dispute with the exception of litigation. The term can refer to everything from facilitated settlement negotiate directly with each other prior to some other legal process . In truth, throughout human history people have found means of resolving disputes outside the courtroom. In this our age ADR has come as a means or a panacea to the many problems of different Legal systems throughout the world. These problems could be listed has follows;
• Delay in the determination of cases
• Cost of litigation
• Ineffective determination of cases involving technical matters
• Destroying of trade or commercial relationship because of the process of cross examination
ADR also been used has a method of resolving international disputes. In this area the most likely method of ADR used is arbitration. Parties to a dispute agree to arbitrate or operate under a contract that specifies that arbitration is the remedy. In some cases arbitration or litigation may not be necessary, instead legal representatives may just organise an informal negotiation where they used their knowledge and skill of ADR to reach some sort of consensus which both parties can agree has binding upon them.
Formal Alternative forms of dispute resolutions can be divided into binding and non- binding. Negotiation, mediation and conciliation are non-binding, and depend on the willingness of the parties to reach a voluntary agreement. Arbitration may be either binding or non-binding. Binding arbitration produces a third party decisions that the disputants must follow even if they disagree with the result, much like a judicial decision. Non-binding arbitration produces a third party decision that the parties may reject. This forms of ADR have equally contributed in various ways to the development of the ADR nationally and international.
Alternative dispute resolution, although not a new field, is still in a developmental stage in Nigeria. There have been however, great strides in the field but in the development of the governing status and inculcating the ideology of the field in the minds of young and up-coming legal practitioners. In the area of governing laws, relevant ones that should be notes are for example, Arbitration and Conciliation Act, United Nations Commission on International Trade Law (UNICITRAL) and Lagos State Arbitration Law. Nigerian ADR is also governed by international treaties to which the country is a signatory too.
Mediation has an alternative form of dispute resolution has a unique twist to it. In this method of resolving dispute, both parties to the dispute agree to meet at a certain place at a certain time to resolve the matter or matters in contention under the guardian of a neutral party, this is where the twist sets in, the neutral party in this case does not have the power to reach a decision, binding or otherwise on the matter of contention. The neutral party or mediator sole duty is to guide the disputing party to reach a consensus that which the parties to a dispute can agree has having binding power on them. “Mediation is a flexible process conducted confidentially in which a neutral person actively assists parties in working toward a negotiated agreement of a dispute or difference with the parties in ultimate control of the decision to settle and the terms of resolution” .Mediation in its own right has not failed to match up with the standard set by its counter-part form of ADR in both the national and international scene.
Now that a proper background has been given to these two alternative methods of dispute resolution, I will look into the ways which arbitration and mediation can function to effectively resolve disputes arising in tax matters. Disputes that arise in tax matters are technical in nature and at which point the conventional court may not possess the specialised knowledge to be able to effectively give a judgment that parties to a dispute will hold to be pleasing. It must be noted that arbitration and mediation have been proven effective in the resolution of tax disputes around the world. In Kenya, has about March 31 2017, about 140 tax disputes which had been pending before the Tax Tribunal, have been resolved through the methods of ADR. In countries like England and America where there are fully established institutions which specialise in to the administration of tax matter, like the IRS (Internal Revenue Service) and HMRC (Her Majesty’s Revenue and Customs.), both intuitions over years incorporated ADR method in the process of resolving disputes in tax which most likely occurs when a tax payer disagrees with the finding of such bodies and it is for this reason the these bodies employ the use of ADR for effective and quick dispute resolution . In Nigeria, even though a specialised Tax Appeal Tribunal is in operation, however, it is yet to incorporate ADR methods into its proceeding. It is at the point that I submit that a provision should made which creates procedure in which the process of mediation can be employed and if it fails, there is an arbitration panel is created like that of the National Industry Court which is empowered with jurisdiction to decide on matter brought to it, just has a relevant law has made it possible for the constitution of an arbitrary panel for the NIC, one should be constituted under and in line with the processes of the Tax Appeal Tribunal.