The types of disputes that are amenable to ADR are of course not unlimited. Judges continue to encourage parties to submit a very wide range of disputes to ADR. However, recent case law, and commentary by the Honourable Chief Justice Bathurst, suggest that the courts are also looking at the appropriateness of ADR. This will be gauged not only by the nature of the dispute, but also the level of public interest in the dispute. Michael Mills and Lauren Whitehead in our Sydney office give their views.
Both the legislature and the courts have recognised that by giving the courts certain case management powers with regards to mediation, arbitration and other out of court options (ADR), there is great potential in reducing barriers to justice. In Victoria, the Supreme Court and County Courts have mandated that all commercial cases must be referred to mediation unless the presiding judge determines that there is a reason not to do so (Supreme Court of Victoria Practice Note No 10 Commercial Court 28 November 2011 para 10.3). In New South Wales, under section 26 of the Civil Procedure Act 2005 (NSW) the court is permitted to refer parties in any civil dispute to mediation procedures with or without their consent.
Recently, the ADR debate has focussed on reasonable or genuine attempts to resolve disputes before commencing litigation (see our post here). However, these questions overshadow the courts’ new challenge, namely determining at what stage in proceedings it is appropriate to refer a case to ADR.
Is early ADR best?
In the recent University of New South Wales Law Journal Forum (Appropriate Dispute Resolution, Volume 18 No 2 November 2012), the Honourable Chief Justice Bathurst observed that although the conventional wisdom is that ADR is effective if attempted early, in his experience the preference towards early referral to ADR does not always generate effective outcomes. His Honour stated that initiating ADR can have a variety of effects depending on the nature of the dispute and that such processes have the potential to frustrate litigants who have their proceedings delayed while they take part in ADR. This can be particularly the case if, for example, the matter does not settle, and the ADR process leads to additional costs in the proceedings.
It seems that while the types of disputes that are amenable by ADR are not unlimited, and the courts are generally encouraging parties to submit a very wide range of disputes to ADR, some recent cases have illustrated that the courts view the appropriateness of ADR as not only dependent upon the nature of the dispute, but also the level of public interest in the dispute.
In the case of Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd (2011) 279 ALR 795, Justice Ball observed that:
“In certain circumstances, it may be apparent from the nature of the subject matter or the way it is dealt with by the legislature that it is appropriate for disputes concerning the subject matter to be resolved by the courts. What normally distinguishes this class of case is the existence of some legitimate public interest in seeing that disputes of the type in question are resolved by public institutions.”[37, 38]
However, in the recent case of Welker v Rinehart (No 2)  NSWSC 1238 (Rinehart case), regarding the Rinehart family dispute, the discretion of the court to grant a stay of proceedings to give effect to a pre-dispute agreement for ADR was considered. In this case the trial judge found that:
“so far as mediation is concerned, sooner or later – as with most commercial and family disputes – it may well be desirable that these proceedings be referred for mediation. But in my view, they are not ripe for that yet. Further disclosure will have to take place before the proceedings can be referred for mediation.”
In the appeal of the Rinehart case, Chief Justice Bathurst noted that although there was no error in the exercise of the trial judge’s discretion at the time, given the nature of the dispute, it would be in the parties’ interests to settle it as soon as possible and, it seemed that, “an attempt to mediate this dispute sooner rather than later would be of benefit to all” (Welker v Rinehart  NSWCA 95 at 194 Bathurst CJ).
The Rinehart case is a particularly good example of the difficulties that the courts face in identifying the appropriate time to make an order for ADR, while still balancing the best interests of the parties and the public. Certainly, where there are complex factual and legal issues, as well as public interest issues, it may be appropriate for the parties to attempt ADR at a later stage once they have a better understanding of the strengths and weaknesses of each side’s legal case and of the key issues that are in dispute. On the other hand, if ADR processes are ordered too late, there could be a risk that the parties have incurred significant costs in preparation for court proceedings only to lose a major motivation and advantage of ADR, and also have their trial delayed pending the outcome of the ADR procedure.
Indeed, it will be interesting to see how the courts balance the many complexities of this problem as the ADR landscape continues to take shape. In the meantime, the courts will continue to consider objectively whether certain proceedings are amendable to ADR and apply their case management powers on a case by case basis, bearing in mind the interests of the parties and public interest.