The Civil Proceedings Rules encourage parties to make reasonable attempts to resolve their disputes amicably and to use litigation as a last resort. Indeed, the settling of disputes at an early stage continues to be an integral part of case management and is often successful in reducing legal and commercial costs. Parties who are able to resolve their disputes through alternative dispute resolution mechanisms often benefit from a faster process that is more likely to produce a result that is satisfactory and acceptable to both parties.
In this Chapter, Jonathan Walker and Fanta Punch, Partners in Hamel-Smith’s Dispute and Risk Management Practice Group, outline and discuss some of the alternatives that are available to manage and reduce the risk of commercial disputes escalating, and ensuring that those disputes are resolved cost effectively.
Nature of Alternative Dispute Resolution (ADR)
ADR is used as a method of resolving disputes between parties both as an alternative to commencing litigation and even after litigation has commenced. The process is a voluntary one and, depending on the method adopted, can be without prejudice to the parties’ strict legal positions. With the aid of an independent third party assisting parties in their deliberation, disputing parties are able to arrive at a mutually acceptable resolution which is cost effective, quick and commercially beneficial.
Examples of situations where a properly designed ADR system might result in significant cost savings include arrangements between joint venture partners, arrangements with suppliers and sub-contractors and arrangements with customers.
Advantages and Disadvantages of ADR
ADR has many advantages in settling commercial disputes. While these advantages vary depending on the method deployed, in the main they include:
- A more cost-effective option to litigation;
- A shorter period of time to resolve the dispute;
- Greater flexibility in crafting a solution;
- Greater flexibility with regard to the selection of the person to deal with the dispute, thus allowing parties to select persons with the appropriate experience to deal with the dispute;
- A less adversarial process which increases the chance that the parties are able to preserve a business relationship.
However, there are disadvantages to using ADR. For example, unlike the certainty and enforceability of a court judgment, some ADR solutions cannot be forced upon the parties. There is also the possibility of a lack of full disclosure during the negotiations which may mean a risk that decisions are made with less than all the facts.
Types of ADR
There are various types of ADR to be considered when seeking an alternative to litigation. Some of the more common forms include mediation, arbitration and expert determination.
Mediation
The mediation process involves an independent party who is appointed by both parties and acts as a facilitator between them. Some key features of this process (as distinguished from other forms of ADR) are that it focuses on the interests of the parties; the mediator imposes no decision but acts purely as a facilitator, therefore, the parties are permitted to reveal to the mediator information that is confidential and that they do not wish disclosed to the other party and the parties themselves participate in the crafting of the solution to the dispute. The result is a process which allows the parties to explore a vast array of potential creative solutions which meet with their respective interests.
The Mediation Act 2004 governs not only the Mediation Board’s overseeing of the certification of mediators and registration of mediators, but also regulates confidentiality which is an integral part of any mediation process.
Arbitration
Two (2) of the most powerful advantages of this form of dispute resolution, particularly for commercial disputes, is that it gives parties the benefit of resolving matters in a private and confidential process (as opposed to Court proceedings which are open to the public) as well as having the issue decided by a person with specialized knowledge relevant to the issue in dispute whether this be of a legal or technical nature.Additionally, arbitration is an internationally
Additionally, arbitration is an internationally recognized means of ADR and there is a host of international rules that parties may rely upon to govern the arbitral process. It therefore offers commercial clients an accepted cross-border method of resolving differences which can be beneficial to international commerce.
Expert Determination
This form of dispute resolution is relatively new to Trinidad and Tobago and continues to develop. The process entails referring the dispute, usually of a technical or scientific nature, to a person with expertise and experience in a particular field, with both parties agreeing to be bound by their determination. This process is especially useful in relation to disputes in specialized industries which do not involve any or any significant disputes of fact.