The Australian Experience of Pre-Litigation ADR Requirements

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This paper was presented at the 6th Symposium of the Institut de médiation et d’arbitrage du Québec
Montréal 4 November 2015.

 6th Symposium of the Institut de médiation et d’arbitrage du Québec, Montréal 4 November 2015

 

THE AUSTRALIAN EXPERIENCE OF LEGISLATED PRE-ACTION ADR REQUIREMENTS: SPECIFICITIES, ACCEPTATION, AND KEYS TO SUCCESS

Overview

The introduction of the Code of Civil Procedure in Québec mandating the consideration of ADR processes prior to instigating litigation has the potential to affect significantly the legal and commercial culture of the Province if the Australian experience over the last 25 years is any guide.

Mediation is now well-established in Australia particularly in the commercial jurisdictions of the states and territories. However it is still viewed as an unwelcome visitor by many in the legal profession and the judiciary. 

This is reflected in the fact that commercial mediations generally take place at the later stages of the dispute. This translates into a process that is directive, evaluative and solution focused.  The legal profession is comfortable with this approach because it has a marked similarity to the adversarial litigation process.

The legislated pre-litigation ADR initiatives introduced into Australian over the last decade are designed to pressure lawyers into mediating much earlier in the litigation cycle.  This requires a different mediation style, one that is relationship based and facilitative with more of a focus on the soft skills of the mediator.

While there has been significant compliance with the requirements to “attempt” mediation and allied ADR processes there is still strong resistance for it to flow through to an actual mediation. Despite this there has been a significant reduction in the number of matters being set down for a hearing in the Australian commercial courts.  Not all of this is due to mediation and ADR but it has played a significant part in changing the commercial culture from adversarial to collaborative.

Part of the motivation for earlier mediation is cost efficiency, but at a more fundamental level, it is a reflection of the fact that we are living in changing times especially in the commercial world. 

There has been a fundamental shift towards a more collaborative management style within corporations and the rise, especially recently, of the “collaborative economy” as evidenced by the Uber ride-sharing and Airbnb accommodation platforms.

It is the speed of change together with the relationship complexity of modern commercial activity that will have the most impact on the slow, adversarial and expensive traditional judicial approach to resolving conflict.

This paper will examine the rise of mediation in Australia since 1990 particularly with respect to the commercial courts and the challenges its growth has had on the legal profession, the judiciary, the legislature and most importantly the parties who find themselves in dispute. The role of the mediator has also evolved over this period to be that of a substantive partner with the judiciary in the resolution of disputes.

The paper will also look at the end users of the mediation product particularly in the commercial and industrial context both as a pre-emptive and post-dispute process.

There are five key stakeholders that will be affected by pre-action ADR requirements.  They are the parties, the lawyers, the judiciary, the legislature and the mediation/ADR professionals.  Each of these stakeholders is driven by internal and external pressures. The key to navigating a way forward is to understand those drivers.

The legislature in the various Federal and State jurisdictions of Australia have played a key role in encouraging the use of mediation and other ADR practices in conjunction with their respective judicial systems. The paper will look at how this has evolved with specific examples from state jurisdictions as well as the Federal Civil Dispute Resolution Act 2011 (Cth).

Mediation, in its modern Western context, is still a relatively new profession. It is continuing to find its way as it evolves its theory and practice base. The profession is still struggling to find its own identity.  Despite this, mediation has survived and grown, principally because it seems to work.  There is a high rate of success once parties get to and participate in the mediation. This applies to both voluntary and compulsory mediation.

The key to understanding mediation’s proper role in the suite of commercial dispute resolution options lies partly in understanding two issues. Firstly, why does mediation work and, allied to this question, what is the source of the mediator’s power and influence over the parties and their lawyers in the session?  Secondly, why do people get trapped in conflict and are unable to negotiate their way out?  It is through understanding these two issues that mediation can find its proper place in working alongside the courts and the legislature to resolve conflict and disputes.

The Australian Experience 1990 to Date

The last 25 years has seen a growth in the use and acceptance of mediation in Australia. There is no one event or initiative that has led to this. It is a combination of many factors.

The Rise of the Private Mediator

The first major initiative involving mediation and the courts took place between 1991 and 1993 when the Law Societies of the states of Queensland, New South Wales and Victoria partnered with their respective superior commercial courts to conduct what the first two states called Settlement Week and Victoria called the Spring Offensive.  Lawyers who had undertaken mediation training were brought together for an induction workshop and were then allocated mediations referred directly by the judiciary from the list of long-running cases.

It is of significance that it was the judiciary and the legal profession, not the legislature that embraced this new process of mediation as a way of dealing with the huge backlog of cases that had built up. It heralded the start of the private mediation movement in Australia especially for lawyer mediators. It provided an opportunity for a significant number of lawyers to obtain practical mediation experience both as mediators and as lawyers acting for the parties in those mediations.

Many of the lawyers who started their mediation careers in those settlement weeks in the early 1990s went on to fill the roles of mediators in a number of substantive mediation panels set up by the legislature in various industries. These included panels for farm debt mediation, franchising mediation, horticultural mediation, retail leases mediation and a host of other schemes.

There is now an active market for private based lawyer mediators in Australia. Over the last 25 years a body of very experienced lawyer mediators has emerged in all states of Australia which the legal profession can call on to mediate often quite complex commercial matters.

The Sir Laurence Street Effect

A powerful influence on the development of a private legal-based mediation profession was the former chief Justice of the New South Wales Supreme Court Sir Laurence Street. He retired from the bench in 1988 and commenced a very lucrative and successful mediation practice. He was held in high esteem both as a jurist and as a mediator by the broader legal profession, commerce and industry as well as politicians on all sides. He gave the emerging profession of mediation legitimacy within the eyes of the judiciary and the legal profession and helped to overcome the initial scepticism at this new profession.  He completed more than 2500 mediations in a wide variety of jurisdictions up until his recent retirement.

More importantly he had the ability to communicate with people and lawyers and was able to use a broad process that combined a facilitative and a subtly directive mediation style. He was a very effective and creative mediator who, through equal measures of charm and guile, was able to build a constructive relationship with parties as well as with their lawyers. His example led to an increasing number of judges retiring from the bench to follow his lead into private mediation practice.  It also opened the door to many senior legal practitioners devoting themselves fully to mediation. 

There is now a significant number of former judges and senior lawyers working as full-time private mediators with fees ranging from $5,000-$15,000 per day. As a result members of the legal profession who practice in the commercial courts have come to accept that mediation as a process is now an integral part of dispute resolution within Australian commercial litigation.  

NADRAC

Another significant development was the initiative by the Federal Attorney General to appoint a panel of experienced mediators from both the lawyer and non-lawyer sectors to advise on policy issues with respect to alternative dispute resolution within a legislative framework. The committee’s title was the National Alternative Dispute Resolution Advisory Committee (NADRAC).  This gave experienced mediators direct access to policymakers and politicians at a time when there was much ignorance and misinformation in the general community on the positives and negatives of mediation. It allowed some practical realism to be brought into the discussions with respect to proposed legislation.

NADRAC made two long-term contributions to the growth of mediation in Australia.  The first was that it developed, in consultation with the broad legal and non-legal mediation community, an Australia wide set of national mediation standards and accreditation (NMAS). Although NADRAC adopted a minimalist approach the standards have had the effect of forcing a number of sitting and retired judges and senior lawyers to undertake basic mediation training.  These standards have challenged, and continue to challenge, the illusion held by a significant number of judges and lawyers that they were natural mediators simply because of their legal training and experience.

NADRAC’s second significant contribution, which was a focus on pre-action litigation requirements, was its 2009 report titled “The Resolve to Resolve: Embracing ADR to Improve Access to Justice in the Federal jurisdiction”. This, together with an internal report within the Federal Attorney Generals Department, led to the enactment of the Federal Civil Dispute Resolution Act 2011(Cth) and has had an influence on similar legislation in Victoria, New South Wales and the other states.

Judicial Mediation

There had been pilot programs in the late 1980s for court annexed mediation in a number of courts particularly the Federal Court of Australia and the New South Wales Land and Environment court. However they evolved more as court Registrar lead ADR processes with occasional participation by judges.

There has been continuing debate within Australia as to whether the judicial role should be kept separate from the mediation role. A number of judges including Sir Laurence Street and the former Chief Justice of the Supreme Court of Queensland the Hon. Paul De Jersey advocated that the two roles be kept separate while other judicial officers have advocated a combined role.

While some judges in a number of jurisdictions will make themselves available for a mediation role within their own courts the majority are happy to refer to private mediation practitioners.  Most mediation when conducted within the various court systems are more in the form of pre-trial conferences and more often than not conducted by court offices such as Registrars and Masters.

There has been some reluctance amongst Federal Court judges to act as mediators. Although the provision for judicial mediation remains in force under the Federal Court Rules it is utilised extremely rarely (Justice P. A. Bergin).

It is the State based commercial courts that have been more practitioner lead with respect to ADR processes.

Early Legislated Intervention

The initial interventions by the legislature began in the early 1990s more as a response to debates about whether the courts had the power to order non-consensual pre-litigation mediation.  This issue partly arose out of the settlement week and spring offensive initiatives.   Some judges were prepared to find that they had that power within their inherent power to manage their own court. Some novel approaches developed including setting matters down for hearing in a priority list if the parties had attempted mediation and in a non-priority list if they had not.

By the end of the 1990s most states had introduced legislation to give courts the power to order non-consensual mediation.  Some courts actively applied those powers particularly in Queensland during the tenure of Chief Justice De Jersey who championed a practitioner lead mediation approach.  Other state courts were less proactive while others simply ignored their powers.  It was often at  the level of the individual judge to decide how proactive they were in ”encouraging” and later directing parties to mediation.

By the mid-1990s the legislature began to take a more proactive and directive role in promoting mediation within specific jurisdictions and industries. A host of legislation was introduced mandating compulsory ADR processes for farm debt, franchising, residential tenancies, retail tenancies, small business, building disputes and strata schemes management, the various state based workers compensation mediation panels, common law work injury claims, and administrative law tribunal’s in the various states and territories of Australia.

 These legislated initiatives have been referred to as ‘scheme’ arrangements (Sourdin) and are generally government funded whether through a private mediation organisation such as “The Office of the Mediation Adviser” for franchising disputes or run through government departments such as the New South Wales Department of State and Regional Development for retail tenancies.

Perhaps the most dramatic scheme was that introduced by the New South Wales legislature to abolish the long established Workers Compensation Court.  It was replaced by the Workers Compensation Commission using a Med/Arb process. A notable feature was the deliberate appointment of experienced mediators as the arbitrators over that of the experienced members of the adversarial workers compensation Bar. The adversarial culture changed immediately because of the cultural alignment between the Med/Arb process and practising mediators acting as the arbitrators.

It is a fate that has hung over the Family Court of Australia for a number of years because of the continued attachment by the family law judiciary to traditional adversarial processes despite having the most ucomprehensive pro ADR legislation and rules in Australia. This is an example of how legislation, by itself, cannot facilitate cultural change without genuine cooperation from the judiciary.

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