Successful Dispute Resolution - Step 6 

The following publication is currently under review.  Elements of the information in the publication may be out-of-date.  Please use the information with caution.

Step 6: Successful dispute resolution

The information set out on this sheet will help ensure that you fully understand the dispute resolution process and are aware of what to expect. The typical dispute resolution process set out below is based on mediation, however, other ADR methods would usually follow a similar path. 

A typical dispute resolution process 

Appointment of a Mediator/Venue Selection

Most mediations are organised through a dispute resolution provider (refer to Step 4). An important role for the provider is to ensure that the mediator in any particular dispute is independent of all parties and does not have a conflict of interest in the matter.

The dispute resolution provider will usually send both parties a list of potential mediators for their consideration. Any party to a mediation has the right to veto the appointment of a mediator, however, this should be done at the earliest possible time.  

The dispute resolution provider will also arrange all aspects of the mediation, including co-ordinating a mutually convenient time for the mediation and organising a 'neutral' venue.  

Mediation Agreement

The dispute resolution provider will provide the parties with a 'mediation agreement' for signature prior to the mediation. This agreement sets out details relating to the conduct of the mediation, such as payment for mediators' services, confidentiality provisions, enforceability issues and termination of the mediation. These matters are discussed in greater detail below.

Confidentiality

In most cases, the parties to a mediation will be asked to sign a confidentiality agreement. This ensures that all information provided at the mediation, including settlement offers that may be made, cannot be revealed in other proceedings.

The purpose of this confidentiality provision is to ensure that the parties in a mediation are able to discuss the dispute openly and frankly, and seek settlement, without the risk of prejudicing further legal action that may occur if the mediation fails. Confidentiality is also important for the resolution of disputes where adverse publicity may undermine the chances of a settlement.  

Role of the Mediator

The role of the mediator is to manage the mediation process and to assist the parties to find a settlement that they can both agree to. The mediator does not provide legal or any other advice to either party and will not make a judgement on any issue that arises during the mediation.

Opening Statements

At the commencement of the mediation both parties will be asked to make a short statement providing their perspective to the dispute, including:

• how the dispute started       
• how the dispute has affected them and their business       
• what their main concerns are       
• what they see as the main issues       
• their needs that will need to be satisfied in any settlement. 

Each person is usually required to speak for themselves when making opening statements. The only person who may interrupt is the mediator, who may want to clarify some points. The other party cannot interrupt.

Issues Identification

The mediator will summarise each party's key points and identify the key issues in dispute. Both parties can provide additional information at this stage, with the aim being a full compilation of all relevant issues.

Once issues have been comprehensively identified and summarised, the mediator will usually encourage discussion about the issues so that any early opportunity for resolution can be identified.

Private Sessions (Caucus)

In most disputes, the mediator will meet with each party separately and privately. This provides an opportunity for more frank discussion about the dispute and exploration of opportunities to resolve the dispute. The mediator may discuss with you matters that were raised in the opening statements and establish whether these change the situation or your expectations in any way.

You will be able to confidentially discuss any matter with the mediator in this private session. The mediator is bound to maintain the confidentiality of anything said in private session unless you provide authority for him/her to transmit information to the other party. In some cases you may ask that the mediator convey a settlement offer to the other party. The mediator would, however, usually be reluctant to do this until all issues are explored.

Termination of the Mediation

You have the right to terminate the mediation at any time, for example, if you think the mediator is biased or the other party does not seem to be acting in good faith. If you wish to terminate the mediation for any reason, it is recommended that you first discuss your concerns with the mediator in private.

Mediation has a very high success rate (80%+), however, if it becomes apparent that the parties are not going to reach a settlement the mediator will normally recommend that the mediation be terminated.

Achieving Resolution

A joint session of the parties chaired by the mediator is usually held to finalise settlement terms. If necessary, further private sessions may be held to fine-tune difficult issues or break deadlocks.

In some instances there may be agreement between the parties on some issues but not on others. In these instances there may be an opportunity for the mediation to be adjourned so that further advice can be obtained. Where there is a technical issue in dispute, the parties may agree to commission an independent expert to provide a recommendation. 

A mediation settlement may also take the form of an action plan which sets out dates for the making of payments or the completion of various activities (such as the preparation of legal documents, new lease agreements, supply contracts and the like).

The terms of settlement of the dispute are not determined by the mediator but by the parties themselves. These terms are written down and signed by each party. If there is a considerable amount at stake, ask for time to seek the advice of a lawyer on the proposed agreement before signing.

Enforceability

The signed settlement agreement can be enforced through the courts in the event that a party fails to abide by any of the terms of the agreed settlement.

Avoiding disputes & dispute management systems

Although many disputes are inevitable, there is a lot that small business can do to minimise the risk of disputes developing and to manage them better when they do develop. There is also an opportunity for industry associations to implement dispute management systems for the benefit of their small business members. 

This section provides some advice on dispute avoidance and dispute management, with regard to:  

• contract clauses that can ensure timely dispute resolution when a dispute does develop       
• information to assist industry associations establish dispute management systems for the benefit of their members. 

Recommended Contract Clauses 

Dispute Resolution clauses should be written into all contracts to encourage joint problem solving before a problem turns into a dispute. Key elements to the clause should include:  

• informal discussion of an issue or problem;       
• how a complainant can raise a matter in writing with the other party (setting out the grounds for the dispute and what is the preferred solution) and how the parties are to make every effort to resolve the dispute fairly;       
• if the dispute is not resolved, provision for a party to use an informal negotiator (eg industry association, business adviser) to assist;       
• if the dispute is still not resolved, provision for the matter to go to mediation or conciliation. 

Using a Dispute Resolution Contract Clause 

Alternative Dispute Resolution (ADR) providers (see Step 4) can discuss with you how to develop a dispute resolution contract clause to suit your needs. There are a number of standard dispute resolution contract clauses, and the following clause has been designed to suit the needs of most small businesses.  

1. If a dispute arises between the parties, then the parties agree to (must) undertake the following steps: 

a. The complainant shall raise the matter with the other party setting out the background and the issues in dispute, and the outcome desired.       

b. If the dispute is not resolved in accordance with clause (a), the complainant shall raise the matter with the ............ (company name) nominated dispute manager. The parties shall make every effort to resolve the dispute fairly. In doing so, each party agrees to use its best endeavours to: 

c. If the dispute is not resolved in accordance with clause (b), then the complainant may refer the matter to its industry association for assistance or to an ADR provider in accordance with clause (d). 

d. If the dispute is not resolved in accordance with clause (c), then the matter shall be referred to mediation/conciliation (or other agreed form of ADR) to be facilitated by an agreed alternative dispute resolution provider. 

2. Action taken to settle the dispute at each stage must be undertaken promptly.       

3. The parties shall equally share the costs associated with the appointment of an agreed alternative dispute resolution provider. 

Dispute Management Systems for Industries

Designing your own dispute resolution process

There is a growing awareness in industry and government that the cost for small business of dealing with conflict is too high and is undermining many positive initiatives designed to increase the role of small business in the overall economy. 

There are already a range of dispute resolution processes either operating or being developed to address low cost dispute resolution and it is in the interest of both large and small business to understand the concepts and support their continued use.  

Alternative Dispute Resolution Process - general principles
 

• Successful resolution of disputes is enhanced by having a defined process which deals with how a problem should be managed from the initial identification through to its logical conclusion.       
• The process needs to be well communicated to all participants in the industry and easily accessed.       
• The industry must support the concept of ADR and be prepared to participate in the development of the process and support it in practice. The key will be low on administrative effort for the parties in dispute and high on practical solutions.       
• The process needs to focus on early resolution by the parties using the lowest cost method to achieve the preferred outcome, but must also be designed so that clear intervention milestones are set out to ensure the dispute will receive appropriate attention and not be allowed to be forgotten. Having defined lead times for action will overcome this issue.       
• Finally, it is important to build in a regular review of the process which will allow effective measurement of the performance and changes to meet current needs. Each step in the process needs to resist a quick fix solution, but rather channel the parties to quality decision making. 

Having established a dispute resolution process it will need to be well administered and properly skilled if it is to achieve long term success.  

Some alternatives

There are a number of alternative dispute resolution systems that industries may wish to consider. 

Acting as an adviser - Industry Associations do act as a first call advisor to members in response to disputes and provide a range of support. Sections 1,2, and 3, in this Kit provide a checklist which will assist in understanding the dispute and in choosing the most appropriate course of action. The Associations' knowledge of the industry, combined with good conflict management skills, provides a valuable tool to assist members better manage disputes.  

Appointment of a Dispute Resolution Adviser (DRA) - The DRA is a specialist dispute resolution adviser who would provide advice on the most appropriate alternative dispute resolution process to be used and assist in the appointment of specialist providers. The DRA needs to be independent of the parties to avoid any conflict of interest which may arise.  

The dispute resolution adviser is a person who -  

• has an understanding of the range of ADR processes and when to use them       
• has dispute resolution skills is neutral and independent of the parties in the dispute       
• has an understanding of the industry or is able to quickly acquire an understanding. 

Use external providers - There are organisations who will provide expert assistance in developing ADR processes, and providing on-going administration of the process (refer to Step 4 in this Kit). This may suit many organisations as it provides both independence and dedicated ADR specialists, and in most cases the user pays system is cost effective.  

Develop a code of conduct - If the industry has a code of conduct or is developing a code, it should include a dispute resolution process. The combination of a code of practice with a defined dispute resolution process provides a powerful tool for the professional management of an industry.  Common features of dispute resolution processes for industry codes of conduct.  

Step 1 - Aggrieved party must first seek a resolution with the other party face to face
Step 2 - If unsuccessful, a written request for a resolution follows
Step 3 - Depending on the type of dispute, the association is advised and seeks to facilitate a resolution. The association may act as an advocate for its member in step 4.
Step 4 - If unsuccessful, an ADR process is initiated which the parties must use before any legal action is taken
Step 5 - The outcomes and the process should be reviewed regularly to ensure it is effective

To be effective each step should have strict time frames which keep the process moving and assist in early resolution. It is also important for the parties to resist looking for a quick fix solution which will result in the problem surfacing again at a later stage. ADR is often the most effective method of identifying all the issues and finding a long term solution. 

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