This is an extract from the paper given by Professor Doug Jones, CIArb World President in Dublin on November 12th. If you would like a copy of the paper please contact me at pat.brady@workplacesolutions.ie

Costs of formal dispute resolution

Dispute resolution processes used for commercial disputes reflect the requirement of quick, inexpensive processes which allow parties to maintain commercial goodwill.[1] Mediation and other ADR techniques are generally accepted as a cheaper alternative, and on that basis there has been an increase in these methods to resolve disputes. Conversely, long and arduous litigations can be expensive for both parties.

Recently in Australia, there has been much talk about the unreasonable amount of money spent on some commercial disputes. Most notably, the Seven Network Limited v News Limited^[2] which was described by Sackville J (the presiding judge) as a ‘mega-litigation’. Sackville J went on to state:

An invariable characteristic of mega-litigation is that it imposes a very large burden, not only on the parties, but on the court system and, through that system, the community.[3]

His honour elucidated that he himself was surprised at the excessive amounts of money spent on this case. He estimated that ‘the parties have spent in the order of $200 million on legal costs in connection with these proceedings’[4] and he questioned whether the amount of money spent was justified given the amount of damages claimed in the case. For example, Seven claimed between $194.8 and $212.3 million when its final submissions were made.[5] Sackville J concluded that ‘[t]he maximum amount at stake in this litigation has not been very much more than the total legal costs incurred to date’.[6]

His honour quite forthrightly labelled the C7 Case litigation ‘extraordinarily wasteful’ [7] and bordering on the ‘scandalous’.[8]

The C7 Case is but one example, albeit an extreme one, of how litigation can be costly in commercial disputes. Logically, the legal costs for long, drawn out disputes will accumulate. Bearing this in mind, many companies now opt for ADR clauses within their commercial contracts. ADR techniques, such as mediation, are likely to be far less ‘wasteful’ whilst achieving similar results.

1.2                National accreditation scheme

Since 2001,[9] there has been much discussion about the need for a national accreditation scheme for mediation in Australia. NADRAC has been instrumental in lobbying for a national system for accrediting mediators.

The National Mediator Accreditation System (NMAS) commenced operation on 1 January 2008. It is an industry based scheme which relies on voluntary compliance by mediator organisations that agree to accredit mediators in accordance with the requisite standards. These organisations will be referred to as Recognised Mediator Accreditation Bodies (RMABs).[10]

In its discussion paper released in 2004, Who Says You’re A Mediator?, NADRAC defined accreditation as:

[T]he process of formal and public recognition and verification that an individual, (or organisation or program) meets, and continues to meet, defined criteria. An accrediting body or person is responsible for the validation of an assessment process or processes, for verifying the ongoing compliance with the criteria set through monitoring and review, and for providing processes for the removal of accreditation where criteria are no longer met.[11]

NADRAC suggests that there is a need to move towards a national scheme because it would promote the following objectives:[12]

• enhance the quality and ethics of mediation practice;
• protect consumers of mediation services;
• build consumers confidence in mediation services;, and
• build the capacity and coherence of the mediation field.

Bearing the importance of these factors in mind, a consensus was reached in 2006 as to the basic characteristics of the National Mediator Accreditation Scheme. This scheme is intended to develop a framework and documentation to guide the implementation of the National Mediation Accreditation System. Proposals were discussed and accepted at the National Mediation Conference in May 2006.

Nation-wide accreditation standards have been developed in order to enhance the quality of national mediation services in Australia. They also aim to facilitate consumer education and build consumer confidence in ADR services, improve the credibility of ADR and help build the capacity and coherence of the ADR field.

With consistent standards across Australia, mediation and other ADR tools are being used increasingly and on a larger scale. Therefore, it can be reasonably inferred that the successful implementation of this project over the coming years will cause a continued increase in the use of mediation.

Whilst businesses, the courts, the legislature and peak professional bodies continue to extol the virtues of mediation in Australia, it appears that it will continue to grow and develop as an alternative method of dispute resolution. The benefits of mediation over litigation and other ADR tools are becoming increasingly apparent and accordingly many firms are opting to draft mediation clauses within their commercial contracts. Furthermore, the court system is utilising the benefits of mediation to alleviate the pressure from their lack of resources.

The next step in Australia is to continue to improve this National Accreditation System in order to promote consistency within mediation across the country. Pending the success of this national system, the outlook of mediation in Australia appears positive. The preference of mediation as the ‘best choice’ to resolve disputes has increased over past decades and it appears that it will continue to do so.