A Progressive Approach to ADR

February, 1999

There is little doubt in my mind that when it comes to alternative dispute resolution (please, not ?alternate? which means ?to follow in turns? rather than ?providing a choice?) mediation is the flavour of the month. The provincial government encourages its use through the notice to mediate provisions of the Motor Vehicle Act and the soon to be proclaimed regulations of the Homeowner Protection Act. Attached to Small Claims Court we have a ?mediation practicum?, providing for mandatory mediation of construction disputes. The Ministry of Municipal Affairs is promoting the use of mediation in order to reach agreement on regional growth strategies, and so on.

As a mediator with a profound and, some would say, passionate belief in the process, I can?t help but be pleased. I believe that anything that can be done to make the world a kinder, gentler and more civilized place is to be encouraged. Mediation assists parties to negotiate their own agreement in a cooperative and collaborative way.

But mediation is no guarantee of closure. For some it becomes a frustrating process when no decision is reached after a lot of talk and much time. Personally I believe that there is always value to the process, since parties will inevitably get a better understanding of the other?s point of view. But, that benefit is often minimized and progress lost when parties return to entrenched positions dictated by their litigation mindset.

The traditional adversarial approach to dispute resolution through litigation guarantees a conclusion. It is arguable that the process takes too long, especially when there are appeals, and is consequently expensive, but there is little doubt as to reaching a binding decision.

Arbitration is offered as an option which provides for a binding decision and enforceable award through a ?custom fit? process. It sometimes looks a lot like litigation but should be less formal and take less time. It provides parties with the flexibility of being able to choose their own ?judge?. A significant benefit to many is the confidentiality of the process, ensuring that the details of the dispute remain private.

But arbitration is limited in its ability to encourage a consensual approach to dispute resolution. As in litigation, arbitration provides for a winner and a loser. Arbitration focuses on procedural issues and decisions are often made on legal grounds that may have little do with how the parties themselves, as business people or ?just people?, may view the issues at stake.

The Centre advocates the use of arbitration as an alternative to litigation. We encourage the insertion of arbitration clauses into commercial contracts. However, incorporating arbitration into a contract does not exclude mediation as an option. It is not a matter of ?either or? between mediation and arbitration. In fact, such diametric thinking is an obstacle to the effective use of ADR. ADR doesn?t need to be a choice between appetizer and entree. If mediation fails to satisfy, then proceed to arbitration.

Arbitration encourages final decisions that tend to be reached more quickly than a court judgement. This is one of the selling points of arbitration. However, because arbitration can put dispute resolution on a procedural ?fast-track? to a final decision, parties who commence arbitration sometimes get caught up in the pace and neglect to fully explore negotiation or a consensual settlement process like mediation at the outset. It remains possible to mediate after commencing an arbitration Some arbitrators are comfortable encouraging or assisting the parties with a mediation process. Other arbitrators, and sometimes the parties themselves, are uncomfortable with an arbitrator?s involvement in ?without prejudice? negotiations when he/she carries the ultimate responsibility of rendering an objective and binding decision.

How can parties ensure that options are effectively utilized?

At the outset of a business agreement when contracts are drafted, its a good idea to commit to having options. (Too often we consider commitment to be only restrictive!). Plan to manage a dispute in an orderly fashion in order to avoid disagreement over processes and concurrent chaos. What I want to encourage is a progressive approach to ADR. Rather than going at it hammer and tongs, parties should agree in their contracts to attempt other means before arbitration. I?m talking about a progressive ADR clause that could look something like the following:

Amicable Negotiation

The parties agree that, both during and after the performance of their responsibilities under this Agreement, each of them shall make bona fide efforts to resolve any disputes arising between them by amicable negotiations and provide frank, candid and timely disclosure of all relevant facts, information and documents to facilitate those negotiations.

Efficient Process

The parties further agree to use their best efforts to conduct any dispute resolution procedures herein as efficiently and cost effectively as possible.

Mediation

The parties agree to attempt to resolve all disputes arising out of or in connection with this contract, or in respect of any legal relationship associated with it or from it, by mediated negotiation with the assistance of a neutral person appointed by the British Columbia International Commercial Arbitration Centre administered under its Commercial Mediation Rules.

Arbitration

If the dispute cannot be settled within 30 days after the mediator has been appointed, or such other period agreed to in writing by the parties, the dispute shall be referred to and finally resolved by arbitration administered by the British Columbia International Commercial Arbitration Centre, pursuant to its Rules.

In the absence of any written agreement otherwise, the place of arbitration shall be Vancouver, British Columbia.

I suspect that one of the more stressful aspects of practising law is to be asked to address a situation that has become, frankly, a mess. One strategy is to try immediately to line up all the scattered bits into an orderly, logical line. This can divide the two sides at the outset. Unfortunately, once an adversarial fence is built it can be hard to tear down. Another option is to let the pieces lie, so that the fallout can be surveyed with the other party (negotiation) or with a guide (mediation) to see if any patterns or pathways become apparent. The pieces will still be there to build fences later if necessary. But hopefully the parties will find a way to pass through the devastation, rather than building a monument out of it. The above wording provides clarity and direction to the dispute resolution process. And, hopefully, it will convince the parties of the good intentions of both sides at the outset.

Further, I expect that it is not fun to explain risks and perils to a client who is heady and optimistic about a new business venture or contract. However, encouraging parties to commercial contracts to include a progressive ADR clause can provide solicitors with an excellent marketing opportunity. Lawyers are forever trying to find better ways to serve their clients. Clients want personalized service. Clients want contracts which keep them in control as decision-makers. Here is a way of ensuring that clients realize that their best interests are being considered by addressing efficient and effective methods of dispute resolution before the construction of the barn, and not after the horse is out!

The Centre is working to assist parties in using the most appropriate method at the most effective time. As a service-provider, we can assist parties from beginning to end.