John Isaac spells out the differences between the four ... · PDF fileJohn Isaac spells out...
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John Isaac spells out the differences between the four Alternative Dispute Resolution methods - all of which can help you avoid expensive litigation. A s disputes regularly occur in life, it is important to know the best way to resolve them quickly and cost effectively and this article focuses on four Alternative Dispute Resolution (ADR) methods which may be used, ADR refers to procedures for resolving disputes that are distinguishable from Court-based processes (such as litigation where a judge makes a decision based on representations made by the parties or their lawyers). Negotiation is the first and simplest ADR method most often used to settle many disputes and disputing parties should always be encouraged to negotiate their differences as a first step toward achieving a resolution. If negotiation fails, mediation is often the next ADR method to try and is a consensual decision-making process in which an independent and impartial person, the mediator, works with disputing parties to help them explore and if possible reach themselves, a mutually acceptable resolution of some or all of the issues in dispute. The mediator has no decision-making authority regarding the outcome (and therefore has no power to impose a settlement) and does not offer advice, such as legal advice. Mediation differs significantly from arbitration and litigation. Whilst mediation is conducted "in the shadow of the law" and may involve consideration of the parties' legal obligations, the emphasis is on minimising the need for formal iegal procedures so strict rules of evidence and principles of natural justice do not apply. The parties are free to accept or reject terms of settlement suggested during the mediation. By contrast, arbitrators and courts are obliged to decide the particular dispute referred to them according to strict legal principles and cannot find a solution elsewhere. They are bound to apply the relevant substantive law and rules of evidence and procedure, follow natural justice principles and the parties are legally bound by an arbitrator's award or a judgment of the court. When is mediation appropriate? Mediation is especially appropriate where: • The parties have a genuine desire to reach a settlement. • The parties need the opportunity to talk openly and frankly. • Relationships between the parties are important and continuing, • Confidentiality is important, • The parties wish to determine their own outcome. • The parties wish to minimise iegal costs and save time. Mediation is a well-accepted technique for resolving disputes. It is commonly used in commercial, employment, housing, construction, environmental, public policy, community, family and many other disputes. Forty-five New Zealand statutes currently legislate for Mediation to be used as the primary conflict resolution method (before litigation is used). If mediation tails to resolve a dispute and further legal processes are required (such as arbitration or litigation), the time and effort put into mediation will not be wasted. The reason is that the parties and their advisers will be better prepared to assist the arbitrator or judge in defining the issues and achieving an efficient and final decision on the outstanding issues (subject to confidentiality). In mediation, the parties generally agree that the whole process will be confidential. The "without prejudice" rule also usually means that any information submitted or statements made by the parties in an effort to resolve an existing dispute cannot be used in subsequent legal processes (e.g. arbitration or litigation 4 8 NZB September 2010 nzbusiness.co.nz
Transcript of John Isaac spells out the differences between the four ... · PDF fileJohn Isaac spells out...
John Isaac spells out the differences between the fourAlternative Dispute Resolution methods - all of which canhelp you avoid expensive litigation.
A s disputes regularly occur in life, it isimportant to know the best way toresolve them quickly and cost effectivelyand this article focuses on fourAlternative Dispute Resolution (ADR)methods which may be used, ADR refersto procedures for resolving disputes thatare distinguishable from Court-basedprocesses (such as litigation where ajudge makes a decision based onrepresentations made by the parties ortheir lawyers).
Negotiation is the first and simplestADR method most often used to settlemany disputes and disputing partiesshould always be encouraged tonegotiate their differences as a first steptoward achieving a resolution.
If negotiation fails, mediation is oftenthe next ADR method to try and is aconsensual decision-making process inwhich an independent and impartialperson, the mediator, works withdisputing parties to help them exploreand if possible reach themselves, amutually acceptable resolution of someor all of the issues in dispute.
The mediator has no decision-makingauthority regarding the outcome (andtherefore has no power to impose a
settlement) and does not offer advice,such as legal advice.
Mediation differs significantly fromarbitration and litigation. Whilst mediationis conducted "in the shadow of the law"and may involve consideration of theparties' legal obligations, the emphasisis on minimising the need for formal iegalprocedures so strict rules of evidenceand principles of natural justice do notapply. The parties are free to accept orreject terms of settlement suggestedduring the mediation.
By contrast, arbitrators and courts areobliged to decide the particular disputereferred to them according to strict legalprinciples and cannot find a solutionelsewhere. They are bound to apply therelevant substantive law and rules ofevidence and procedure, follow naturaljustice principles and the parties arelegally bound by an arbitrator's award ora judgment of the court.
When is mediation appropriate?Mediation is especially appropriate where:• The parties have a genuine desire to
reach a settlement.• The parties need the opportunity to
talk openly and frankly.
• Relationships between the parties areimportant and continuing,
• Confidentiality is important,• The parties wish to determine their
own outcome.• The parties wish to minimise iegal
costs and save time.Mediation is a well-accepted technique
for resolving disputes. It is commonlyused in commercial, employment,housing, construction, environmental,public policy, community, family andmany other disputes. Forty-five NewZealand statutes currently legislate forMediation to be used as the primaryconflict resolution method (beforelitigation is used).
If mediation tails to resolve a disputeand further legal processes are required(such as arbitration or litigation), the timeand effort put into mediation will not bewasted. The reason is that the partiesand their advisers will be better preparedto assist the arbitrator or judge in definingthe issues and achieving an efficient andfinal decision on the outstanding issues(subject to confidentiality).
In mediation, the parties generally agreethat the whole process will be confidential.The "without prejudice" rule also usuallymeans that any information submitted orstatements made by the parties in aneffort to resolve an existing disputecannot be used in subsequent legalprocesses (e.g. arbitration or litigation
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- with very few exceptions). Everyoneattending the mediation conference (e.g.expert witnesses) is also bound byconfidentiality provisions.
There are several different 'types' ofmediation that may be used. Two of themain ones are:
1. Settlement Mediation (PositionalBargaining)Here the mediator starts with theseparate positions of the parties andencourages incremental bargaining untilthe parties have moved into a positionof agreement somewhere between theiropening positions. The mediator's mainrole is to determine each party's"bottom lines" and use persuasiveinterventions to move the parties instages through to a point of compromise.This model is appropriate where anongoing relationship between theparties is not of prime importance andwhere the issues in dispute arecontractual. This approach is helpful inallowing parties to settle the terms onwhich the parties will sever their ties ordetermine the amount to be paid by oneto the other.
2. Facilitative Mediation (Interest-based Bargaining).Facilitative mediation is an interestbased and problem solving approach tomediating a dispute. It encouragesparties to move away from positionsand to explore the needs that existbehind those positions.The mediator involves parties infocusing on the future and solving
problems rather than assigning faultand addresses interests instead ofblaming and justifying.Facilitative mediation is appropriate forany dispute but especially where theparties will continue to have an ongoingprofessional or personal relationship.
The advantagesMediation has many advantages whencompared to arbitration and litigation.
It is usually a cheaper, quicker and moreflexible method of resolving disputes.
In arbitration and litigation there are setprocedures for each process - e.g. thegiving of evidence and rights of appeal.Whilst in arbitration the parties have someflexibility, in mediation there is nearlyunlimited flexibility - e.g. in proceduralmatters parties may choose their mediatorand strict legal rights and responsibilitiesare seen as of less significance to theprocess.
Other advantages of mediation are:parties retain control of the process (inlitigation disputants delegate to theirlawyers and ultimately the court thefunction of resolving their dispute); reachagreements that meet their needs andinterests (win/win outcomes are possiblewhereas litigation only provides winner andloser outcomes). Litigation and inter-lawyercommunications within the adversarialsystem tend to escalate antagonism andmay increase costs.
Mediation is, however, not always asuitable method. For example, whereparties will not agree to mediate, aprecedent or matters of law need to bedecided or court orders are needed.
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ArbitrationIf mediation does not result in a resolution ofthe issues in dispute, arbitration may bethe third ADR method to use. It is a processwhere an independent arbitrator makes adecision settling the dispute afterreceiving/hearing the evidence presentedby the parties.
The arbitrator's decision is called an"award" which is final and binding on theparties and enforceable via the Court. TheArbitration Act 1996 contains statutoryprovisions governing the arbitration process.The strict rules of evidence and principlesof natural justice apply in arbitration, asthey do in Court.
Expert determinationA fourth ADR method which may beappropriate is 'Expert determination' -where an expert is engaged by the partiesto investigate and use his or her ownexpertise to determine the issues in dispute.The expert may make a determination withor without submissions by the parties andacts within the terms of reference set outby the parties.
In summary, if negotiation fails to resolvea dispute, mediation is often the first ADRmethod to try next and it may be used evenif litigation has been started. Shouldmediation also fail, arbitration may be thenext best ADR alternative to use beforeattempting expensive litigation.
John Isaac is managing director ofMediation & Arbitration Ltd.www.mediationarbitration.co.nz .
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