Alternative Dispute Resolution - Martin Dillon

Find information about mediation, arbitration, conciliation, negotiation and other aspects of alternative dispute resolution.

Please note: Articles on this website were originally published by CourtKeys.com in 2015 and may now be out of date. Revised and updated content is included in Civil Litigation for Non-Lawyers [available here]. Disclaimer

Parties involved in a dispute, or ‘disputants’, may prefer to avoid litigation and resolve their disputes in other ways. This can be for a variety of reasons including confidentiality, cost and speed. Alternatives to litigation are collectively known as ‘alternative dispute resolution’ or ‘ADR’ for short.

Resolutions can be achieved cheaper and faster than litigation in some cases, and the parties may agree to keep matters raised in the course of the dispute confidential. The confidentiality aspect of ADR can be very attractive where parties are reluctant to air their dirty laundry in open public forums such as the courts. ADR can also hold attraction for those hoping to preserve a productive relationship despite a problem. That relationship may be able to be maintained if the problem can be resolved by cooperation, whereas there might be little chance of that once an adversarial court case is filed.

Alternative dispute resolution options include:

1. negotiation;

2. conciliation;

3. mediation; and

4. arbitration.

ADR concluding with a settlement agreement

Negotiation, conciliation and mediation are all ADR options that can resolve disputes by facilitating settlement agreements. The parties are not told what to do. They are encouraged to cooperate and agree to a resolution. There is no obligation on them to settle, but it can be in their interests to do so if an agreement can be reached that is sensible in the all the circumstances.

See the part of this text dealing with ‘settlement’ below for things to keep in mind when negotiating a settlement and recording a settlement agreement.

Negotiation

This can be the least formal of the alternative dispute resolution options, and you may have already tried to negotiate a resolution to a problem before giving serious consideration to ADR. It could be worth considering this option even if you have tried to negotiate previously though. Types of negotiations can range from the very informal to more structured arrangements involving lawyers, written statements of position, pre-agreed itineraries and ‘ground rules’ such as how disputants to address one another, who is to discuss what and when each party has an opportunity to speak. These can be an extremely cost effective way to resolve disputes.

The more formal kinds of negotiation often begin with a conversation between lawyers who communicate their client’s positions and suggest settlement terms. The lawyers then revert to their clients for instructions and sometimes that is all it takes to reach agreement.

Some kind of preliminary negotiation is an obvious and sensible step that judges expect to have occurred before litigation is commenced. Missing this would not necessarily affect any ruling on the dispute itself, but may factor in a decision on costs. Legal costs are often awarded to a successful party, but the award is discretionary and may not be given if litigation was avoidable.

Hurled accusations and threats of legal action make for good TV drama but often translate into wasted time and needless costs. Nobody likes to be bullied or made to feel like a bad guy, so resistance can be expected. Any such resistance can have more to do with emotion than the rights and obligations at issue, but still hinders progress toward a resolution. Hurt feelings can sometimes become an additional complicating factor that is difficult to identify and address in a commercial context.

Structure

You cannot expect to negotiate in any meaningful way if you are not given an opportunity to say your piece and let the others involved say theirs. That means taking turns to talk and listen. See those parts of this text dealing with the format of hearings and trials for descriptions of how you might go about putting forward a position and addressing any response by way of reply.

Statements of position

Preparing and issuing a written statement of your position to the others involved in a negotiation might help them to understand your point of view and focus the negotiation. Such a statement would amount to a synopsis of submissions or synopsis of argument. See those parts of this text dealing with synopses of submissions for some idea of how to prepare those document.

Briefs of evidence

Similar to a statement of position, written briefs of evidence might help the others involved in a negotiation to understand the strength of your evidence. A brief of evidence is a written statement of what a witness would say if called to court. In the context of a negotiation, briefs may assist the parties by reducing speculation about the strength or quality of evidence that witnesses might give. That can help to focus debate. See parts of this text dealing with briefs of evidence for more about these documents.

Bundles of documents and other evidence

Like briefs of evidence, a bundle of key documents of evidence supporting your position may also help to focus debate: The parties would be able to actually see what is being referred to in a statement of position or brief or evidence. That puts them in a position where they can be satisfied about what the evidence actually is. Often, the more that is open to doubt the less progress can be made in a negotiation. See those parts of this text dealing with bundles of documents for more about these and the evidence that they might include.

Conciliation

Conciliation involves a neutral intermediary who meets disputants separately to discuss their story, the other side, common ground and possible settlement terms. This collaborative exercise can help to defuse strong emotions and reconcile differences by way of concession.

The structure of a conciliation meeting can be similar to a structure for a formal negotiation, although the parties may also be removed to separate rooms from time to time. The conciliator often acts as a kind of ambassador or messenger between the parties where they separate. The separation can help disputants to step back from details or dilute emotions and thereby facilitate settlement. See the part of this text dealing with the structure of a negotiation above for more on the general structure you might expect of a conciliation.

A statement of position and evidence in support can also be helpful. See those parts dealing with ‘statements of position’, ‘briefs of evidence’ and ‘bundles of documents and other evidence’ in the ‘negotiation’ part of this text above for more.

Mediation

Mediation involves elements of negotiation and conciliation. The disputants meet before a mediator who assists them to negotiate a settlement. They are often separated at some point for the mediator to hold private discussions on possible settlement terms as a conciliator would.

You may find yourself having to attend mediation even if you chose to litigate rather than attempt alternative dispute resolution. The District Court, for example, may require you to attend a ‘judicial settlement conference’ before it will allow your case to progress to trial. A judicial settlement conference is a kind of mediation in a court with a judge acting as the mediator. The High Court also makes use of these kinds of conferences but the District Court requires them in the ordinary course for all except the simplest cases. Cases before the Family Court, Tenancy Tribunal and Employment Relations Authority often feature mediation or judicial settlement conference components as well. See the parts of this text that deal with judicial settlement conferences for more on those types of conferences.

The structure of a mediation can be similar to the structure of a formal negotiation or conciliation, as can the materials such a statement of position and evidence that may be useful. See the parts of this text dealing with ‘negotiation’ and ‘conciliation’ above for more on those. Also, see those parts dealing with employment mediations for some idea of what to expect of mediations in that context.

Settlement

The point of a settlement agreement is to bring an end to a dispute: If the dispute continues then it is not really settled. Matters to consider when negotiating settlement include:

1. What, exactly, are you trying to settle?

It may be that you have a number of different disputes with the same party. If you are attempting to settle only some of them then you will need to be careful to define which ones. Many settlement agreements set out a background to the dispute(s) being settled. Equally, many agreements record settlement of ‘all issues between the parties’. If you are inclined to settle ‘all issues’ then you need to be careful to make sure you are not inadvertently or arguably settling some problem you did not even realise you had. The risk of this remains even if you are careful to avoid it.

2. Who is to do what, and how?

A settlement agreement might not be worthwhile if you end up having a whole new dispute about what it means. Who is to do what, and how they are to go about doing it should be carefully set out in order to avoid that possibility.

Exactly how much detail is called for will depend on exactly what has been agreed. For example, if one party has agreed to pay another by instalments over time then the amount of each instalment and the time each instalment is due ought to be written down. Recording how each instalment is to be paid and where it is to be paid to may also be worthwhile.

Other things to consider might include:

2.1. What is to be done about any claim to legal costs or other costs?

2.2. What is to be done about any claim to interest?

2.3. What is to happen to any existing court case or ADR action?

2.4. Should the settlement agreement be made conditional on a party doing something such as making a payment?

3. What is to happen if a party defaults on the agreement?

If another party fails to uphold its end of a settlement agreement then enforcing the agreement is an option that would ordinarily be available to you. The situation is somewhat different where the agreement is conditional on something or other and that condition was not met. In that case it would usually be as if there was no agreement at all, and the parties would go back to trying to resolve their dispute one way or another.

Where another party defaults on an unconditional settlement agreement then you would have to enforce the terms of that agreement as they stand unless there are specific terms for what is to happen upon default or ‘default provisions’. There can be no going back to the dispute unless the default provisions say so or the settlement agreement cannot be relied upon by any party or become ‘null and void’.

Default provisions can be important where you have made some concessions or given some discounts in order to reach settlement. That is because you could end up only being able to enforce the discounted settlement terms rather than the full claim you were making before you agreed to settle. Default provisions can get around that by requiring the other party to give everything you had claimed of them before you agreed to settle, plus interest (if applicable) and plus legal costs of making your claim, making the settlement agreement and enforcing the settlement agreement upon default. Opposing parties would of course have to agree to default provisions in a settlement agreement, but if they do not then the agreement might not be worth making in the first place.

If you do include default provisions, and if those provisions require another party to pay costs upon default, then it may be worth specifying the costs that would become payable or how they would be calculated. You may be able to negotiate for costs ‘on and solicitor and client basis’ or perhaps costs calculated in accordance with a particular court scale. See those parts of this text dealing with costs for more on the various court scales and how they differ from ‘indemnity costs’ or costs on a solicitor and client basis.

4. Are the terms of the settlement to be kept confidential?

It may be wise to negotiate for a term that requires the parties to keep the terms of the settlement agreement confidential except for enforcement purposes. You may also be interested to go a step further and require the parties to keep various matters arising in the course of the dispute confidential, or prohibiting the parties from disparaging one another.

What might follow from the parties breaking any confidentiality term is another matter. You may prefer to leave that question open and rely on defamation or other relevant laws, or perhaps negotiate a fixed penalty fee or schedule of penalty fees depending on the seriousness of the breach.

5. Governing law and jurisdiction?

There may be some need to have the settlement agreement governed by the laws of a particular country or to agree on the court that would have jurisdiction over the agreement. If that is the case then you should carefully record the country and/or court in the agreement.

Settlement Agreement Template

You can download a template Settlement agreement here.

ADR concluding with a determination

There is another species of ADR that resolves disputes by putting some neutral third party in the position of a judge and having him or her make a decision. Disputants can have more than one ‘judge’ if they like, and who that person or those people might be is up to them. They might agree to have ‘judges’ appointed by a neutral third party if they cannot agree. Such neutral third parties could be the president of the New Zealand Law Society or retired High Court judge for example.

Parties would normally agree that they will be bound by the outcome of these kinds of alternative dispute resolution options at the time they elect them. Otherwise there is little point in using this form of ADR. They may of course agree on things such as rights of appeal as they would have if they brought their dispute before a court. It is up to them, and that is a reason why this kind of ADR can appeal: The parties can agree on their own process, and that can save time and cost.

Arbitration

Arbitration is an adversarial process similar to a court. An arbitrator hears the arguments of the parties involved in a dispute and makes a binding decision. Disputants may find cost savings by agreeing to tailor rules of procedure, evidence and submissions as appropriate to their case, but may still end up before the High Court if an appeal or setting aside application is made.

The Arbitration Act 1996 governs arbitration in New Zealand. Section 10 provides:

(1) Any dispute which the parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration unless the arbitration agreement is contrary to public policy or, under any other law, such a dispute is not capable of determination by arbitration.

(2) The fact that an enactment confers jurisdiction in respect of any matter on the High Court or a District Court but does not refer to the determination of that matter by arbitration does not, of itself, indicate that a dispute about that matter is not capable of determination by arbitration.

Schedules 1 and 2 of the Arbitration Act 1996 provide general and additional optional rules for arbitrations, including how arbitrators may be appointed; how an arbitration may be conducted; how arbitral decisions may be enforced; and how costs and expenses may be dealt with.

An arbitration might be run like an interlocutory application or a short, simplified or full trial, or something entirely different. It all depends on what the parties agree. Parts of this text could be of assistance in some way, particularly those parts dealing with statements of claim, discovery, witnesses, and synopses of submissions.

Note: This content was originally published by CourtKeys.com in 2015. Disclaimer