Alternative Dispute Resolution Law in Australia

Alternative Dispute Resolution (ADR) is a self-explanatory term that is used to describe alternative processes to resolve disputes, other than judicial decisions through litigation. These processes can be advisory, determinative and/or facilitative, during which an impartial person assists the parties to the dispute to resolve the issues.

No uniform legislative framework exists in Australia for Alternative Dispute Resolution processes, although there are many different laws in place in the different states and territories. The exception to this is commercial arbitration, which does have in place uniform legislation in each state and territory.

There are three main types of formal ADR processes:

  • Facilitative, such as Mediation;
  • Advisory, such as Conciliation and Expert Appraisal or Case Appraisal; and
  • Determinative, such as Arbitration and Adjudication.

The Civil Dispute Resolution Act 2011 (Cth) requires parties to a dispute to take genuine steps through ADR processes prior to commencing certain legal proceedings in either the Federal Court of Australia or the Federal Circuit Court of Australia. Exceptions to this requirement include Family Law, Migration and Employment Law matters, all of which have their own dispute resolution requirements under the respective legislation.

Facilitative Alternative Dispute Resolution

The practitioner in this type of ADR process will assist the parties to identify the issues and then to reach an agreement about their dispute. The most common example of this process is Mediation.

Mediation

This is an entirely voluntary and confidential process and the parties, together, explore their differences and attempt to reconcile the issues. A mediator is unable to – and in fact has no authority to – impose a settlement or determination on the parties, because the parties must reach their own compromised solution with the mediator’s assistance. Although the mediator is a neutral third party, they act as a guide to assist the parties with their negotiations and reaching of a resolution.

Most frequently, mediation is used in Family Law proceedings, throughout which the parties are in an extremely emotional dispute but will have on-going contact with one another due to children. Although it is often a less formal environment, a skilled mediator (also referred to as a Family Dispute Resolution Practitioner) can assist the parties to reach an agreement as to time spent with children, or property division.

Mediation is generally speaking the fastest and most cost-effective ADR process and is often considered as the first step prior to initiating court proceedings. Mediation can be conducted in conjunction with other more formal Alternative Dispute Resolution and court processes. Often, contracts can include a clause referring the parties to mediation prior to filing court proceedings to enable privacy for both parties. This aspect of confidentiality can be useful in corporate scenarios as well as familial ones.

Advisory Alternative Dispute Resolution

This ADR process involves a practitioner actively advising the parties as to the issues at hand in the dispute and their possible resolutions.

Conciliation

The difference between a mediator and a conciliator is that a conciliator is advisory, whereas a mediator is not advisory but merely facilitative in approach. Conciliation is frequently used in tribunals, where a party’s rights are in question, and a conciliator is to ensure that any resolution or settlement between the parties meets legislative requirements. As such, a conciliator will propose terms of settlement that the parties can consider. However, similar to a mediator, the conciliator does not have the authority to determine the settlement, but simply to advise the parties on the issues and outcome.

Expert Appraisal or Case Appraisal

This ADR process is determined by an independent third party expert; however, it is flexible, as the parties in dispute agree to be bound by the decision of the expert before the determinations are made. Expert Appraisal or Case Appraisal is most effective if it is a technical matter that needs to be determined fairly and promptly. The expert will give the parties reasonable opportunities to put their case forward and respond to the other party before making any determinations.

Determinative Alternative Dispute Resolution

Determinative ADR processes are the most formal, whereby both parties must consent to the decision of a third party, to whose judgement they agree to be bound.

Adjudication

Adjudication is a formal process, wherein the adjudicator reviews all the material presented by both parties and makes a judgment, which is binding on the parties. Adjudication is a very common process in the construction industry. Different states and territories in Australia have legislation to ensure contractors are paid fairly and promptly for work completed under construction contracts. This legislation enables a sub-contractor, who has provided works, to make the contractor pay the account by lodging an adjudication application with an adjudicator, who is agreed between the parties or nominated by the Authorised Nomination Authority (ANA).

Arbitration

The process of arbitration is very formal. In Queensland, it is governed by the Commercial Arbitration Act 2013 (Qld), and there is equivalent legislation in the other states and territories. The parties take their dispute to be determined by the arbitrator, who is an independent third party. As long as the arbitration follows the principles of natural justice, the parties can vary the process to suit the needs of their dispute. To save costs, a small matter could be determined on the basis of written submissions and documentary evidence. If it is a more complicated matter, it may be heard in a more formal manner similar to a court hearing. The decision of the arbitrator (also called the Award) can be enforced similarly to a court order. An industrial arbitration process differs to the commercial process according to the relevant Industrial Award. As an alternative to litigation in court, arbitration is a process that is efficient and more cost-effective to the alternative of litigation in court.

For further information on the ADR processes, the Attorney-General’s Guide to Dispute Resolution is an excellent resource and can be found at www.ag.gov.au.