TEMA 4: LA ESTRATEGIA EMPRESARIAL
4.2. COMPONENTES Y NIVELES DE ESTRATEGIA
Mediation is defined by NADRAC as:
a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner (the mediator), identify the disputed issues, develop options, consider alternatives and endeavour to reach an agreement. The mediator has no advisory or determinative role concerning the content of the dispute or the outcome of its resolution, but may advise on or determine the process of mediation whereby resolution is attempted. Mediation may be undertaken voluntarily, under a court order, or subject to an existing contractual agreement.518
It is already possible for courts to refer parties to mediation, even without their consent. However, as noted above, there are divided views over the desirability of making such compulsory referrals. There is considerable support for judicial referral of parties to mediation without consent. In
Remuneration Planning Corporation Pty Limited v Fitton (2001), Justice Hamilton of the NSW Supreme
Court noted that mediations ordered over the objection of the parties might often be successful:
Since the power was conferred upon the Court, there have been a number of instances in which mediations have succeeded, which have been ordered over opposition, or consented to by the parties only where it is plain that the Court will order the mediation in the absence of consent. It has become plain that there are circumstances in which parties insist on taking the stance that they will not go to mediation, perhaps from a fear that to show willingness to do so may appear a sign of weakness, yet engage in successful mediation when mediation is ordered.519
More recently, Justice Spigelman, Chief Justice of NSW, commented:
One matter that appears somewhat counter intuitive is the conferral upon courts of a power to order mediation. This was once thought to be pointless because it appeared unlikely that a party who was ordered to mediate would be prepared to enter such negotiations in a co-operative manner. That has proven to be false. Reluctant starters have often proved to be willing participants in the negotiation process. It appears that many litigants have either not understood, or not been advised by their lawyers about, the weakness in their case, or have adopted a negotiating posture from the outset that they could not possibly lose. A formal order of the court requiring mediation has overcome
such inhibitions and has proven particularly successful in a number of spheres of jurisdiction.520
NADRAC’s view is that:
[T]he potential benefits, both in providing parties with a further opportunity to resolve their dispute and in ensuring publicly funded and scarce judicial resources are used only in determining intractable disputes, justify the continued use of court- ordered ADR.521
In Going to Court, the authors stated that they did ‘not see a great problem with compulsory systems’, nor did most of the people to whom they spoke to about it. In their view, compulsory systems bring worthwhile practical benefits.522
There was considerable support for compulsory referral to mediation in the submissions. The Victorian Bar and David Forster expressed support for compulsory referral in response to the Consultation Paper.523 Michael Redfern thought there
should be very early compulsory mediation procedures.524
The Magistrates’ Court and the Dispute Settlement Centre of Victoria felt that compulsory court-ordered mediation provided a forum for settlement and a range of possible solutions.525
One submission in response to the Consultation Paper contended that compulsory dispute resolution processes with sanctions ‘are the only route to take’.526
6.1.1 Position in Victoria
In Victoria, all three courts have the power to order a proceeding or any part of a proceeding to mediation,527
even without party consent.528 The Supreme Court is also
empowered to refer proceedings to mediation by a master, with or without the parties’ consent.529 In practice, all three
courts encourage parties to agree to mediation. Where the claim is for more than $30 000, the Magistrates’ Court will encourage mediation (rather than a pre-hearing conference).530
Any of the courts may order a further mediation if appropriate. As noted at the beginning of this chapter, the commission’s proposals in relation to pre-action protocols are intended to facilitate the resolution of many disputes, including through ADR, without the necessity to commence legal proceedings.531
In addition, the proposed overriding obligations would impose on all key participants in civil litigation, from its inception, an obligation to use reasonable endeavours to resolve the dispute by agreement, including, in appropriate cases, using ADR processes.532
6.1.2 Other models
Australia
Mediation
Many Australian courts and tribunals have powers to refer matters to mediation with or without the consent of parties. This includes the Federal Court,533 the Federal Magistrates
Court,534 the New South Wales state courts,535 the South
516 See the discussion of these roles in Buckley v Bennell Design and
Construction Pty Ltd (1978) 140 CLR
1; Leighton Contractors (SA) Pty Ltd
v Hazama Corp (Aust) Pty Ltd (1991)
56 SASR 47; Nallar v Haines (1991) 25 NSWLR 224, referred to by Neil Williams, Civil Procedure—Victoria, vol 1 (at January 2008) (LexisNexis Butterworths) [50.01.30]. 517 See, eg, Aerospatiale Holdings
Australia Pty Ltd v Elspan International Ltd (1992) 28 NSWLR 321.
518 NADRAC (2006) above n 1, 104. 519 Remuneration Planning Corporation
Pty Ltd v Fitton; Fitton v Costello [2001]
NSWSC 1208, at [3]. 520 The Hon. James J Spigelman,
Chief Justice of New South Wales, ‘Commercial Litigation and Arbitration: New Challenges’ (paper presented at the First Indo Australian Legal Forum, New Delhi, 9 October 2007).The commission is also aware that in recent years a number of Federal Court cases have been successfully resolved after referral to mediation over the objection of one or more of the parties. 521 NADRAC (2006) above n 1, 44. 522 Sallmann and Wright (2000) above n
47, 125.
523 Submissions CP 33 (Victorian Bar), CP 52 (Hollows Lawyers).
524 Submission ED2 11 (Michael Redfern). 525 Submissions ED1 30 (Magistrates’
Court and Dispute Settlement Centre of Victoria), ED1 31 (Law Institute of Victoria).
526 Confidential Submission CP 1 (permission to quote 17 January, 2008).
527 Mediation is defined below. 528 Supreme Court (General Civil
Procedure) Rules 2005 r 50.07, County Court Act 1958 s 47A, Magistrates’ Court Act 1989 s 108, Magistrates’ Court Civil Procedure Rules 1999 r
22A.01. See also County Court Rules
of Procedure in Civil Proceedings 1999 r 34.17: at a directions hearing
in the County Court the court may, even without party consent, refer the whole or any part of the proceeding to mediation.
529 Supreme Court of Victoria, Court of
Appeal Practice Statement No. 1 of 2006 (2006).
530 Magistrates Court of Victoria, above n 20, 30. See discussion above of pre-hearing conferences in the Magistrates’ Court.
531 See Chapter 2. 532 See Chapter 3.
533 Federal Court of Australia Act 1976 (Cth) s 53A.
534 Federal Magistrates Act 1999 (Cth) s 34.
535 Civil Procedure Act 2005 (NSW) s 26. parties to consent to the referral.
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Australian state courts,536 the Tasmanian Supreme Court,537 the Australian Capital Territory state
courts,538 VCAT,539 the Consumer, Trader and Tenancy Tribunal540 ,and the AAT.541 Neutral evaluation
Some Australian courts and tribunals also have powers to refer matters to neutral evaluation with or without the consent of parties. This includes the Federal Magistrates Court,542 and the Consumer,
Trader and Tenancy Tribunal.543 Other forms of non-binding ADR
Some Australian courts and tribunals have the power to refer matters to other forms of non-binding ADR, without party consent. For example, in the Queensland District and Supreme Courts, the courts may refer parties to case appraisal,544 the Western Australian District Court can require parties to
attend a pre-trial conference;545 and the AAT president is empowered to refer matters to conferencing,
case appraisal and conciliation and procedures or services specified in the regulations.546 Pre-action ADR
Participation in mediation or another form of non-binding ADR may also be a prerequisite for commencing proceedings. For example, in disputes about retail leases, proceedings cannot be commenced until mediation has been attempted under legislation in Victoria547 and NSW.548 Pre-action
obligations are discussed in detail in Chapter 2.
United States
In the United States, compulsory ADR has been introduced in some jurisdictions. The Alternative
Dispute Resolution Act 1998 authorises the use of ADR in US federal courts and imposes a number
of requirements.549 The Act authorises mandatory ADR. District courts are explicitly given authority
to require parties to ‘consider the use of an alternative dispute resolution process at an appropriate stage in the litigation. Each district court shall shall provide litigants in all civil cases with at least one alternative dispute resolution process, including, but not limited to, mediation, early neutral evaluation, minitrial, and arbitration…’ A district court that elects to require the use of ADR in certain cases may only do so with respect to mediation, early neutral evaluation and if the parties consent mediation. 550
Canada
Since January 1999, as part of the courts’ case management program, mandatory mediation551 has
became a permanent feature of the rules of court in Ontario.552 Rule 24.1 essentially requires that:
Within 30 days of the filing of a statement of defence, the parties to litigation must choose •
a mediator.
The choice of mediator may be from the court-approved list of mediators (the ‘roster’), or •
as agreed between the parties.
If the parties fail to notify the court’s mediation coordinator of their mediator within the •
required time, a mediator from the roster will be assigned by the coordinator. One study in Ontario of a two-year mandatory mediation pilot analysed more than 3000 cases and found there were positive impacts on the speed, costs and outcomes of litigation when ADR processes were used.553
Norway
In Norway, conciliation boards have been established to facilitate resolution of disputes without the necessity for litigation.554 Each municipality in Norway is required by law to have a conciliation
board.555 Mediation before the conciliation board is mandatory for all civil claims, before proceedings
can be commenced.556 If the mediation does not result in an agreement, the conciliation boards have
jurisdiction to make a ruling that resolves the dispute in favour of one of the parties.557 The conciliation
boards must apply the relevant law if they want to resolve the dispute by making a ruling.558 Such
rulings have the same effect as a decision made by a regular court, and can by appealed to the municipal courts.559 The conciliation boards play a significant role in the Norwegian legal system—226
575 civil cases were addressed to the conciliation boards in Norway in 2002.560The annual number of
cases dealt with by Conciliation Boards appears to have remained relatively constant. In 2004 218 157 disputes were dealt with by such boards.
The compulsory nature of proceedings before the conciliation board has given rise to concerns that this may not be compatible with Article 6 of the European Charter of Human Rights.561
561 Ervo (2007) above n 448, 480. 562 Ibid.
563 [2004] EWCA Civ 576.
564 Dyson J in Halsey (2004) EWCA Civ 576.
565 Dame Hazel Genn et al, Twisting
Arms: Court Referred and Court Linked Mediation Under Judicial Pressure,
Ministry of Justice Research Series 1/07 (2007) 8.
566 Ibid 15 (original emphasis).
Notwithstanding this concern, the Ministry of Justice has adhered to the obligatory procedure because of the possibility of bringing the claim before a court later and because the conciliation procedures are cheaper and simpler than court proceedings and ‘more decentralised than the court system’.562
United Kingdom
The position in England and Wales is that courts should encourage, but not compel, parties to participate in dispute resolution. In the Court of Appeal case Halsey v Milton Keynes
General NHS Trust and Steel v Joy563 (‘Halsey’) the court
considered human rights constraints on the power to order parties to submit their disputes to mediation against their will:
It is one thing to encourage the parties to agree to mediation, even to encourage them in the strongest terms. It is another to order them to do so. It seems to us that to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court ... it seems to us likely that compulsion of ADR would be regarded as an unacceptable constraint on the right of access to the court and, therefore, a violation of article 6 [of the Human Rights Act 1998]. Even if (contrary to our view) the court does have jurisdiction to order unwilling parties to refer their disputes to mediation, we find it difficult to conceive of circumstances in which it would be appropriate to exercise it.
The court in Halsey also took the view that nothing would be achieved by compulsorily referring parties to mediation
except to add to the costs to be borne by the parties, possibly postpone the time when the court determines the dispute and damage the perceived effectiveness of the ADR process.564
Some commentators view the decision in Halsey as representing a radical departure from the direction in which recent court judgments about ADR had been moving.565
The UK Ministry of Justice in a May 2007 report asserted that it was arguable whether, in fact, a direction to attempt mediation prior to a hearing would infringe Article 6:
Referral to mediation is a procedural step along the way to a court hearing if the case does not settle at mediation. It does not exclude access to the courts and to require parties to attend a three- hour low-cost mediation session does not order them to compromise their claim. Having attended the mediation meeting, the parties are free to terminate and leave at any point and to continue with the litigation.566
536 Magistrates Court Act 1991 (SA) s 27(1); District Court Act 1991 (SA) s 32(1); Supreme Court Act 1935 (SA) s 65.
537 Supreme Court Rules 2000 (Tas) r 518. 538 Court Procedures Rules 2006 (ACT) r
1179—there is no mention of whether the parties’ consent is required. 539 Victorian Civil and Administrative
Tribunal Act 1998 s 88.
540 Consumer, Trader and Tenancy
Tribunal Act 2001 (NSW) s 59(1)—
there is no mention of a need for the parties to consent to the referral. 541 Administrative Appeals Tribunal Act
1975 (Cth) ss 34A, 3—there is no
mention of a need for parties to consent to the referral.
542 Federal Magistrates Act 1999 (Cth) s 26.
543 Consumer, Trader and Tenancy
Tribunal Act 2001 (NSW) s 59(1)—
there is no mention of the need for parties to consent to the referral. 544 District Court of Queensland Act 1967
(Qld) ss 97–98; Supreme Court of
Queensland Act 1991 ss 102–103)—
there is no specific reference to party consent.
545 District Court Rules 2005 (WA) rr 39–40.
546 Administrative Appeals Tribunal Act
1975 (Cth) ss 34A, 3—there is no
mention of the need for parties to consent to the referral.
547 Retail Leases Act 2003 Pt 10 (Dispute Resolution) and s 87(1).
548 Retail Leases Act 1994 (NSW) Pt 8, Div 2 (Mediation) and s 68(1).
549 § 651(b). 550 § 652(a).
551 Rules of Civil Procedure 1990 R.R.O (Ontario) r 24.1
552 Paul Jacobs, ‘A Recent Comparative History of Mandatory Mediation vs Voluntary Mediation in Ontario, Canada’, International Bar Association
Mediation Newsletter (2005) 1 <www.
msmlaw.ca/Resources/Mandatory. vs.Voluntary.Media.pdf> at 19 March 2008.
553 Robert Hann and Carl Baar, Evaluation
of the Ontario Mandatory Mediation Program (Rule 24.1): Final Report—The First 23 Months (2001) 3.
554 See generally, Ervo (2007) above n 448, 479.
555 Ibid. 556 Ibid.
557 Lars-Jørgen Kihlberg Olsen, The
Conciliation Boards in Norway—A Brief Overview and Assessment of Pros and Cons, <http://folk.uio.no/larsjol/
conciliation.doc> at 19 March 2008. 558 Ibid.
559 Ibid.
560 Statistics Norway, Disputes Dealt with
by the Conciliation Boards, by Decision and County 2002, <www.ssb.no/
english/subjects/03/05/forlik_en> at 19 March 2008.
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The Woolf Report considered that ADR should be encouraged but that compulsory ADR should not be recommended either as an alternative to litigation in the courts or as a preliminary step to litigation.567
6.1.3 Concerns about compulsory referral to mediation
The voluntariness of ADR
Even though it is already possible to refer parties to mediation and other forms of ADR, without the parties’ consent, submissions to the commission raised various concerns about compulsory referral. One of the primary arguments is that the hallmark of ADR procedures and the key to their effectiveness is that they are voluntarily entered into by the parties in dispute without binding outcomes except where the parties have reached agreement. Consequently, some contend the court should not direct that such methods be used.568 One rationale is that ‘settlement at an ADR process is
more likely to occur if the parties are naturally ready to settle, rather than obliged to participate’.569
Similar concerns were raised in some submissions. Telstra, the Australian Corporate Lawyers
Association, Victoria Legal Aid and the Insurance Council of Australia all argued that ADR should only be ordered when the parties participate voluntarily.570 The Springvale Monash Legal Service’s response
to the Consultation Paper expressed general concern about compulsory referral to ADR.571 State
Trustees suggested that rather than compulsorily referring parties to ADR, there should be incentives for voluntarily engaging in ADR ‘to reduce the cost and formalities involved’.572 The Law Institute
contended that pre-issue ADR processes should be voluntary and not a compulsory precondition to issuing proceedings in court.573
The inappropriateness of referral
PILCH contended that ADR would not be appropriate in public interest cases that require a formal publicly binding determination.574 Other commentators have a similar view.575 The Federation of
Community Legal Centres argued that ADR should not be used compulsorily where there is a power imbalance between parties.576 Some commentators have also suggested that compulsory referral
to ADR is not appropriate if there is a risk of violence to one of the parties or if previous settlement attempts have failed and the matter is unlikely to settle. If a party is compulsorily referred to ADR but does not participate in good faith, this will render the process unsuccessful and increase costs and delay.577 An anonymous submission in response to the Consultation Paper was not supportive of
compulsion and contended that mediation should only occur where both parties agree to act in good faith.578
The Charter
Another main concern is the contention that mandatory mediation deprives litigants of their right to a trial, or delays their exercise of that right. Chapter 1 discusses the right to a fair hearing. Section 24 of the Charter of Human Rights and Responsibilities Act 2006 (the Charter) provides that a party to a civil proceeding has the right to have the proceeding decided by a competent, independent and impartial court or tribunal after a fair and public hearing. Section 24(3) provides that ‘all judgments or decisions made by a court or tribunal in a criminal or civil proceeding must be made public unless the best interests of a child otherwise requires or a law other than this Charter otherwise permits’. In addition, a court (or tribunal) is a ‘public authority’ subject to the Charter when ‘it is acting in an administrative capacity’. A court (or tribunal) is said to be acting in an administrative capacity when, for example, listing cases or adopting practices and procedures.579 The Charter also applies to courts (and tribunals)
to the extent that they have functions under Part 2 and Division 3 of Part 3 of the Act.580 The charter
also provides that ‘[s]o far as it is possible to do so consistently with their purpose, all statutes must be interpreted in a way that is compatible with human rights’.581 Moreover, ‘[i]nternational law and the
judgments of domestic, foreign and international courts and tribunals relevant to a human right may be considered in interpreting a statutory provision’.582
To exercise the right to a fair hearing requires access to the courts. Equal access to the courts is not attainable if people are excluded from the court process.583 The fact that litigants who are referred
to mediation retain the right to a judicial adjudication of their dispute if they are unable to resolve it by agreement tends to negate the contention that non-binding ADR options such as mediation are