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PLEASE NOTE: This article was published on the date listed below and may now contain information that has since been updated or changed. We have retained this article as it may still contain helpful comments. However, we advise you to make an appointment to see us for the most up to date information on this topic.

APRIL 2001

Alternative Disputes Resolution

The world is changing. Now we have to change the way in which we deal with clients. The Financial Transactions Reporting Act and the Land Transfer Act both require us to make an accurate identification of the individual. In the past our requirements as to identification of clients were flexible. This, unfortunately, has to change.

Alternative dispute resolution processes, known as ADR, are becoming a more widely preferred means of resolving a variety of disputes. All business managers or executives should be aware of a full range of processes available to resolve disputes and of the new disputes management movement which is growing in New Zealand. We would all agree that disputes need to be resolved early, constructively and cost effectively.

Litigation

More and more business and legal communities in New Zealand are turning to ADR as an alternative to the adversarial court process of litigation. Litigation can be expensive in terms of lawyers’ fees and all other directly related costs, but there are also the indirect costs, for example the cost of diverting key personnel from productive activities or the cost of destroying a profitable relationship with a former business ally.

More than 90% of all legal proceedings are settled out of court, most of them virtually on the courthouse steps after months or years of preparation and expense.

The idea behind the adversary system is that the truth will emerge when opposing sides present their cases as forcefully as possible.

Litigation however can take years to resolve and can be extremely stressful. It is a very public process and there is always the risk of losing. The decision is final and is imposed on the parties.

Arbitration

Arbitration is a form of ADR that most resembles litigation. This is basically adversarial in nature and produces a binding decision made by a third party.

Mediation

Mediation is a co-operative problem-solving process designed to help the parties find constructive solutions to problems. These solutions may or may not involve enforcement of legal rights of the parties. Mediation is a structured negotiation, in which the parties in dispute, usually with assistance and support from their advisers, identify and evaluate options for the resolution of the dispute. By opening up the channels of communication, relationships can be preserved and a greater variety of solutions considered.

The principles of problem-solving and negotiation described in Fisher and Ury "Getting to Yes" can be summarised as:

  • separate the people from the problem;
  • focus on interests, not positions;
  • invent options for mutual gain;
  • use objective criteria or sound reasoning to evaluate options.

Mediation can be cheaper and faster than litigation. It is often less stressful than litigation. It is a private solution and the parties reach their own decision.

The range of remedies available in mediation is not limited to the usual remedies available through litigation. Mediation can provide a sense of satisfaction for most parties at a substantive, procedural and psychological level. As a consequence, agreements are more readily and comfortably adhered to than those which have been imposed by a judge or an arbitrator. Agreements reached are usually final and binding contractual agreements.

Paul Maskell, a partner of our firm, is a fully qualified Mediator. Paul is available to assist in the following ways:

(1) being appointed as an independent mediator to assist parties in finding solutions; or

(2) acting for a party through the mediation process; or

(3) providing advice and guidance, prior to a mediation to assist a party about to participate in a mediation without representation.