Alternative Dispute Resolution (ADR) – At the forefront of dispute resolution
Date: April 1st, 2011 | Filed under: Mediation Scholarship Articles | Tags: "ADR", alternative dispute resolution, mediationJacqueline Lopes, Winning Participant
“The notion that most people want black robed judges, well dressed lawyers, and fine panelled court rooms as a setting for resolving their disputes is not correct. People with problems, like people with pains, want relief, and they want it as quickly and inexpensively as possible.” - Warren E. Burger, former Chief Justice of the US Supreme Court.
The 2008 global financial crisis saw an increase in corporate bankruptcies and contractual breaches because of a failure to meet payment obligations. This has contributed to a fresh wave of enthusiasm directed at recognising alternative methods of dispute resolution. According to O’Donnell J in the recent Supreme Court case of Galway City Council v. Samuel Kingston Construction Limited & Anor.[1], “one of the oldest and best established” systems of dispute resolution is “arbitration”. This article argues in favour of reforming the legal infrastructure and placing ADR at the forefront of dispute resolution. It is proposed that a mandatory ADR clause be implied into all civil and commercial contracts. This would promote the use of ADR as a first step in the process of access to justice.
There is a deluge of research supporting the claim that not all disputes are ideally suited to be resolved through court litigation.[2] The reality is that many consumers face a number of obstacles in seeking legal redress in the courts including long delays, rigid procedural and evidential requirements, court fees and the cost of providing expert opinions. More interestingly, a survey of the 2006 Eurobarometer indicates that 53% of EU disgruntled consumers preferred to settle their dispute amicably rather than through the courts. It is, therefore, not surprising that numerous research studies demonstrate there is a growing number of individuals who fail to seek redress through a court of law.
In England the Department of Constitutional Affairs White Paper (July 2004)[3] recommended that more emphasis should be placed on a “proportionate dispute resolution” system on grounds that most people questioning decisions preferred a speedy and consensual resolution to their concerns.[4]
The best solution is ADR, which comes in various forms, such as arbitration (where an agreed upon third party judges the case) and mediation (where an independent third party helps the sides resolve their differences). While the concept of ADR is familiar to most legal professionals, those that use it, generally like it, and those who think they do not like it, do not promote its inclusion as a contractual clause.
In Ireland, pursuant to Section 15 of the Civil Liability and Courts Act 2005, an alternative dispute resolution process can be initiated on the request of one of the parties. According to Murphy J in Noel Hogan v. St. Kevin’s Company[5], however, where the parties refer disputes between them to the decision of an arbitrator it is obviously their intention that both parties are content to have an important point of law determined not by the courts but by the arbitrator even though he possesses no legal qualifications.
ADR is not a partial system of justice – it is not a replacement of the courts, but rather an alternative to the courts. For this reason, arbitration awards are regarded as final and following the endorsement of the Supreme Court in Keenan v. Shield Insurance Company Ltd[6], should only be interfered with if there is a fundamental error of the law.
The advantage of ADR (particularly mediation) is that it allows the parties to resume communication and come to a realistic solution to their dispute through negotiation rather than being locked in a battle of confrontation, which inevitably ends with a winner and a loser. More importantly, the parties are able to settle the dispute and still maintain a healthy business relationship.[7] Another important advantage of alternative dispute resolution over the rigors of court process is its affordability and underlying purpose that facilitates communication rather than adversarial confrontation. Davis eloquently describes ADR as a process symbolising an “alternative version of empowerment to that represented by the lawyers and courts – one that rests on participation and engagement”.[8]
There seems little argument that the court process is lengthy and expensive. Clearly there is an urgent need for a resolution process that addresses the disparity arising between potential economic loss and the underlining cost of access to justice. ADR encapsulates two fundamental features designed to address this disparity and provide essential access to justice in accordance with this longstanding constitutional right, namely:
a) It is designed to provide an amicable out-of-court solution by facilitating communication and participation between both parties to the dispute; and
b) It provides a vehicle whereby each process can be specifically tailored and chaired by a qualified professional.
On this point, it is worth noting that in Dunnett v. Railtrack plc (in railway administration)[9] Brooke LJ acknowledged that “[s]killed mediators are now able to achieve results satisfactory to both parties in many cases which are quite beyond the power of lawyers and courts to achieve”.
Ian Hanger in his article “Some observations on Current Mediation Practices” suggests that in mediation cases, “legal principles should be put aside and a solution structured so that the parties can achieve a result that is best for each of them”. [10] He argues that in some cases lawyers are involved in a “try-on” meaning they commence a legal action with no real intention of seeing it through to trial, but rather delay proceedings with intent to initiate a process of mediation.[11]
In Ireland, a number of statutory provisions and government-backed initiatives encourage the use of ADR and mediation, including amongst others
a) The Labour Relations Commission offers a voluntary mediation process where a professional mediator assists employers and their employees to resolve disputes when they are unable to reach an agreement.[12]
b) The Director of Equality Investigations also offers a voluntary mediation service in disputes under the Employment Equality Act 1998 and the Equal Status Act 2000.[13]
c) In November 2002, the then Minister for Environment and Local Government, Martin Cullen, launched the Private Residential Tenancies Board mediation service, which deals with disputes to conclusion and refers appeals to the Courts only on points of law.[14] In effect, the voluntary mediation service provided by the Board’s Dispute Resolution process offers both landlords and tenants a real alternative to the court process. [15]
d) More recently, the Construction Contracts Bill 2010 pursuant to Section 8, proposes to provide a right to adjudication for construction contracts. This means that disputes arising between employers and contractors or sub-contractors and contractors would be resolved by an independent third party adjudicator. The Bill specifically states that the contract must specify that the adjudicator’s decision is binding on both parties until such time as the dispute is resolved through agreement, arbitration or litigation.
Other jurisdictions also proactively involved in promoting the use of ADR and mediation in resolving disputes include the US, England, Canada and Australia.[16]
Successful examples of the implementation of ADR in Ireland include amongst others the Personal Injuries Assessment Board (commonly referred to as PIAB), which was set up on a statutory basis to curb litigation. Its function is to assess personal injury damages so as to preclude the parties from having to pay exorbitant court costs and solicitor fees. Another example is Ireland’s Financial Ombudsman that offers a free service to complainants of financial service providers. In the first half of 2010 the Ombudsman reported having received 3,600 complaints and achieving compensation payouts totalling €1.3m during that period.[17]
The Netherlands justice system also has a longstanding tradition of encouraging informal resolution. [18] In 2000, they introduced a pilot project to determine if a mediation system could be justified within the existing judicial infrastructure and effectively integrated. In 2003, the Dutch Ministry of Justice published a report on the results of this project. The findings of the report confirm that a mediation service within the judicial infrastructure was warranted and in 2005 statistics to backup this finding was issued by Judge Dory Reiling.[19]
A World Bank report on ADR in 2006 also provided positive feedback and concluded that mediation reduced case backlogs and increased the settlement capacity of judges. Specific findings of the report showed that court annexed mediation achieved a settlement rate of 61%. In a 1,000 cases that had been referred, 89% had completed the terms of mediation settlement within 3 months and an average of 6.3 hours of mediation was required for each case. It further noted that 50% of civil cases could be settled via mediation.[20]
On the 23rd April 2008, the European Parliament also put ADR at the forefront of its civil and commercial dispute resolution process by formally approving the EU Mediation Directive 2008/52/EC. [21] The purpose of the directive is to promote amicable settlement of dispute through mediation services, which supports a solid relationship between mediation and judicial proceedings. The deadline for transposing the directive into Irish law is summer 2011. The scope of the Directive is limited to cross-border disputes. This does not, however, prevent member states from applying the Directive to its national mediation process.
“The Directive contains five key provisions:
- The training of mediators and the development of, and adherence to, voluntary codes of conducts and other effective quality control mechanisms concerning the provision of mediation services.
- Every judge in the Community, at any stage of the procedure, has the right to invite the parties to have recourse to mediation if he considers it appropriate in the case in question. The judge can also suggest that the parties attend an information meeting on mediation.
- To set up a mechanism by which agreements resulting from mediation can be rendered enforceable if both parties so request.
- Ensures that mediation takes place in an atmosphere of confidentiality and that information given or submissions made by any party during mediation cannot be used against that party in subsequent judicial proceedings if the mediation fails.
- The Directive contains a rule on limitation and prescription periods which ensures that, when the parties engage in mediation, any such period will be suspended or interrupted in order to guarantee that they will not be prevented from going to court as a result of the time spent on mediation.” [22]
From the above, one can conclude that alternative dispute resolution is steadily growing globally. The EU Mediation Directive 2008/52/EC can be expected to promote the use of mediation and the expectation for acceptance in the establishment of a shared legal framework for alternative dispute resolution across the European Union. Key provisions of the directive also seem to support the argument that ADR should form part of the legal regime for civil and commercial dispute resolution.
The author believes there is no reason why civil justice procedures cannot be altered to include ADR clauses in all contracts. It is submitted that since the objective of ADR is to provide a consensual process of dispute resolution where mutual communication and participation is paramount, it is indeed the most fair, equitable and just means to resolve disputes both nationally and between cross border parties.
The author is of the opinion, that if the constitution guarantees a right to due process without providing effective mechanisms for ensuring the right can be exercised, then it has no practical value. In order to ensure that consumers are able to assert their rights whenever infringed, legislators ought to design a legal framework that entitles consumers to speedy legal resolution. In Canada ADR now forms part of the legal resolution regime and in Australia it has become the primary resolution in Family Law disputes.[23]
It is hoped that the EU and its member states will embrace a shared legal infrastructure that envisages ADR at the forefront of dispute resolution for all civil and commercial related issues.
Jacqueline Lopes: LLB, PhD (Full Time) Law Student, Winning Participant.
[1] [2010] IESC 18
[2] Genn, H. (1999) Paths to Justice: What do people do and think about going to law? (Oxford: Hart Publishing); Genn, H., Lever, B. and Gray, L. With Balmer, N. (2006) Tribunals for diverse users (London: Department of Constitutional Affairs); Adler, M. And Gulland, J. (2003) Tribunal users’ experiences, perceptions and expectations: A literature review (London: Council on Tribunals).
[3] Department of Constitutional Affairs (2004) Transforming Public Services: Complaints, Redress and Tribunals (London: Stationery Office) on website http://www.dca.gov.uk/pubs/adminjust/transformfull.pdf.
[4] Riddell, S. and Weedon, E. (2009) Approaches to dispute resolution in additional support needs in Scotland (24(4) European Journal of Special Needs Education 355-369)
[5] [1986] IR 80
[6] [1989] IR 89
[7] Morgan, J. (2002) Commercial Dispute Resolution in Ireland – A comparative analysis 9(9) CLP 200.
[8] Davis, G. (2004) A research perspective in Westcott, Family Mediation: past, present
and future (Bristol: Jordan Publishing), 59-69.
[9] [2002] 2 All ER 850
[10] Hanger, I (2002) Some Observations on Current Mediation Practice 21(2) The Arbitrator & Mediator 13.
[11] Hanger, I (2002) Some Observations on Current Mediation Practice 21(2) The Arbitrator & Mediator 13.
[12] Labour Relations Commission, Ireland (2010) at website http://www.lrc.ie/
[13] Section 78 of the Employment Equality Act 1998 and Section 24(1) of the Equal Status Act 2000.
[14] The Private Residential Tenancies Board, Ireland (2010) at website http://public.prtgb.ie/disputes.htm.
[15] The Private Residential Tenancies Board, Ireland (2010) at website http://public.prtgb.ie/disputes.htm.
[16] Morgan, J. (2002) Commercial Dispute Resolution in Ireland – A comparative analysis 9(9) CLP 200.
[17] Prasifka, B. (2010) Financial Ombudsman calls for more powers (Ireland, RTE News 23 November 2010) on website http://www.rte.ie/news/2010/11/23/financial services.html.
[18] Combrink-Kuijters, L., Niemeijer, E. and Ter Voert, M. (2003) Ruimte voor Mediation. Evaluatie van projecten bij de rechterlijke macht en gefinancierde rechtsbijstand (Den Haag: Boom Juridische Uitgevers).
[19] World Bank (2006) Alternative Dispute Resolution – Appendix A: Compendium of Case Studies on website http://rru.worldbank.org/Documents/Tookits/adr/adr_appendices.pdf.
[20] World Bank (2006) Alternative Dispute Resolution Manual: Implementing Commercial Mediation (US: IFC) on website http://rru.worldbank.org/Documents/Tookits/adr/adr_fulltoolkit.pdf.
[21] Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters on website http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/263&format=HTML&aged=0&language=EN&guiLanguage=en
[22] Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters on website http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/263&format=HTML&aged=0&language=EN&guiLanguage=en
[23] Field, C. (2007) Alternative Dispute Resolution in Victoria: Supply-Side Research Project (Research Report for Consumer Affairs Victoria) on website http://www.consumer.vic.gov.au.
