There are alternatives to formal court litigation which can sometimes lead to commercial outcomes more quickly and cost effectively. These fall under the umbrella of alternative dispute resolution which is referred to as ADR.
ADR processes are generally comprised of:
- Mediation;
- Arbitration;
- Conciliation; and
- Expert determination.
Each of the above ADR processes are similar in nature and procedure but are distinguishable based on key features. Each is discussed below.
Mediation
Mediation is the most informal of all the ADR procedures. An independent third party is appointed by agreement by the parties and is paid a fee for his or her time split between the parties. That person is usually a recognised mediator and has undergone some formal training.
The procedure prior to and at the mediation session will largely be run by the selected mediator and styles may vary depending on the mediator chosen. The mediation session will usually be a half to one day, but can be longer if there are many or complex issues to be worked out.
The parties can be represented by their solicitors but need not be, although they generally are.
Perhaps the key benefit is that the mediation session provides an informal setting (usually in one of the solicitor’s offices) for the parties (or their controlling minds) to vent their frustrations and be heard. This process by itself allows the parties to ‘clear the air’ and to then focus on the real issues in dispute.
The main feature is that nothing said in the mediation – not even what the mediator might say about the legal position of one of the parties – can be relied upon if later court proceedings are commenced in the event the mediation session does not result in a settlement.
If a settlement is reached, the lawyers will usually prepare a binding deed of settlement which formally records the parties’ legal rights. That deed can be enforced via later court proceedings if one of the parties does not comply with the terms of settlement.
At ICL Lawyers we utilise only the most commercial mediators and have had much success with this process.
Arbitration
Arbitration generally has the same characteristics as mediation with some key differences.
These include, for example, that although the appointment of the arbitrator is by agreement of the parties, there can be more than one arbitrator and the arbitration process is generally more formal than a mediation.
Most importantly, the key difference between a mediation and arbitration is that the decision of the arbitrator (or arbitrators by majority) is binding on the parties without the need to register the decision in a court. The decision generally only needs to be registered if court enforcement is needed, for example, where one of the parties to the decision is not complying with the decision.
Arbitration is therefore the main real alternative to formal court litigation.
Conciliation
Conciliation is entirely similar to mediation in terms of process and outcome, except conciliation is usually reserved for disputes between parties involving something very technical, in fact so technical that even the solicitors for the parties may not have a complete understanding of it.
The person appointed as conciliator by the parties will generally be a renowned expert in that aspect of the technical dispute, otherwise the process is the same.
It is common for some mediators to also act as conciliators but in selective areas of expertise only given the many years of experience required.
Expert Determination
Expert determination is to Conciliation what Arbitration is to Mediation.
Expert determination is essentially the same as Conciliation (as both involve highly technical aspects to the dispute), except that the determination is binding on the parties.
Usually, parties only engage an expert determination in relation to discrete, but highly technical, issues in dispute, and then, only when there is significant commercial risk involved.
Generally, the fees payable to an expert determiner are quite high as compared to a general mediator as there are less experts in each particular field.
We have noticed in the last few years that even where formal litigation proceedings have been commenced in the courts, it is increasingly becoming the courts’ standard practice to refer the parties to some form of ADR. It therefore makes commercial sense to explore these options prior to commencing formal proceedings, and in particular, where there are non-legal issues which might be resolved outside of the expense of the court room.
At ICL Lawyers we have over time learned to engage the best providers of these ADR services, regardless of the type of dispute. If you need any assistance contact one of our lawyers at info@icllawyers.com.au or call 02 9138 7800 for a no-obligation discussion and for expert legal advice.