Predictability

534 _{This is related to the ‘mass litigation’ problem faced by manufacturers of drugs and medical devices. Hence,} once their products are associated with consumer injuries, the healthy profits they make becomes a hedge against the loss of revenue due to the adverse publicity generated by litigation as well as the costs of litigation. See Mullady RG, ‘Considerations in the Management and Defence of Pharmaceutical Litigation in the United States’ in Howells GG (ed), Product Liability, Insurance and the Pharmaceutical Industry: An Anglo-American Comparison (Manchester University Press 1991) 122.

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It has been demonstrated that insurers are wary of litigation due to unpredictable verdicts and huge legal fees and expenses.535 Moreover, a study conducted by Friedman and Ladinsky showed that the US workers’ compensation scheme is only effective due to, inter alia, the shortcomings of litigation unless it imposes a strict or absolute liability on employers to ensure that they subscribe to employee cover.536 _{Thus, litigation can be very effective, if it is}

accompanied by strict duties.

With regard to the IDC, until the procedures utilised by the Committees and the ambiguities within the empowering legislation are clarified, the present status of the Committees and their freedom to interpret the principles of justice continue to pose a direct threat to the fair and efficient resolution of insurance disputes. Although it would seem as if the IDC regime embraces the doctrine of precedent to achieve efficient justice and protect parties’ rights, the provision on the use of precedent is quite vague and none of 102 Committee decisions analysed by the researcher cited and relied on precedent. Also, there is no hierarchy or priority stated for the sources to be availed of by the Committees. The Working Rules do not delineate which decisions constitute binding or mandatory authority and which constitute persuasive authority. From a theoretical perspective, this is quite problematic because ambiguity creates a substantial risk of bias towards the policy preferences of adjudicators and possibly, miscarriage of justice.537

The Working Rules are also silent on the issue of enforcement. It is noted in Chapter 2 that the influence of the Continental European civil law tradition is strong in the KSA. The hallmark of the civil law system is the comprehensive codification of its law into frequently updated legal codes. These codes provide specifically for all aspects of a matter being tried and it is ventured here that codification would rectify the shortcomings indicated above. In this vein, Al-Obeikan clarifies:

The human mind is limited, which may cause conflict between opinions. It is for this reason codification is necessary. It would contribute to establishing justice. It will facilitate a judge’s work and relieve him of conducting difficult research in the books of jurisprudence. We are living in times that require rapid verdicts in accumulating cases. This process will be speeded up by codification. Codification would also be useful to end the serious matter of conflicting judgments that

535 _{See OT Beatty, ‘Workers’ Compensation and Hoffman Plastic: Pandora’s Undocumented Box’ (2011) 55 St} Louis University Law Journal 1211, 1221-1222 (discussing the problems encountered by workers, employers and insurance companies in the civil justice system).

536 _{Friedman and Ladinsky (n 240) 70-71.}

537 _{W Fansworth et al, ‘Ambiguity about Ambiguity: An Empirical Inquiry into Legal Interpretation’ (2010) 2(1)} Journal of Legal Analysis 257, 271.

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sometimes occur within the same case and in the same city, perhaps even in the same court or that are passed by the same judge.538

The KSA’s insurance sector is currently facing an issue that was previously acknowledged by the Commissioner of Australia in 2005:

[A] large number of Tribunals have been created, with a wide variety of powers. Many of these Tribunals were set up in response to specific needs, and lack any coherent framework or settled pattern. Reaction to a new statutory scheme, or the emergence of a particular kind of dispute, has often been the establishment of a new Tribunal.539

Codification, or at the very least, express acknowledgement in the Working Rules and related regulations, will mean that the IDC Committees and parties will be clear on the scope of authority, jurisdiction, power, and enforcement. Such clarity will certainly enhance the effectiveness of the system. The above shortcomings show that the proceedings of the IDC are not sufficiently streamlined to support the contention that the KSA’s administrative tribunal model is a superior alternative to litigation, given that the tribunal functions like a court and does not provide a shorter and more cost-effective path towards making a comprehensive set of remedies available to policyholders. However, as noted above, a practical inquiry may provide different findings to the theoretical and doctrinal analysis conducted above. Hence, it may be difficult to argue that the IDC is not a more efficient and effective dispute resolution option when compared to litigation without examining actual decisions of the IDC.

3.5 Conclusion

The premise of this Chapter is that the consumer should be able to credibly threaten a form of legal recourse against insurers who wrongly cut payment claims. It has been argued that litigation has historically been a form of legal recourse which readily provides a comprehensive set of potential remedies for consumers. These remedies include, inter alia, punitive damages, attorneys’ fees and expenses, and emotional stress damages. This Chapter has shown that there are shortcomings in the litigation model. In particular, the limitations in the available remedies, access to the courts, and the litigation process. The legal process is inefficient and works in favour of the insurers; it is slow, costly, and unpredictable. In this light, this Chapter considered

538 _{AM Al-Obeikan, The Codification of Islamic Shariʿah (Asharq al-ʾAwsat 2006) 36.}

539 _{M Barker, ‘The Emergence of the Generalist Administrative Tribunal in Australia and New Zealand’ (8th} Annual AIJA Tribunal’s Conference, 9 June 2005) <http://www.sat.justice.wa.gov.au/_files/JBspeechGeneralistAdministrativeTribunal.pdf> accessed 14 November 2019.

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the argument that the expenses and unpredictability of litigation could be avoided or reduced by channelling disputes into an administrative system.

What has commonly been shown is that in most societies, including the KSA, there is a need for a form of flexible adjudication, which is suited to changing social requirements and industry needs, as opposed to the rigid formal procedures that are ingrained in the operations of ordinary courts of law. The administrative tribunal model seeks to achieve this objective, because it consists of an agency that is not part of the judiciary but is tasked with determining disputes and passing binding decisions. It is essentially designed to overcome the shortcomings of the litigation system. As a result of the tribunal’s reduced scope and specialised nature, it is able to offer increased speed and efficiency at a more affordable cost for the parties involved, in comparison with the realities of traditional litigation.

It is also shown that the administrative tribunal in the KSA tasked with settling insurance disputes, the IDC, is an interest-based option that enjoys a high level of independence and is governed by rules that afford parties sufficient time to prepare and present their cases. Nevertheless, the IDC Committees have tribunals in only three cities, implying that parties who do not live in these cities have to able to meet the additional costs of travel and accommodation. Also, there is no conclusive evidence that IDC Committees constitute a better dispute resolution option than litigation; at least, from a theoretical perspective. The provision on the exercise of precedent is somewhat ill-defined, and the researcher was unable to identify any Committee decision that cited and relied on precedent; the Working Rules do not mention what constitutes binding, mandatory or persuasive authority; neither do they clarify the basic elements that all Committee decisions should contain, how decisions should be enforced, and the grounds for objection and appeal. These shortcomings may be overcome by enacting new codes or rules to clarify the enabling legislation. In the meantime, the next Chapter seeks to determine whether opting for other forms of ADR (negotiation, mediation and arbitration) may be preferable to the administrative tribunal model, given the flexibility provided by these forms of ADR over the choice of forum, and substantive and procedural law.

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Chapter 4: Comparing the Administrative Tribunal Model and Other