Alternative Dispute Resolution

Question 1

What are the different circumstances that ADR occurs in?

Answer 1

Ad hoc ADR: parties agree after the dispute has arisen that they wish to undertake ADR to resolve their dispute.

Contractual ADR: commercial parties contracted before the dispute arose to use ADR in the event of a future dispute.

Court-ordered ADR: the parties have commenced litigation but the court orders ADR before trial due to the circumstances of the case.

Legislation ADR: specific legislation relevant to the dispute or rules of civil procedure require parties to undertake ADR prior to commencing, or during, litigation.

Question 2

What is external dispute resolution?

Answer 2

Government-run complaints and ombudsman schemes. List of relevant ombudsmen can be found at the Australian and New Zealand Ombudsman Association (ANZOA).

Question 3

What are the benefits of external dispute resolution compared to ADR and litigation?

Answer 3

Complaining to an ombudsman is generally free, does not require any legal representation, and is designed to be efficient, impartial and independent. Ombudsmen also have the power to improve services where a common flaw is complained of and identified.

Question 4

What are the drawbacks of EDR in comparison to ADR and litigation?

Answer 4

Because it is free, it requires significant government funding. EDR proceedings also does not prevent subsequent litigation.

Question 5

What legislation regulates ADR?

Answer 5

Commercial Arbitration Act 2010 (NSW), Civil Dispute Resolution Act 2011 (Cth), and Federal Court Rules 2011 (Cth) (specifically pt 28: Alternative Dispute Resolution.

Question 6

What are the advantages of ADR?

Answer 6

It tends to be cheaper, quicker and less stressful than litigation. They also offer the potential to preserve the relationships of the parties and allow for flexible solutions.

Question 7

What are the problems with ADR?

Answer 7

The more formal the method of ADR, the more expensive, time consuming and stressful it may be. ADR is often in addition to litigation rather than in replace of it.

Question 8

What is negotiation?

Answer 8

Negotiations aimed at settling the dispute itself.

Question 9

When can negotiation arise?

Answer 9

Conferences, formal correspondence, informal discussion, electronic communications, etc.

Question 10

Is negotiation voluntary or involuntary?

Answer 10

Often entirely voluntary but there are also circumstances where courts direct parties to negotiate or statute requires negotiation. E.g. FMG Pilbara Pty Ltd v Cox (2009) 175 CLR 141 concerning legislative obligations to negotiate in good faith under s 31 of the Native Title Act 1993 (Cth).

Question 11

What is an Offer of Compromise?

Answer 11

Offers to settle disputes which comply with specific legislative guidelines. Form of negotiation. Can be advantageous where the offer is not accepted and the matter proceeds in a court to a final judgment.

Question 12

What are Calderbank offers?

Answer 12

A letter offering to settle a case for a certain amount, and the offer must remain open for a reasonable amount of time. Important for the allocation of legal costs where such an offer is rejected.

Question 13

What are the advantages of negotiation?

Answer 13

Speed, cost, flexibility, confidentiality.

Question 14

What are the disadvantages of negotiation?

Answer 14

Lack of procedural protection. Least final and binding form of ADR. Heads of agreement would be drafted by lawyers. Heads of agreement are signed by all parties to the negotiation and set out the terms of settlement to the extent agreed but are not deeds and are not automatically binding on the parties. The only way to ensure a negotiated settlement is binding is by executing a deed of settlement.

Question 15

Can heads of agreement be binding?

Answer 15

They can be held to constitute a binding agreement between the parties depending on the terms of the agreement and the conduct of the parties. E.g. Re Leslie Muir Holdings Pty Ltd [2019] NSWSC 1519 lists three categories where the agreement terms are of a contractual nature.

Question 16

What is mediation?

Answer 16

Involves exploring the means for settling a dispute with the parties, sometimes their lawyers, and a third-party independent mediator.

Question 17

What are sources of mediation regulation?

Answer 17

Pt 4 (ss 25-34) of the Civil Procedure Act 2005 (NSW).

In 2008, a National Mediator Accreditation System (NMAS) was introduced which is administered by the Mediator Standards Board (MSB). The Australian National Mediator Accreditation System sets out Accreditation Standards and Practice Standards.

Question 18

What are the advantages of mediation?

Answer 18

Inexpensive, fast and flexible. Gives an opportunity to discuss and a catalyst for settlement or a means of improving the efficiency of subsequent dispute resolution, such as arbitration or litigation.

Question 19

What are the problems with mediation?

Answer 19

A mediation agreement is not binding unless accompanies by a formal agreement, such as a deed of settlement. Mediation can also be expensive and time-consuming. If the mediation is undertaken compulsorily, in circumstances where one or more parties may have no real intention of settling, then the mediation costs may be largely wasted.

Question 20

What are the similarities between mediation and conciliation?

Answer 20

Confidential, non-binding, flexible and involves the disputing parties attempting to resolve their dispute with an independent third party.

Question 21

What are the differences between mediation and conciliation?

Answer 21

Less common for conciliation to involve lawyers than mediation. Conciliation is more likely than mediation to be administered by courts, tribunals or other government-funded institutions. Conciliation is also more likely to focus on discussing issues and exploring a mutual resolution rather than bargaining to reach a monetary compromise. Conciliators “may be more directive and advisory” than that of arbitrators.

Question 22

What are some types of conciliation?

Answer 22

AHRC conciliation service for victims of discrimination by the Commonwealth and discrimination in employment.

Family Court conciliators, but the conciliators are not allowed to give the parties legal advice, although they can discuss legal principles.

Question 23

What is arbitration?

Answer 23

It is final and binding and is the most formal means of resolving a civil dispute other than litigation.

Question 24

When would you use arbitration?

Answer 24

When disputes are of great technical depth, require cultural or religious understanding, and international parties because of the ability to choose arbitrators with pre-existing expertise, understanding, and/or neutrality to resolve their disputes.

Question 25

What are the sources of arbitral law?

Answer 25

International Arbitration Act 1974 (Cth) for private international arbitration, and the Commercial Arbitration Act 2010 (NSW).

Question 26

What are the advantages of arbitration?

Answer 26

Uniform domestic commercial laws make private arbitration attractive. Offers finality, enforceability, faster, cheaper, less formal and more specialised environment. Is the only ADR that is determinative and confidential.

Question 27

What are the disadvantages of arbitration?

Answer 27

Too expensive, time-consuming, possible legal dispute about their agreement to arbitration, and there is the possibility of appealing.

Question 28

How can an arbitration decision be appealed?

Answer 28

Under the Commercial Arbitration Act 2010 (NSW), and explained in Westport Insurance Corporation v Gordian Runoff Ltd (2011).

Question 29

What is case appraisal?

Answer 29

Operates similarly to court-ordered arbitration. It is court, or tribunal, ordered and the case appraiser hears both parties’ evidence and submission and makes a decision. The decision is not binding and the parties can litigate if unhappy with the appraiser’s decision.