Alternative dispute resolution (ADR)

Disputes are often resolved outside the Court process. ADR methods are alternatives to litigation. This may occur by negotiation, mediation, arbitration, conciliation or independent expert determination of the disputed issues. We are involved in various ADR methods, including those below.

Negotiation between disputing parties in an attempt to resolve disputes. Negotiation is the most commonly used method of dispute resolution. Negotiation occurs in a private forum. Any settlement can be subject to agreed confidentiality terms.

Mediation between the disputing parties, who are usually separately represented, with the assistance a neutral third party (called a mediator). Mediation is quite different from commercial litigation. It always requires both parties to compromise what they may otherwise be seeking to obtain. Mediation can be required by statute (e.g. under the Franchising Code), by order of the court or by contractual terms agreed by the disputing parties. The mediator assists the disputing parties to resolve the dispute. Mediation occurs in a private forum and any settlement can be subject to agreed confidentiality terms. In mediation the mediator seeks to coax the disputing parties towards a resolution of the dispute. The structure of a mediation varies and usually occurs at the direction of the mediator, in consultation with the disputing parties, who can more objectively (than the disputing parties) isolate the disputed issues, and seeks develop options/proposals for the resolution of those issues. Mediation is not always successful and the costs of the mediator are usually agreed to be paid by the disputing parties.

Arbitration of commercial disputes. Arbitration is a private forum that has long been used to settle domestic and international commercial disputes and exists. Disputing parties may agree to submit the dispute to arbitration either in an arbitration clause in a contract they have entered into or when the dispute arises. In an arbitration an independent arbitrator (acting in a judicial manner similar to the litigation process) applies the relevant law or industry practice and makes an ‘award’ to finalise the dispute. Advantages of arbitration are seen as avoidance of publicity (as it is conducted in private); avoidance of delay in settlement of the dispute; a simpler and less formal procedure than in commercial litigation; reduction of expense (which is not always the case as the parties are liable for the arbitrator’s fees, usually calculated at professional rates, and the hire of facilities); and, if the dispute is of a technical nature or involves complex accounting or commercial issues, a person who has the required technical qualifications and expertise may be appointed arbitrator.

Conciliation The terms ‘mediation’ and ‘conciliation’ are often used interchangeably, however, they are two distinct processes. Conciliation is often a statutory requirement (e.g. Industrial Relations Act and Federal and State anti-discrimination legislation). In conciliation, the neutral third person assists the parties to negotiate as in mediation but exercises greater influence over the outcome than is the case in mediation. The conciliator may suggest options and possible solutions and is generally much more directive than a mediator and may in some cases make an award.

Independent Expert Determination provides for the appointment by the parties of an independent expert to determine (identified) disputed issues of fact or law. The expert acts in an investigatory/inquisitorial manner to obtain information from the disputing parties so that the expert can properly determine the issue. The parties can by agreement decide if the expert’s determination is to be final and binding on them. If not, the determination can be used as a basis for further negotiation to settle the, or other, disputed issues. At least this process can clarify the disputed issues put to the expert. The issues to be determined by the expert may be factual, trade or industry practices or customs, or legal. Independent expert determination is not arbitration, as Arbitration legislation does not apply to expert determination.