MEDIATION & ARBITRATION

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MEDIATION
ARBITRATION

Overview of Mediation

  • The essential concept of mediation is a process of constructive negotiation assisted by a neutral third party (and sometimes more than one).  The term “conciliation” can also be applied to such a process.

  • The broad process can include a number of different forms and techniques.  However, there are now some well-established and accepted practices in New Zealand.

Factors favouring Mediation

  • There are genuinely contentious issues which could go either way at Court or in an arbitration.

  • There is a multiplicity of issues, making it unlikely that one party will win or lose every issue at Court or arbitration.

  • The parties want to continue their relationship in some form after the dispute is resolved (eg continuing business dealings, family relationships, neighbours).

  • A determination of the facts is not necessary to the parties.

  • Confidentiality, privacy, and privilege attach to the discussions and to any documents produced.

Procedure at Mediation

  • There is no set procedure.  Mediators can use any process they want, subject to the parties being prepared to go along with it.  However, certain practices have developed and are widely followed.  Those common practices are described here.

  • Often the mediator will open the proceedings by making a statement on the mediation process he or she will follow and the rules which will be applied.  Then there will be an opening statement by each party, which is an opportunity for each to state the facts as they see them and what they seek out of the mediation process.  This can be assisted by a written opening document, which is encouraged by some mediators and is commonly seen in complex mediations, and can be presented by either the party personally or their representative.  In terms of the theory of mediation this phase is “scene setting”, and can also be used to identify emotional issues, factual issues, and getting the parties used to discussing the issues constructively.  The mediator might well interrupt from time to time in order to clarify statements, neutralise inflammatory statements, and encourage the parties to deal with each other constructively.

  • The next phase of the mediation is an examination of the parties’ position after their opening statements, with the mediator taking a more active role.  Areas of agreement will be identified and emphasised.  During this phase the parties can expect questions from the mediator.  These questions will aim to clarify positions, get all the issues clearly on the table, and sometimes to gently or not so gently engage in “reality testing”.  This latter style of questions is to bring home to parties that unrealistic positions are not strong foundations for constructive negotiation.  Disagreements will be identified and an agenda may be set for dealing with them.  For tactical reasons, the mediator will often deal with the smaller and more easily solved issues first.  In this phase, the true negotiations start.

  • At about this time (although a mediator can do it at any time), the mediator will try and generate options.  This involves identifying all the possible options for the parties, including options for settlement.  If the mediation is working effectively, options will be generated co-operatively between the parties, and will include options not previously identified.

  • While not a necessary part of all mediations, at this stage it is common for mediators to have separate meetings with the parties.  This is called “caucusing”.  It can be a very powerful technique, because it allows the parties to speak directly to the mediator about their true interests and concerns about the outcome, without being inhibited by the other party’s presence.  The mediator is then placed in a better position to see opportunities for fertile settlement discussions, which the parties themselves could not see.  When parties make statements in such separate meetings, those statements remain confidential and are not disclosed to the other parties without prior permission.

Finally, the negotiations are brought to an end with either concluded results or an agreement that the mediation has been unsuccessful.  Even in the latter situation, useful discussion can be had about what the parties are going to do next with their dispute.  For instance, there might be an agreement to limit the scope of the dispute so as to make a subsequent Court proceeding or arbitration less expensive.  If a final agreement is reached, then the Mediator will be keen to ensure that it is recorded in a way which is final and binding, preferably before the mediation is concluded.

Overview of Arbitration

  • The scope for arbitration is very wide.  Any dispute that could be determined by a Court can, with a few exceptions, be made the subject of an arbitration.
  • The decision made by an arbitrator is very much like a Court decision.  It is binding on the parties, it is enforceable between the parties (using Court enforcement techniques, if necessary), and it settles issues of fact so as to make them res judicata between the parties (ie not able to be re-opened even in other disputes).
  • A key element to arbitration is that the parties themselves agree to the arbitration process in substitution for the Court process.  It is therefore essentially a contractual process within a statutory framework.  Such agreement is usually termed “submission” to arbitration.

Factors favouring Arbitration

  • Flexibility of procedure by the agreement of both parties (eg unsworn evidence, written evidence, suspension of the rules of evidence).

  • Speed (although generally only with the co-operation of the parties).

  • Privacy and confidentiality.

  • Unlimited choice of arbitrators, including those with familiarity or expertise in the subject matter

  • Restricted appeal rights, and early finality.

Procedure at Arbitration

  • The appointment of the arbitrator or arbitrators (sometimes referred to as “the arbitral tribunal”) must take place in accordance with any rules the parties have laid down for themselves in the submission to arbitration.  If the submission is in fact a combined mediation and arbitration, then this might require a mediation before any arbitration can be proceeded with.  The wording of the submission might require notices to be given, or it might require some other form of process.  If there is no form of process in the submission for the appointment of an arbitrator, or if one party’s refusal to co-operate means that the process cannot be followed, then the Arbitration Act assists by providing two default processes.

  • Even after the arbitrator is appointed, there may well be one or more preliminary meetings that form part of the hearing.  The subject matter of these includes all of the preliminary points that arise from time to time in Court proceedings (eg disclosure of documents, directions regarding the hearing, how expert evidence is to be dealt with).  Just as with a Judge, an arbitrator can make preliminary orders, including orders in the nature of injunctions, orders for the preservation of property, and orders for the production of documents.

  • An arbitration hearing can follow any procedure that the parties agree on, provided that it meets the basic requirements of arbitration.  Those basic requirements involve the rules of natural justice, particularly the right of each party to present their case, and the duty of the arbitrator to make a binding decision based on reasoned principles and the evidence.

  • It is, strictly speaking, not necessary to have a hearing, provided the parties agree, although it will always be necessary for the parties to present their case in one manner or another (eg through documents, by telephone), for each party to know what the other party has put before the arbitrator, and to have a chance to comment upon it.  Nevertheless, by far the most common procedure is to have a hearing, which is conducted in a similar fashion to a Court hearing.

  • The analogy with a Court hearing can be quite striking, with arbitrators often requiring a Statement of Claim and a Statement of Defence to define the issues, requiring formal openings and closings, and with evidence presented on oath by way of written brief followed by cross examination.

  • Whilst it is possible for an arbitrator to give an oral decision, it is extremely unusual.  Decisions are almost always subsequently given in writing.  The decision may or may not be with supporting reasons, depending on what the parties to the dispute require.  The decision of the arbitrator is properly called “an award” in the terminology of arbitration.  The award ought to deal with all matters that were placed before the arbitrator for a decision.  Just as is the case with Court decisions, it is common for the arbitrator to reserve the issue of costs for further submissions in the light of the award on the substantive matter.

  • The arbitrator has a wide discretion with costs, but generally will award costs in favour of the successful party against the unsuccessful party.  The wide discretion can include a sharing of costs between the parties, especially where neither party is seen as winning on the issues.  Unlike Court proceedings, costs also include the issue as to who must pay the fees of the arbitrator.

  • Whilst the scales of costs used by the District Court and the High Court are irrelevant to arbitrations, the general principles and discretions about costs apply.

There is a very limited scope to challenge an award.  There is no right of general appeal.  There is a limited right of appeal with the leave of the High Court on a question of law, although the parties can agree in advance that there is no right of appeal at all.  The Courts have firmly underpinned the arbitration process by taking a strict and conservative approach to parties wishing to appeal an arbitral award.

CONTACT
Paul Maskell
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Sarah Bush
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Greg Stringer
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for

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E-mail: p.maskell@inderlynch.co.nz

for

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E-mail: s.bush@inderlynch.co.nz

for

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E-mail: g.stringer@inderlynch.co.nz


Mediation Rooms

Mediation rooms are available for hire at Manukau City and Papakura together with
additional breakout rooms for confidential discussions

Contact Peter Vujcich for further details

Ph: 09 299 8550  Email: papakura@inderlynch.co.nz


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