1.
Introduction
Disputes are inevitable due to
the escalating demand of byzantine and fast-track construction projects.
Therefore, it is imperative for a person in the managerial or administrative
position to possess skills in resolving disputes. Recent years have registered
a growing trend of alternative dispute-resolution methods, for instance,
mediation, adjudication, conciliation, and various other hybrid arrangements[1]. This can be attributed to the
drawbacks associated with arbitration and litigation, namely, the upsurge in
costs, deferrals and hostile relationships between parties.
Unfortunately, during the last
decade superfluous and increasingly complicated stipulations were incorporated
in construction contracts. In general, this involved the addition of numerous
alternative dispute resolution methodologies and arbitration divided into
redundant tiers[2]. These apparently more economic
and swift alternative dispute resolution techniques only rendered the process
more ineffective instead of the other way round. Mediation plays an integral role in
determining the conditions of contracts.
The exercise of Alternative
Dispute Resolution has gained widespread prominence for working out differences
in every sphere of life. During recent years legal systems have increasingly
adopted restorative justice practices[3], this implies that Alternative
dispute resolution is even employed for dealing with criminal cases. This
philosophy has empowered people from all walks of life including laymen by
escalating their knowledge of successful negotiation that tends to focus on
their benefits rather than their social standing[4]. However, this relatively
comprehensible approach occasionally ends up in agreement breakdowns regardless
of the fact that parties voluntarily negotiated in a facilitated mediation
process where they had every opportunity to advocate their interests.
2.
Dispute Resolution Methods
Dispute resolution method potentially ensues in the following three
outcomes, namely, an agreement (negotiation), compromise (conciliation) or
judgment (court or arbitration rulings). The mediation outcome falls under
agreement and cannot legally bind parties to abide by the mediation outcome
unlike arbitration or court proceedings[5]. But to be an ideal solution,
the agreement should meet the interests of all participant parties.
3.
Categorization Of Mediation Outcome
Arbitration comprises a ruling given by a neutral, mutually nominated
arbitrator. However, mediation outcome can be classified as a contract[6]. By taking into account elements
that validate a contract, we can notice that in a mediation outcome, the opposing
parties exchange informed offers and acceptances in order to determine an
outcome. Moreover, consideration and intention to enter into a legal
relationship exists so it can be concluded that it is simply not a concurrence
of offers and acceptances. Therefore, mediation outcome meets the criteria of a
contract and should not be confused for a judgment which is a legal
determination imposed on parties regardless of their consent.
4.
Discharging Mediation Outcome
The creditor should normally
expect a voluntary settlement as regards to the obligation as is the case in
normal contracts. However, in the case where the debtor continues to defer the
obligation, the outcome will vary according to the commencement of the
mediation process. Normally, two hypothetical circumstances exist:
4.1
Parties choose Mediation over Litigation
As mentioned
before, mediation outcome is simply a contract; hence, the creditor can utilize
the same remedies as are available to a contractor. In other words, he can
initiate a legal proceeding on the ground of breach of contract and require
specific performance, rescission, reformation or compensation in the form of
damages etc. but it is imperative to remember that in these instances, a court
is obliged to hear out such cases before settling the dispute. Only when it
announces its judgment, will the contract be legally enforceable. Therefore,
mediation outcome simply serves as a facilitation process rather than a dispute
resolution process like arbitration or adjudication. To put it another way, if
the aggrieved party repudiates an agreement, the court can only resolve a
dispute after the existence and validity of an agreement are proved.Before
moving onto the enforceability of remedies from the mediation outcome, the
court first needs to consider the worth and position of the mediated dispute.
Realistically, mediation outcome is wastage of time for such disputes as it
only leads to procrastination and seems irrational.
4.2 Mediation
after Initiation of Court Proceedings
This option
does not affect the mediation outcome process being classified as a contract.
The only difference is that the judgment of a court will ensue in a “consensual
judgment”. Alternatively the same applies to a settlement which is better known
in Australian law as a ‘consent order’[7]. The proceedings which have
already been initiated in a court will then include such court intercession. At
times parties may seek the court for re-assessment of the outcome. However, in
both situations the outcome will not only be seen as a contract but rather as a
court order. In truth, the mediation process is non-existent; the mediation
outcome (contract) only served as evidence for the court judgment.
In the
aforementioned theoretical situations, the creditor is likely to benefit more under
the latter option if he seeks a court remedy due to non-fulfillment of
obligations by the debtor as decided by the mediation outcome (contract), is
likely to benefit more under the latter option. Under the first option, he will
probably encounter prolonged proceedings as the debtor can use acceptable
allegations to be excused from specific performance e.g. emergency, frustration
and the like[8]. But in the second scenario, the
proceeding will assume the form of an enforcement proceeding because either the
debtor declines to comply with the court judgment or fails in enforcement of
the court order (Australian terminology).
In
certain situations, legislation or the outcome of mediation or any other such
agreements might necessitate particular solutions when non-cooperation results
from the outcome of the mediation. This tends to stand true without regard to
any form of classification. For instance, a bigger contract might entail
dispute resolution provisions stipulating that disputes should be settled in
several stages. One of these stages is mediation and in case it proves futile,
then arbitration can be used. Mediation might fail as its outcome usually does
not provide a long-term remedy. Additionally, mediation can be exercised by
parties beforehand or subsequent to reappearance of a dispute. No law prohibits
this course of action.
Debtors
have to face repercussions as a result of prolonging proceedings. Contempt of
court is the bare minimum punishment unlike general proceedings. Debtors should
carefully review repudiating a mediation outcome since this can prove quite costly.
A prudent mediator will deliberate and debate about an issue from all angles to
eradicate any prospective vitiating reasons and to formulate a long-lasting
solution before drawing the agreement. Similarly, a judge cannot be expected to
restate a consensual judgment or alternatively a consent order without putting
the mediation outcome to test for durability.
5.
Enforceability of Mediation Outcome
A
mediation outcome ensues from either of two cases. In the first case a contract
is signed into effect by the disputing parties acting outside the domain of the
court system. This could also occur when a court issues an order such as in
Australia: normally, the court takes control of the alternative dispute
resolution. On the other hand, jurisdictions and in particular where civil and
sharia law systems[9] have
been implemented, the outcome of the mediation or the suluh concurrence passed
by the court may be known as a consensual judgment. In these circumstances, the consensual
judgment is deemed as conclusive and significant judgment, against which no
appeals could be made to the court of appeals regardless of the fact that
parties go to the court on their free will and ask for a mediation outcome to
be re-issued. Thereby, the implementation of an outcome of mediation is
dependent on the outcome’s nature of formality. To put it another way, the
method of outcome will be determined in the light of the kind of the outcome’s final
mediation which could be a consent order, consensual judgment or an agreement.
From the above, it can be deduced that the enforceability of a mediation
outcomes rests on a court order; otherwise it cannot be legally enforced on its
own.
Another
critical issue is whether a mediation outcome is synonymous to a dispute
resolution outcome. The answer is negative; two points should be borne in mind.
Firstly, the legal system must adopt the mediation outcome as an “enforceable
outcome per se”. In other words, the national legislation should give statutory
recognition to the enforceability of a mediation outcome or ratify a distinct
new legislation governing mediation in every aspect. Such legislative practices
are being undertaken in some jurisdictions. For instance, since 1984 the government
of Australia recognizes mediation as a community service[10].
The Court (Mediation and Arbitration) Act (Cth) was enforced with regard
to Commonwealth Legislation in 1991. In addition, during the Workplace
Relations Act (Cth) sanctioned a recommendation to mediation in respect of
industrial disputes for the first time in history. Several national and
international organizations now exist to smooth the progress of mediation in
all types of disputes. Consequently, various
bodies developed a code of practice. An example would be the New South Wales
Law Society which has established a guideline to facilitate practicing
mediators. In Australia this legislative development has resulted in the
issuance of a National Accreditation Standard for Mediators[11]
as a result people are proscribed from acting as mediators unless they
hold a valid national accreditation.
Australia is one country that has taken pragmatic steps for overcoming
flaws in the mediation practices as a part of the alternative dispute
resolution process. Nonetheless, the legislative still needs to take implement
one last conclusive measure for making the process flawless. They legislature
should grant legal enforceability to a mediation outcome signed by an
accredited mediator, similar to the status of a judgment made by courts in
Australia.
If this step is taken, it will not render the
process exceptional but only assign it as much weight as an arbitration award.
The similarities between the two should be taken into account. Firstly, both
arbitration and mediation outcome are branches of dispute resolution processes;
secondly, both involve parties voluntarily seeking an alternative remedy to
resolve disputes without the burden of litigation. However, arbitration award
carries legal weight and a determinative decision enforced on parties. As
opposed to this, an outcome of mediation is considered as the consensual remedy
requested by the involved parties to settle a dispute; therefore, it sounds
more rational and coherent with the overall legal system to award legal
enforceability to the later so that parties abide by the solution. In plain
terms, it seems logical and categorically acceptable to coerce parties into
accepting a mediation outcome. Furthermore, it is noteworthy that in today’s
globalized world, the bulk of commercial disputes comprise transnational
disputes, hence international assistance is required for effectively resolving
them. Thereby, the first step should be
legal enforceability of mediation outcomes on a national level, and then countries
should work together for recognition and enforceability of mediation outcome at
the international level. United Nations can play an instrumental role in this
regard. The United Nation Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, (also known as the New York Convention 1958) was
adopted for the international enforceability of arbitration awards[12].
National
and global acknowledgement of outcomes of mediation in line with arbitration
awards concerning the nature and legal enforceability needs to be established.
Only then would mediation become a genuine and functional dispute resolution
technique.
6.
Court
In
spite of the increasing accentuation on the use of informal methods to resolve
conflicts, the legal settings is still “aimless, meandering, and …
confusing”. The courts have failed to
lay down plain, comprehensible and well-reasoned approaches regarding dispute resolution.
This is reflected by the fact that traditional arbitration law which comprises
of judicial decisions which are relevant to federal or state stipulations are
being applied to alternative dispute resolution that is dissimilar to
conventional arbitration. The interface between conventional arbitration and
prior stages in dispute resolution depict the fault of the courts to clearly
specify well-reasoned and lucid methodology for the new generation.
Arbitration
law encompasses a wide variety of particular legal repercussions that have a
bearing on several different facets of the dispute resolution process. The application
of these standards to mediation as well as nonbinding adjudication carries
little significance and appears irrational. The courts become ineffective
during judgement and enforceability, as they are required to conduct an
analysis for every single case to determine the federal or state arbitration
law it relates to. Due to the increased complexity and judicial intervention,
courts find it difficult to formulate a new body of law for dispute resolution
cases. It is integral to consider whether litigation should be ceased and a
nonbinding process compelled. Moreover, should immunity be extended to a third
party decision maker or adjudicator?
A handful of international courts have incorporated the
law of contract concerning legal and equitable solutions in relevance to
alternative dispute resolution. However, others have not adopted this for
myriad reasons; namely, mistrust, lack of awareness of alternative dispute
resolution, and comprehensible shortcomings concerning equitable relief. Courts
require a guideline for the legal implementation of dispute resolution
processes and for avoiding interface between conventional arbitration and
dispute resolution agreements. Statutory measures could be employed but this
will ensue in dangers and obstacles, if immediately applied on a large scale.
Therefore, courts should consider “the development of a restatement of dispute resolution.”
If nothing else, at least this multi-disciplinary and well thought out debate
would shed some light on
the problems[13].
The
adoption of mediation has been rather slow. A study of the mediation pilot in
United Kingdom revealed that only five percent of the parties involved in cases
agreed to mediate. This attitude can be attributed to numerous factors. For
instance, normally the opposing party construes mediation as a sign of weakness,
lawyers also lack experience in this relatively new legal concept, and parties
often disdainfully view the notion of compromise. Moreover, lack of public
awareness also plays a role in the slow take up of alternative dispute
resolution.
7.
The Situation in UAE
In
the case of UAE, judicial mediation is a preferred option and is taken to
action through the Conciliation and Settlement Committee that operates in
federal courts. This body was established under the Federal Law No. (26) as
well as the Procedures of the Conciliation and Settlement Committee
(Ministerial Resolution 133 of 2001). The purpose of this body and the overall
mechanism is to promote mediation over conflicts that might end up in
litigation. According to Article 101 of the Civil Procedure Law both parties
can choose to stop action by asking the judge and this effort can be turned
over to mediation. However, it is up to the judge to decide if mediation or
arbitration should be allowed or not. The efforts for mediation could be done
either before or after the dispute. Moreover, mediation could be part of the
contractual obligations although it does not always have to be as such. Other
than the Conciliation and Settlement Committee no other mechanisms are
available in UAE codes to settle disputes through mediation and this
effectively limits the efficacy of such a body.
In
case that an arbitration clause is present in a contract, the particular
dispute cannot be taken to a court of law in UAE. This happens as the
arbitration clause removes the case from the jurisdiction of the court of law.
However, in the case of mediation clauses the bereaved party can take the case
to a court of law. The court may choose to forego its jurisdiction in order to
initiate mediation. In case that mediation fails, the court still retains its
jurisdiction to solve the problem.
Mediation
however is limited in that either party does not have to act in good faith
during mediation. This means that either party cannot sue the other party for
lack of good faith during mediation as made apparent by the Avril v Civilmar[14]
case. If mediation is carried out under the LCIA rules then Article 10 provides
for confidentiality.
8.
Conclusion
Mediation is an ingenious and peaceful notion to settle
disputes between hostile parties by bearing in mind their interests, cost
limitations and time restraints. Productive mediation can only ensue from the
genuine and mutual endeavours of various parties such as lawyers, psychologists
and other smart individuals or organizations[15].
As discussed above, mediation is a productive tool to
draw an existing dispute to close by assisting rival groups to conclude an
acceptable agreement. However, the durability of such an acceptable agreement
is full of doubt as the existing national and international legal systems do
not provide any tools to coerce the repudiator to impose the outcome. Moreover,
manipulation of the process can occur at the hands of a malicious party[16].
Unfortunately, up to this point in time a mediation
outcome cannot be legally enforced until it is re-issued by a court; thus, so
far it does not amount to a dispute resolution outcome. In fact, it should be
viewed as a court judgement instead of a mediation outcome, after the
re-issuance of an outcome by a court. The outcome as a part of an agreement would not directly conclude a
dispute and in itself, it carries no legal worth. Hence, the legal analysis of
classifying an outcome of mediation as a reliable method for dispute resolution
proves flawed and incorrect. It is merely a facilitative technique in an
attempt to avoid litigation. Similarly, the mediator is not technically a
dispute practitioner but rather acts as a helper in contracts.
9.
Recommendations
Attention needs to be paid to reform the process to
render mediation outcome as an acceptable and effective dispute resolution
choice. Two sum it all up, two proposals should be considered. Firstly, a
Mediation Legislation should be endorsed which would represent all the amendments
and developments in relevance with mediation outcome to the present time. In
addition, this Act should decree that mediation outcome would hold the same statutory significance as an
arbitration award in terms of the nature and enforceability of outcome[17].
Secondly,
in consideration of transnational disputes, countries should collectively
strive in international forums for the endorsement of a treaty that would offer
international acknowledgment and enforceability of mediation outcomes[18].
United Nations has already ratified the United Nation
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the
‘New York Convention 1958’, and can prove effective as an international
platform for formulating an agreement pertaining to mediation outcomes.
Moreover,
192 countries hold membership in the United Nations out of 243 countries, which
would ensure that the international adoption of an Act would extend to the
maximum countries possible.
10.
Bibliography
Books
David Spencer, Essential
Dispute Resolution (2nd edn, Cavendish Australia 2005)
David Spencer and Michael C Brogan, Mediation
Law and Practice (Cambridge
University Press 2006)
Norwood,
Establishment of the Community Mediation
Services (1st edn, South Australia Press 2010)
Richard
Garnett et al, A Practical Guide to
International Commercial Arbitration (Oceania Publications Inc 2000)
Roger Fisher and William Ury and Bruce Patton, Getting to Yes (Negotiating an agreement
without giving in) (2nd edn, Random House 1991)
Sai-On
Cheung and Henry C H
Suen and Tsun-Ip Lam, Fundamentals
of Dispute Resolution Processes in Construction (1st edn,
Routledge 2001)
Thomas Stipanowich, The Arbitration Penumbra: Arbitration Law
and the Rapidly Changing Landscape of Dispute Resolution (1st
edn, Maxwell 2007)
Journal
Articles
eLaw Journal: Murdoch University Electronic Journal
of Law (2010) 17(2)
John Braithwaite ‘Restorative Justice and
De-Professionalization’ [2004] The
Good Society 13 (1):
28-31
Miryana Nesic (2001)
‘Mediation - On the Rise in the United Kingdom?’ Bond
Law Review 13(2) Article 10
WALRC, Review of the
Criminal and Civil System in Western Australia Final Report Project No 92 (1999)
Case
Law
Avril
v Civilmar 605 So. 2d 988 (Fla 4th DCA 1992)
National Australia Bank v Freeman
[2000] QSC, 295
Scanlan’s New Neon Ltd
v Tooheys Ltd (1943) 67 CLR 169, Frustrated Contracts Act 1978
(NSW);
Frustrated Contracts Act 1988 (SA)
Statutory
Law
Administrative Appeals Tribunal
Act 1975 (Cth) S 34d(2)
Website
Lloyd
Duhaime, ‘Sharia Law Duhaime’ <http://www.duhaime.org/LegalDictionary/S/ShariaLaw.aspx> accessed 4th
May 2012
[1] Sai-On Cheung and Henry C H Suen
and Tsun-Ip
Lam, Fundamentals of Dispute Resolution
Processes in Construction (1st edn, Routledge 2001) 128
[2] David
Spencer and Michael C Brogan, Mediation Law and Practice (Cambridge University Press 2006)
[3] John Braithwaite ‘Restorative Justice and De-Professionalization’
[2004] The Good Society 13 (1): 28-31
[4] Roger Fisher and William Ury and
Bruce Patton, Getting to Yes (Negotiating
an agreement without giving in) (2nd edn, Random House 1991) 4-8
[6] David Spencer and Michael Brogan, Mediation Law and Practice (Cambridge University Press 2006) 348
(NSW); Frustrated Contracts Act 1988
(SA)
[9] Lloyd Duhaime, ‘Sharia Law Duhaime’ <http://www.duhaime.org/LegalDictionary/S/ShariaLaw.aspx>
accessed 4th May 2012
[10] Norwood, Establishment of the
Community Mediation Services (1st edn, South Australia Press
2010)
[12] Richard Garnett et
al, A Practical Guide to International
Commercial Arbitration (Oceania Publications Inc 2000) 125
[13] Thomas Stipanowich, The
Arbitration Penumbra: Arbitration Law and the Rapidly Changing Landscape of
Dispute Resolution (1st edn, Maxwell 2007) 8
[15] Miryana Nesic (2001) ‘Mediation - On the Rise in
the United Kingdom?’ Bond Law Review 13(2)
Article 10
[17] WALRC, Review of the Criminal and Civil System in Western Australia Final
Report Project No 92 (1999)
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