When is arbitration the answer? It's a question that's being asked more and more in construction. This week, industry professionals gathered in Melbourne to hear from experts in the field, including the Honourable Justice Croft from the Supreme Court of Victoria, Albert Monichino QC and Corrs International Arbitration Partner, Bronwyn Lincoln.
Corrs High Vis tackles the issues that matter in the construction industry. The podcast series, brought to you by Corrs Construction team, offers views and analysis providing industry professionals with key insights to help them make smarter decisions.
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TEXT VERSION
Host:
Jaclyn Smith, Senior Associate, Corrs Chambers Westgarth
Moderator:
Joe Barbaro, Partner, Corrs Chambers Westgarth
Panellists:
The Honourable Justice Croft, Supreme Court of Victoria
Albert Monichino QC of the Victorian Bar
Bronwyn Lincoln, Partner, Corrs Chambers Westgarth
JACLYN: Hi and welcome to Corrs High Vis. My name is Jaclyn Smith and I'm a Senior Associate in the construction team at Corrs Chambers Westgarth. Earlier this week we hosted a breakfast seminar looking at when is arbitration the answer. We were fortunate to have an expert panel for this interactive discussion including the Honourable Justice Croft from the Supreme Court of Victoria, Albert Monichino QC and Corrs Litigation partner, Bronwyn Lincoln. Joe Barbaro, a partner in the Corrs Construction team chaired this expert panel and we now cross to the session itself.
JOE: Good morning everyone. Welcome, on behalf of the partners of Corrs Chambers Westgarth, to our panel session today on "When is Arbitration the Answer? Commercial perspectives on using Arbitration and related trends in Dispute Resolution". No better topic on a bright and sunny Melbourne morning than looking at the challenges of dispute resolution and the options that are available to us. My name is Joseph Barbaro, I'm a partner in the Construction and Projects team and I practice in dispute resolution and transactional work and it's my pleasure with my partners that we have such an esteemed panel which I will introduce in a moment to support this conversation today. The reason for focussing on this particular topic is that in our experience dispute resolution is increasingly important in commercial transactions and the business environment which we and our clients operate. There are so many different contexts in which so many members in this room participate: whether you're developers who are buying and selling land, building developments, selling apartments, whether you're contractors who are supplier supplying, whether you're a technology provider who's seeking to protect their particular IP, whether you're a supplier, whether you're in Government and you're procuring. There are so many contexts in which tension and disputes can arise and increasingly we're asked to look at dispute resolution within that commercial context. We need to consider factors such as the speed with which the disputes can be resolved not only because we want the answer faster - so much a trend in modern society - but also because we know usually the longer things take the more they cost. We also seek finality; lawyers might intellectually love telling their clients about the appeals process, the delays in the courts and exciting points they might take to the High Court. I suspect most of our clients are probably interested in just having the thing done and sorted. The financial impact and the reputational impact on businesses and for Government is considerable and in the context of reporting on financial performance the significant scrutiny which is placed on organisations with media and much more attention to the way in which we perform, the ability to actually resolve disputes effectively, commercially and quickly becomes more important than ever. So we don't come to this particular session today with any predetermined outcome or answer. We don't seek to sell arbitration as the answer to dispute resolution in every context but rather to explore how arbitration and in contrast to arbitration, litigation and other forms which represent dispute resolution techniques that can be extremely effective. So I certainly find as a front-end practitioner that clients increasingly ask us to look at the options. They increasingly look for flexibility. There is a trend to tailor dispute resolution to the particular subject matter and the particular disputes that might arise but there is also a very significant proportion I think of those in the industry who threaten dispute resolution in their transactions, as very much the boilerplate clause at around number 40 in the Contract and it just sort of rolls on from contract to contract and we'll seek to challenge that thinking. Arbitration is not new and so what we seek to explore today are the trends and the practices in a way in which it is used. The court system we also know is increasingly challenged by the alternative dispute resolution methods that are out there whether they be Arbitration, Expert Determination or Adjudication. So the courts have certainly not been standing still. So on our panel today we have really the pleasure of a range of perspectives and experience from the judiciary to arbitrators to practitioners - both the lawyers and Counsel. I will start by introducing His Honour Justice Croft. His Honour is the judge in charge of the Arbitration List in the Supreme Court of Victoria. Prior to his appointment as judge in the Supreme Court, Justice Croft practised extensively in property and commercial law and was an arbitrator / mediator in construction and commercial disputes both domestically and internationally. He was on IAMA, [is] a grade one arbitrator, a member of the International Panel of Commercial Arbitrators, the Australian Centre for International Arbitration, which is ACICA, and the Singapore International Arbitration Centre as well. We also have with us, at the far end, Albert Monichino QC. Albert practises as a barrister, arbitrator and mediator. He was appointed senior counsel in 2010 and has over 25 years' experience in commercial dispute resolution. He is the President of the Australian Branch of the Chartered Institute of Arbitrators and he's a chartered arbitrator himself as well as an accredited advanced mediator and often also practices as counsel advocate in arbitration and in court. And, my partner, Bronwyn Lincoln who is in the Litigation group here. She practices in international and commercial arbitration and commercial litigation with a focus on cross-border and non-jurisdictional disputes. Bronwyn is also an international arbitrator so [she] approaches these things from both perspectives. I want to keep the presentation to a conversation with the panel members for about 30 to 35 minutes and then I'm going to open it up to the floor and welcome any questions. I appreciate that there is varying experience within the room in terms of the familiarity with the arbitration / litigation process but I recognise there are a number of lawyers and in-house counsel in the room. It will probably take a little bit of the way in which these processes work as read and understood but I will ask a few questions that at least give people a little bit more background and understanding before we delve into the commercial and practical perspectives of dispute resolution techniques. On that front, I want to ask you Bronwyn perhaps just to kick off I think maybe for those in the audience who are less familiar with Arbitration, if you might just give us a snapshot of how Arbitration differs from litigation and perhaps even just set the scene on what is a domestic versus an international arbitration because I think that theme will emerge as important in this discussion.
BRONWYN: Thanks Joe and good morning everyone. I think the primary difference between litigation and arbitration is that to resolve a dispute through arbitration you actually need to have a contract which has an arbitration clause in it to start with. So it's an agreement between the parties to resolve a dispute that is outside of local domestic courts. That's number one which of course is so important to talk about it upfront and not when things all fall apart. In terms of the process, the court of course has civil procedure rules so you have a prescribed course and there are case management techniques and there is some flexibility within that which I'm sure His Honour will speak about. Arbitration on the other hand the parties have the opportunity to actually be part of it, it's their process, so as a party you work with the arbitrator to look at how you might best approach a dispute. There are some fairly standard procedures that you would look at but you have that opportunity to tailor something that suits what you need and that's a big selling point of it. In terms of domestic and international arbitration, again the main reason that you would choose international arbitration is for enforceability because if you have a judgment of a local court and you seek to take it somewhere else in the world, you can often not enforce. Or if you need to run the case again in the foreign jurisdiction in order to get a judgment in that jurisdiction. Whereas with the foreign arbitral award there is a convention called the New York Convention where there are, I think, 155 plus countries at the moment who are signatories or members – it is growing all the time. But subject to some limited rights of appeal you can take your award, which is what you get through the arbitration process, and have it recognised and enforced as a judgment in that foreign jurisdiction and that's very, very important when you are trying to protect an international transaction or investment.
JOE: So in that context – I mean two things that emerge there is the finality and enforcement. You mention the appeal rights and then the ability to actually enforce your judgment in different jurisdictions. Judge, you are in the charge of the Arbitration List in the Supreme Court, I mean, what's its purpose if arbitrations are final and enforceable – what comes to you?
JUSTICE CROFT: Well we in Victoria were one of the first jurisdictions in the world to set up a special Arbitration List with a judge dedicated managing the list. The purpose of the Arbitration List, in the context of modern arbitration legislation domestically and internationally, is to facilitate and support arbitration. The courts, 20 or 30 years ago (that's probably a reasonable estimation) regarded arbitration as an inferior jurisdiction which needed to be supervised and that was very, very unhelpful. It was a trend that existed right through the common law world, it wasn't something peculiar to Australia. But as modern arbitration legislation developed, and in England particularly, and now in Australia in recent years, the role of the courts is to do things like appoint arbitrators if the parties can't agree and the whole arbitration procedural process becomes unstuck, and particularly to focus on enforcement when we receive applications from overseas countries to enforce foreign arbitral awards. We enforced the award against Gutnick at the end of the 2015; an award by a Singapore tribunal. Enforcement is very important. So it's facilitating the process and facilitating and enforceability. In this respect, Bronwyn mentioned the New York Convention – the New York Convention is really the cornerstone of success in international arbitration. Without the New York Convention and the ability to enforce foreign arbitral awards throughout the world, the world trading system really couldn't operate. You can enforce court judgments to some extent, but the ease of enforcement of the foreign arbitral awards is very important, and it's far more easy than enforcing the judgments of courts internationally. So, in a nutshell, that is basically what we do.
JOE: And are there any appeals from arbitrations, and then may be contrasting the domestic versus the international?
JUSTICE CROFT: Well the international regime in Australia is established by a Commonwealth Act and the effect of the Commonwealth Act is to adopt the UNCITRAL – United Nations Commission on International Trade Law - Model Law, and the Model Law philosophy, and the philosophy of the Commonwealth legislation, is really no merits appeals. This is emphasised in a number of cases in Australia in recent times, such as the TCL case which went to the High Court. In that case, and in a number of Victorian Supreme Court and Federal Court decisions more recently, merits appeals were dressed up as denial of natural justice claims seeking manipulate the process to effectively achieve a merits appeal. So in a number of my decisions and a number of decisions all around the country, the Court and other courts have stressed that there are no merits appeals; we are here to facilitate and enforce, basically, but internationally no merits appeals. The domestic legislation is slightly different, for obvious policy reasons, in that under the domestic legislation, parties can agree to what is, effectively, a merits appeal; but you don't see it very often. So the two – the domestic and international regimes – tend to operate similarly, and there are no merits appeals.
JOE: I think that last point is a good one in terms of the capacity for parties to design the appeal process perhaps in domestic arbitration. I'll come back to that later in terms of the way in which arbitration clauses might be written. Albert, so we've talked here about the finality and the appeal process, what can arbitration do or not do that the courts can do? So if you're just going down the arbitration path are there remedies and avenues in terms of the relief an arbitrator can give you that you're forced to go to court in some scenarios?
ALBERT: I wouldn't suggest that an arbitrator can grant relief that a court can't grant but one advantage of arbitration over the court system is that the proceedings are confidential. If you have a particular concern, it might be a sensitive commercial dispute; it might be sensitive, involving very sensitive high dollar value commercial dispute between family members. [For example] a Jewish family and the last thing they wanted to do was to litigate that dispute in court because there would be a member of the press sitting in the back of the court reporting on what was happening. So they decided to do it by arbitration. It's confidential so that's an advantage. In the international spaces, as Bronwyn mentioned, enforceability is the advantage and indeed, for international disputes, litigation is alternative dispute resolution [as] the main game is arbitration. But the other advantage perhaps that arbitration offers is flexibility – appointing your arbitrator, your decision maker – you don't have that luxury if you go to litigation; you might get the judge that's particularly suited to your dispute, you might not. In arbitration you can – the parties, if they agree – can obviate that risk and there's also flexibility. Arbitrators are the servant of the parties, if they agree; if they instruct the arbitrator to do something, the arbitrator must do it. So you can get an arbitrator to conduct your arbitration between 5 o'clock at night and midnight, five nights a week. You can get a leisurely timetable to suit the parties. Judges, while they – especially Justice Croft – are quite accommodating to reasonable requests of the parties, ultimately they're organs of the State and they have a public duty not only to you, the parties, but also the other litigants in the queue and so that may constrain them from acceding to every request of the parties.
JUSTICE CROFT: We will sit at night!
ALBERT: Sorry?
JUSTICE CROFT: We will sit at night.
ALBERT: I'll take you up on that. There you go.
JOE: It's on tape as well.
JUSTICE CROFT: Can I just respond to that? In agree entirely with in relation to confidentiality and things like that. I think Joseph, you made reference to the Court's responding to dispute resolution. I think in recent years the development of commercial courts throughout the country has been very significant. And there's been a bit of a piggy-backing on developments, and arbitration became very flexible, chess-clock arbitration and things like that. The courts have picked that and other innovations up and then arbitration lagged behind a bit and then they'd catch up. And I think it's a very healthy competition cycle in a sense. But putting aside international enforcement, and things like confidentiality and the fact that with litigation you don't choose your judge, I don't think there's anything a commercial court can't do that arbitrators can do. We can be as flexible as you like. We can run chess-clock proceedings. We can sit any hours that are convenient. And, significantly, I think there's been a fundamental change in the way the courts perceive themselves in recent times. I think we see ourselves as serving the community in dispute resolution. We don't see our role as to simply hear cases and deliver judgements. You won't get any proceeding to trial in a commercial court without being forced to mediation unless there's some good reason not to – so it's a very flexible litigation procedure. I emphasise that we're in the business of serving the parties in dispute resolution, so I think there's not a lot of difference, subject to an arbitration's confidentiality and appointing your own judge, in effect.
BRONWYN: Could I just make one comment there because I agree with all of that but you just need to be aware that if you are negotiating with a party that is from somewhere else in the world, unless you stipulate in your contract you can choose aribitration, that you may not end up in the courts here in Australia which have all of these procedures and offer all of the flexibility and the case management techniques that you see in arbitration. But instead you might find yourself in the Mongolian court or in the Brazilian court or even a New Guinea court and they may have very different processes to what you're used to and they may have processes which to you don't seem entirely fair or the integrity of the courts might be in question. So when you're looking at an international transaction that's another reason why you would look at arbitration because you choose the forum upfront and you minimise the risk of actually ending up running proceedings perhaps in a foreign language in a country that you're not familiar with.
JOE: So there seems to be a common acceptance that there's, to a degree, flexibility in the courts and in arbitration to resolve disputes in a sense to suit what is before the decision-maker. But I think we're perhaps interested to hear in some of the ways in which that is effectively working in your experience. I will ask for you perhaps to look at for example complex disputes involving expert evidence and some of the trends that are emerging there in a way in which you perhaps each in your capacity as decision-makers, arbitrators and the judge, are using different techniques to deal with complex and expensive and time consuming expert evidence.
ALBERT: Well one option well in complex cases, I've done this as counsel not as arbitrator, where there might be in a construction dispute there might be different types of experts required: structural engineers, other engineers, other areas of expertise. You might have three different expert disciplines and both the court, well the arbitrators have been doing especially internationally for some time and more recently courts have been doing it, appointing a technical facilitator. So it is a general expert who will then conduct the pre-hearing joint meetings of the experts to try to get points of agreement and disagreement rather than by getting the two competing experts knocking heads together. This technical facilitator will meet with the different experts maybe say three different sessions for the three different disciplines and prepare, have the responsibility of preparing, the joint report for the hearing and, with the agreement of the parties, may also act as a tutor for the decision-maker. So in the arbitration hearing the expert would sit with the arbitrator or panel of arbitators and may even ask questions. Again, that's all a matter of the agreement of the parties. I know this process was adopted in the recent bushfire case in the Supreme Court by a judge but this has been done by arbitrators for some time.
JOE: Judge, you might comment as well, I am particularly interested also because of the Supreme Court's use of expert referees and appointees.
JUSTICE CROFT: Yes I was just thinking, Albert mentioned the bushfire case, just thinking about that. Justice Jack Forrest at various stages in the bushfire case actually had some technical advisors sitting with him on the bench. Again, I think there is not a lot of difference between the approach now between arbitration and the courts with expert evidence. The problem that both processes face is the potential of parties to brief the expert to say whatever they want the expert to say and that is a problem. Then if you've got a non-technical judge or arbitrator, you've then got a non-expert trying to sort out two pieces of expert evidence, which is not absolutely ideal. In recent times I have been trying to address that by sending matters out to special referees – which was a practice adopted very extensively in New South Wales some 20 years ago. We for various reasons seemed to stop doing that about 10 years or so ago in Victoria but I've used it quite extensively since then and it has been very successful. You get the parties' agreement to the right expert special referee and let the expert technical person to privide a report back to the court on the question referred – the court remaining the ultimate decision maker. Nevertheless, the courts are very reluctant to interfere with the report unless there is some good reason to not accept it. So, as long as that regime is adopted it is very cost-effective. But apart from using special referees it is common to provide for expert conclaves, hot tubs, concurrent evidence of experts – it's all being done in the courts here as it has being done in arbitration. Perhaps before I forget it, Bronwyn's warning comments following my comments last time, I totally agree, and the similarity between what we can do as courts here and what arbitrators can do, is very much focused on the domestic system really because you can get yourself into some real problems in international litigation, courts and jurisdictions that you are not familiar with.
JOE: There is this discussion on flexibility and obviously there is a range of approaches that can be adopted, you mentioned stop-clock referees, expert facilitation. How interventionist should or can the judge and arbitrator be in shaping the dispute process with the parties. Or is that really something which the parties should shape for themselves? And I was going to put a proposition to you in answering this, and I'll actually ask each of you to comment on this: are legal advisors brave enough in this be it direction or advice they give their clients to embrace some of these perhaps newer or more challenging ways to fast-track an end result? I might start with you [Bronwyn].
BRONWYN: I was thinking as you asked that question that one way to focus with, all due respect for all the clients in the room here, but to focus clients on thinking about how arbitration or litigation or how the dispute process might best serve their ends and to get a result in a quick way, so efficiently without costing too much money, is to focus on the money. So I think as a practitioner you do have an obligation to actually as I said at the start to talk to people and say – it's your process. Particularly where you're drafting in arbitration clause, it's your process so you should think about how you want it to run. I think as an Arbitrator, if you have parties sitting in front of you and you can see things going off the rails in terms of efficiency, you do have some sort of obligation to raise with the parties and with counsel to put ideas on the table that you have seen work in the past. It may not work - ultimately it's the parties' dispute process, but I do think you have an obligation and it's particularly important if you are going to promote arbitration to be brave in a number of respects - both as Counsel and as a client and as the arbitrator hearing the dispute.
JUSTICE CROFT: I think a lot of arbitrators and judges have that same obligation and I think we do, as arbitrators, do hold regular directions hearings in the commercial court, and it is a matter of putting things on the table and explaining to people what might be a good idea or a bad idea. Of course the best way to proceed is not to be coercing people into a procedure but getting people to think about it so that it becomes their own view - as sort of nudging it along to an efficient procedure. I think that's the way to go really. I tried – you mentioned the money – now without mentioning names, I had a case not so long ago which was consuming vast amounts of money and I decided to get out the English White Book [the English Civil Procedure Rules] and look at their regime where there is provision for ordering production of a litigation budget being established as part of the litigation procedure - which we don't quite do here. And I made orders for them to actually work out how much all this was going to cost and sent it out to a judicial registrar. I thought this would be beneficial and they would see how much money they were and would be burning and come to some sensible arrangement. Well it didn't work, but I might use it again some time.
ALBERT: Well on that note in fact arbitrators in the Australian Arbitration both domestic and international, have the power to cap recoverable costs. That is the recoverable costs of the successful party and my view is if you're an arbitrator and your fees are capped (that is determined as a proportion of the amount in dispute) and you get the parties' recoverable cost are capped then that will drive economic efficiency because it is in no one's interest to draw this proceeding out. So under the act what you would you do as an arbitrator is that you would invite submissions from the parties as to whether the recoverable costs should be capped and at what amount and I have done that many times, invited the parties but I have never had any takers, which is a disappointment. So that's on the budget issue. On the other issue, I think it is very important for the clients to be intimately involved, especially in especially the first Directions Hearing, which will shape how the arbitration is going to pan out, and not just leave it to the lawyers, because although we talk about party autonomy, and with respect to the lawyers in the room, sometimes it's really about lawyers' autonomy, it's the lawyers who shape the process to suit their convenience and not the parties' ultimate convenience. I have been in arbitrations with a first directions hearing, I have said to the parties, "What's the estimated of duration?" The counsel of one party said "Oh 10 days". The other counsel said "15 days" and the client said "What!?" I said "Let's just adjourn the hearing for a moment". I came back 20 minutes later and they said "Well we agree on 7 days." So if the parties hadn't been there, they might have ended up with a 10 to 15 day hearing. So parties should really be involved in shaping the arbitration and really questioning their lawyers as to whether you know: "do we need three rounds of submissions?" It needs to be proportionate to the complexity in our dispute.
Joe: There was passing reference earlier to the importance of mediation being included in the dispute process in a formal sense. There are also trends, for example, there is a process out there we refer to as "Med / Arb" and there's also the use of dispute review boards, for example, on large projects where a pre-appointed panel, of say three experts, look after a project and are available to the parties to vote, decide, but also facilitate and mediate disputes. I am interested in your comments on wearing both hats and if you think that's effective or otherwise. I'll start with you Bronwyn.
Bronwyn: I have a quite strong view on this. What the primary point is at mediation I think is always useful and in Australia it's part of the dispute resolution landscape, so that's sort of my primary point. But having said that, I think it's very dangerous for an arbitrator for example, to adopt a practice such as we have seen in a number of Asian countries for a number of years where an arbitrator can stop an arbitration and then step down and act as a mediator and then if the matter doesn't resolve, they get back – or put their hat back on as an arbitrator. I think there are all sorts of risks with that, particularly if there is confidential information disclosed. How do we set aside what have been told as a mediator, which is a lot more open and of course what you would hear when you are sitting as an arbitrator? Then put that aside and then make your decision or issue your award? It seems to me that it is far more sensible to me to actually have two distinctive processes and for the sake of engaging someone who is an expert in mediation standing down the matter for half a day or a day, allowing the parties to take part in a mediation – that would be my preferred course in every case.
Justice Croft: I entirely agree. I think both arbitrators and judges should be interventionist in the early directions hearings and encourage parties to try mediation. Judges can direct them, maybe arbitrators less so. The legislation right back to the 1984 Act in Victoria provides for all arbitrators to be fairly interventionist in the sense of directing parties to mediation. I did actually conduct, in the middle of an arbitration, at the pressing request of the parties, a mediation as arbitrator. They asked for a day of mediation. I said I was prepared to do it, but only with no confidential sessions, no private sessions, simply open sessions, and I said I didn't want the experts to come along and tell me that their expert evidence was actually nonsense. Because if it didn't settle I was going to have to continue with the arbitration. It didn't settle and I did continue with the arbitration and published an award and it was never appealed and everyone seemed quite happy. But I think the problem is – perhaps with what you see with some of the Asian Med / Arb situations some of which seem very unsatisfactory – is that, you actually compromise both processes. This is because mediation works I think because you have the mixture of open sessions and confidential sessions and you have someone – the mediator – who can see each party's cards and nudge them to a common position if possible. But if you mediate as arbitrator I think private sessions are really not possible, because you are going to hear things that will make it impossible to continue as an arbitrator. This means you will lose that whole essential engine of the mediation. So I would say you compromise the mediation and you potentially seriously compromise the arbitration because you might hear things and pretend to put them out of your mind, but that's pretty ambitious really, once you have heard something which is damaging it is very hard to forget about it.
ALBERT: I have a slightly more relaxed view on this. I think we need to appreciate that it's a combination, I think we need to be a bit more receptive to hybrid processes, not only combining mediation with arbitration but mediations with expert determination, both binding and non-binding, you can craft your process. I have, just slightly off the track, I had a dispute, a construction case, where the issue was the interpretation of a contract. A lot of money turned on it, the parties agreed to appoint a retired High Court Judge as their neutral and we crafted the process. The process was, we will have a mini-trial before you, say half a day and then 24 hours later you give us a short opinion and then we resume a day later for a mediation, you are mediator. The case settled. So that's combining a mediation with a non-binding expert determination. So I think we need to be receptive. I wholly accept that there are real difficulties in combining, for the arbitrator changing hats and conducting a mediation with private sessions. Although the act, the Domestic Arbitration Act allows that to happen. It is very difficult to put things out of your mind, but this process happens in Germany, it happens in China, it's allowed by statute. In Hong Kong and Singapore you can do it but if you receive material information in the private session you are under an obligation to reveal it to the parties. Anecdotal evidence suggests that it is not a very popular process in those countries for that reason because it's not going to have a chilling effect: no one in a mediation is going to say something to the arbitrator in that private session if they know it is going to be revealed. But I think you can combine, without risk, combine arbitration with mediation if you forgo the private sessions. I agree with Justice Croft that does reduce the effectiveness of the mediation, but you can imagine a long running arbitration to get a new person in as mediator, for them to come up to speed is going to be very difficult. In those circumstances, what you could do is have a moratorium in the arbitration, the arbitrator becomes a mediator, you have a round-table discussion, nothing private is said to the arbitrator and you see whether you can resolve the dispute. If it doesn't resolve you are back and acting as an arbitrator. But I think we need to be a bit more flexible and open minded in how we resolve disputes but also heeding the cautions that my co-panellists have mentioned.
justice croft: I think you can combine either process, but I absolutely disagree with combining mediation and arbitration. As a silk, I was a mediator in a very large dispute between two major companies, a number of years ago now. We had a two day mediation which raised some really complex technical issues and contractual issues. The two parties desperately wanted to settle it but it was kind of, pick a number out of the sky or something, and how could they justify that to their two boards. So what they eventually decided to do, they came to me and said "Look we have proposed nine questions and some limited documentation - provided by each party in relation to the nine questions and basically we want you to say, on the basis of admittedly limited material you have got, "what do you reckon" the Supreme Court would say to each of those nine questions?" So I wrote quite a long opinion as to what I thought the Court would say in relation to those nine questions. We then got back together in the mediation and they looked at it – and they had settled it. It was a multi-multi-million dollar dispute. It would have cost a fortune to run in court. And because they then had some rational basis to take to the boards they settled it. You certainly can, be imaginative and combine other processes which do not raise the sort issues that have been raised with the combination of mediation and arbitration.
JOE: Yes I think Albert you mentioned expert determination. In my experience any reportedly robust third-party opinion has the real capacity to bring parties together because you selected them and you asked them to tell you something. It is very difficult to ignore it. I am just interested to hear where you would recommend to clients the use of these other processes we talked arbitration, talked litigation, expert determination is something I get asked about increasingly. Particularly in the context where coming from a construction background a job is being built and the real concern is that things just come to a halt and you need quick answers to allow you to move on and often expert determination presents as a solution to that. Perhaps you might comment on that and the difficulties using expert determination.
Albert: Well expert determination like arbitration results in a binding determination unlike mediation where it is really up to the parties, the mediator doesn't impose a result. I think it is very difficult to anticipate what sort of disputes are going to arise on a construction project. If you do your best in your dispute resolution clause but the best time to devise the appropriate dispute resolution being administered is after the particular dispute has arisen. The problem is that the parties may not agree at that stage as to how to resolve [it] because the losing party, there may be an obvious losing party. That party will not agree with anything, just draw it out. But expert determination, I did one recently – it can be usually is a lot quicker than arbitration because you don't need to have an oral hearing, you don't have witnesses, and it is an arbitrator-like effectively quasi-judicial officer affording natural justice. There is a natural justice in expert determination, but nowhere near the procedural fairness and natural justice required in conducting an arbitration or litigation. But where expert determination falls down is that it is not a great way of determining factual disputes, because it's like statutory adjudication [in the] construction field. You are not going to have the ability to listen to witnesses, hear them cross examined, it is a rough and ready process to determine the factual disputes. So it is best suited to cases where there is an agreed statement of facts and then it's a question that will turn on the question of law I think, or a technical dispute. It might be a particular engineering or other expert question where you might give a particular expert in that area of expertise to determine.
Joe: Well on that note I think in conclusion what we have heard today are some really interesting insights and perspectives from different roles as a dispute resolution process and I think we can see that arbitration courts all offer a range of solutions and flexibility and it's a matter of really appreciating the nuance and actually turning your mind to this and perhaps Albert's thankful recommendation that you seek legal advice when you make a decision.
Albert: l will distribute my card.
Joe: On that note I won't take more of your time and obviously the Panel members I think will be around for a while after this, but also there is a number of Corrs lawyers in the room who no doubt will be happy to answer questions as well on this process. But I would like to thank each of our Panel members in the usual way.
This podcast does not give legal or other professional advice and its contents should not be relied upon as such. Formal legal and other professional advice should be sought in particular matters.
