What’s in the dispute resolution “tool kit”?

Traditionally, in dispute resolution there has been a distinction between “alternative dispute resolution” (ADR) processes on the one hand and “litigation” on the other hand.

However, these days it may be more useful to look at dispute resolution processes as being more like a “tool kit” in which there are a range of processes which are available to be used. And like any tool kit, the “tools” in dispute resolution can be used on different occasions and for different purposes depending on the circumstances and stage of the dispute.

Ultimately the dispute resolution tool kit can be divided into 2 broad categories of dispute resolution processes:

1. Firstly, dispute resolution processes which involve the parties deciding their own outcomes (which can be referred to as self-determinative processes), such as mediation.
2. Secondly, processes which involve an independent third party deciding the outcome on behalf of the parties (i.e. third party determinative processes), such as arbitration and court.

Sometimes parties will use a “hybrid” process, which combine dispute resolutions.

Ultimately, the dispute resolution “tools” that might be used should be fit for purpose and well designed to give the parties the best opportunity to resolve their differences in the most efficient and cost-effective way possible.

Settlement discussions or a settlement conference – the parties or their lawyers engage in settlement negotiations, or the parties (with or without their lawyers) attend an in-person or online conference to discuss their conflict or dispute and try to agree on a mutually-acceptable outcome or settlement.

The discussions/conference is held on a “without prejudice” basis, meaning that the parties cannot generally adduce evidence about the matters discussed at the settlement conference in a subsequent court or arbitral proceeding.

Mediation – like a settlement conference, but the parties also mutually engage an independent person (or persons) (i.e. the mediator) to help them discuss the issues in dispute and try to agree on a mutually-acceptable outcome or settlement.

Unlike a judge or an arbitrator, the mediator’s role is to facilitate the resolution, not make a decision for the parties. That said, many lawyer mediators adopt an “evaluative” mediation style, in which they express opinions (a.k.a. “reality test”) about the potential outcome of litigation and make recommendations to the parties about settlement options.

However, even if the mediator uses an “evaluative mediation” style, the parties still ultimately decide the outcome of the dispute. Usually the parties agree that the settlement will only be binding once the parties execute a formal settlement agreement or settlement deed.

Conciliation is another term used in dispute resolution and is often considered to be similar to mediation in that ultimately the parties decide the outcomes. However, conciliation is more traditionally used by public authorities and institutions and the independent “conciliator” will often be more directive towards the parties about the outcome of the process.

Written offers to settle – a party serves a written offer to settle which can be accepted by the other parties, thereby forming a binding settlement agreement.

If the parties are in litigation in court or arbitration, the offer will usually be “made under the rules” or expressed to be a “Calderbank offer”, which means that there may be adverse costs consequences for a party who rejects an offer and the subsequent court judgment is not better than the offer and/or the court determines that it was unreasonable for the party to not accept the offer.

Case appraisal or early neutral evaluation – the parties mutually engage an expert to give an opinion about a matter, but the opinion is not binding upon them. The main advantage is that the parties can take the opinion into account for the purpose of settlement negotiations, a settlement conference or mediation.

For example, the parties might mutually engage a lawyer to give an opinion about an important legal issue, which then assists the parties in considering the potential outcomes and risks of litigation if they are unable to settle the dispute.

Litigation – the parties’ dispute is determined by a judge or tribunal following a hearing or trial. Usually litigation will involve pre-trial steps to be taken by the parties, such as the exchange of pleadings, discovery (or disclosure) or relevant documents and filing of both lay witness and expert evidence.

The decision of the court will be binding and enforceable, and the parties will usually have avenues for appeal if they consider that there has been an error in the judgment (usually the appellant has to demonstrate an error of law has occurred in the trial judge’s decision).

Arbitration – the parties agree (i.e. an “arbitration agreement”) to have their dispute decided by an independent person or persons (the arbitrator or arbitral tribunal). The process is kept confidential between the parties, and the arbitrator’s decision, known as an award, is binding upon the parties by reason of their arbitration agreement and legislation which is designed to assist enforceability (such as the Commercial Arbitration Act).

Arbitrations can be “domestic” (i.e. arbitrations between parties within the same jurisdiction) or “international” (i.e. disputes between parties from different jurisdictions). Other issues in arbitration include the “seat” (i.e. where it is held), institutional vs “ad hoc” arbitrations and what is the law governing the arbitration agreement and the arbitration itself.

Expert Determination – similarly to arbitration, the parties agree (i.e. an ‘expert determination agreement’) to refer their dispute to an expert who will make a binding decision.

But unlike arbitration, which is governed by both the arbitration agreement and legislation, expert determination is governed solely by the terms of the expert determination agreement, and the decision of the expert has to be enforced under the law of contract.

Expert determination is often used to decide technical matters within disputes, such as construction, engineering or IT based disputes.

Sometimes the parties will use a couple of processes together in the one matter – this is generally as a “hybrid” dispute resolution process. For example:

“Med-Arb” is a process in which the parties agree that they will attempt to resolve their dispute via a mediation, but then if they cannot resolve the dispute themselves, then the parties will engage in an arbitration which results in a binding award. The reason they might do this is because they want to take the opportunity to resolve the dispute themselves, which might include terms of a settlement agreement which they cannot achieve in an arbitration, but then have the certainty of an outcome if the mediation is not successful. The Law Council of Australia has published a comprehensive commentary on Med-Arb, which can be found here.

Another example of a hybrid process is a matter in which the parties agree upon the sale of certain businesses, but they disagree upon the price. In that case, the parties might resolve the terms upon which the business might be sold using settlement negotiations or a mediation, however the sale price for the business might be referred to an expert valuer for either a nonbinding early neutral evaluation or a binding expert determination.