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Proven alternatives to formal litigation are embraced in Australia to seek effective, flexible, and cost-efficient ways to resolve disputes. Some of the most common alternative dispute resolution (ADR) methods in Australia include mediation, arbitration, expert determination and dispute boards. These forms of ADR are all options that may be chosen by the parties rather than instituting formal proceedings through the courts.
Mediation
Mediation is a form of structured negotiation where the parties attempt to resolve their dispute by identifying and assessing different options of settlement. The negotiation is facilitated by an independent and impartial third party, known as a mediator, who typically has expertise in the subject matter of the dispute. Mediation is private, confidential and without prejudice.
Arbitration
Arbitration is similar to proceedings before a court; it can be private and confidential with tailored rules to facilitate a determination. The parties to a dispute present their evidence and arguments to the arbitrator, who is an independent third party. Depending on the size and complexity of the dispute, there may be a single arbitrator or a panel of arbitrators presiding over the matter.
Arbitration is a well-known form of ADR. There are globally and domestically recognised organisations that publish arbitration rules. In Australia, the International Arbitration Act 1974 (Cth) incorporates the UNCITRAL (a legislative template created by the United Nationals Commission on International Trade Law) Model Law. Additionally, the Australian Centre for International Commercial Arbitration (ACICA) publishes a set of rules that parties can adopt for arbitrations with their location in Australia.
Relevantly, the arbitrator’s decision (i.e. the arbitral award) is binding and enforceable; there are very limited avenues for parties to appeal an arbitral award.
Expert determination
Expert determination is an ADR process where a neutral and highly specialised independent third-party provides their determination on the dispute between the parties. The determination can be either binding, binding subject to limited exceptions, or non-binding – the nature of the expert’s determination will be chosen by the parties.
Expert determinations are particularly useful in matters where the relationship between the parties will continue for some time because of the nature of the contract or the project. They are also useful where there is a technical and commercial dispute requiring non-legal expertise, and quick and cost-effective determination. They are commonly used for issues of valuation.
The expert(s) chosen by the parties will draw on their professional knowledge, background, and experience to assess the evidence and submissions made by the parties in coming to their determination.
Dispute boards
Dispute boards are created at the beginning of large construction or infrastructure projects and comprise impartial experts who assist parties in dispute avoidance and resolution throughout the project’s lifecycle.
Typically, dispute boards comprise three independent and impartial individuals (the Board) who have relevant expertise in the project. For example, a senior engineer, project manager, and/or lawyer.
The dispute board and its processes are set out within the project contract and will start when the project is initiated. The Board is thoroughly briefed on the project and assists parties in identifying potential issues that may arise, while facilitating effective collaboration and communication.
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