Alternatives to court proceedings

Wendy Duggan, Senior Associate | August 2004

Mediation and arbitration are increasingly recognised and accepted as alternatives to litigation.

While the courts remain busy, lawyers and clients are increasingly turning to these methods as faster and less contentious solutions than a prolonged and public fight through the courts.

Arbitration and mediation are not suitable for all disputes but, in many cases, offer workable and often cheaper solutions for many commercial disputes.

This newsletter briefly explains the two processes. However, every dispute is different and it is essential to take legal advice on the best tactical course of action for your dispute.

Mediation

Mediation is a consensual process used to resolve many commercial disputes before they reach arbitration or proceed to a court hearing - although you can turn to mediation at any stage of a dispute.

Choosing this option depends on the willingness of both parties. It can be cheaper and can be a practical choice if you wish to maintain a good ongoing relationship with the other party.

When and why a dispute should be referred to mediation will depend on a number of factors, such as:

• the strengths and weaknesses of each party's case;
  
  
• whether these have become apparent;
  
  
• whether the opposing party is willing to agree to mediation;
  
  
• the availability of other options for resolution;
  
  
• the value of the financial claim; and
  
  
• whether there are options available other than financial ones to resolve the dispute.

Those attending a mediation will generally be senior representatives of the parties involved who are able and authorised to settle the claim.

Most mediators also require the parties' legal representatives to be present to advise on any legal issues that arise; as the mediator must remain impartial.

If settlement of the dispute is reached at mediation, it generally results in a binding settlement agreement.

Arbitration

Arbitration is not an automatic or necessarily preferable option to litigation. It is closer in style to the court process, with a period of preparation leading to a formal arbitration hearing.

An arbitration hearing can be as expensive as litigation but is usually underway faster than a court hearing, so can be useful if a quick resolution is important.

Also, arbitration proceedings do not generate the publicity associated with litigation, so are preferred in cases where confidentiality is important.

Once the arbitrator is agreed, the arbitration process can take from three to six months, depending on the complexity of the issues and the availability of the selected arbitrator/s.

An arbitrator's award is generally agreed to be binding, with limited possibility for the award to be appealed or overturned.

Some disputes are suitable for resolution by arbitration, while others are more suitable for resolution by court proceedings or mediation. Again, it is important to take proper legal advice on the best tactics for your dispute.

Some commercial contracts contain compulsory arbitration clauses for the resolution of disputes, which require the parties to refer disputes to arbitration rather than litigating through the courts.

In such cases, the parties do not have a choice but to arbitrate - unless the clause allows for urgent injunctive relief or if both parties decide that they would prefer to litigate after all.

Arbitration clauses generally cover the appointment of the arbitrator or arbitrators, and other relevant matters.

Not all arbitration clauses are compulsory. Where the clause is not compulsory, the parties may still agree to refer their dispute to arbitration, and to agree the terms of referral.

Advice and information

Bell Gully's Litigation Team can advise on all aspects of the dispute resolution process, including arbitration and mediation.

If you require any advice or further information, please contact any of the team members listed below:


AUCKLAND

Alan Ringwood
Partner

Wendy Duggan
Senior Associate

David Cooper
Partner

Ian Gault
Partner

Brian Latimour
Partner

Roger Partridge
Partner

Ralph Simpson
Partner

Rob Towner
Partner

WELLINGTON

Mike Colson
Partner

Mark O'Brien
Partner

Andrew Scott-Howman
Partner