Deciding what form of dispute resolution process is needed
There are a wide range of dispute resolution processes with differing features. Choosing the appropriate process for a scheme will depend on a number of factors.
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Consensual or determinative
Deciding whether disputes should be resolved in a consensual or determinative way is the first step in determining the right model for the scheme.
A consensual process is where the outcome of the dispute is decided and agreed by the parties themselves (eg, a negotiation or mediation). A determinative process is one in which a third party decides the outcome (eg, arbitration).
Questions that might help in this decision are:
- do the disputes relate to legal rights or transactional matters? If so, it may be appropriate for them to be decided by a neutral third party through a determinative process, or
- do the disputes relate to relationships or interests where the outcome may be more subjective and difficult to determine? In this case, a consensual process may be most appropriate.
There are 2 main types of consensual processes, which are distinguished by who is involved in them:
- where only the parties are involved - usually called self-resolution or negotiation
- where an independent third party helps the parties resolve their dispute but has no decision-making power. Mediation is the most common example of this type of process.
If it is decided that a determinative process is appropriate, consider who the decision-maker will be. Usually, if determinations are made on fundamental legal rights or entitlements, they should be made by someone in a statutory role eg, Ombudsman or Commissioner. Their decisions will usually be a matter of public record and there will be mechanisms for holding them accountable.
Types of processes
Self-resolution (or negotiation)
Self-resolution is the lowest level dispute resolution intervention. As it only involves the parties themselves, it is often the fastest and cheapest, and can be highly effective. For these reasons, a scheme should generally have ways of encouraging or supporting parties to self-resolve. The capacity to self-resolve can be built through education and providing tools to help parties and also through the experience of participating in facilitated dispute resolution processes.
Both the Unit Titles Act 2010 and Residential Tenancy Act 1986 have mediation processes. After a landlord and tenant or members of a body corporate have been through a mediation process, they may have learnt skills that they can apply to prevent or quickly address future disputes.
There are some situations where requiring parties to attempt to negotiate may be inappropriate, such as where serious allegations have been made or there are significant power imbalances between the parties.
Dispute resolution processes
There are a range of dispute resolution processes that may be appropriate within consensual and determinative dispute resolution. The processes adopted need to be appropriate for the context and the nature of disputes that arise, and flexible enough to change over time.
The table below indicates the types of processes that might be appropriate in particular circumstances. We advise you to involve stakeholders in identifying the right processes for the specific issues and parties concerned.
Table: When particular processes might be appropriate
|Consensual or Determinative||Process||Description||When usually appropriate|
|Consensual||Conciliation||Relatively informal discussion facilitated by a third party, possibly with an active advisory role.||Where a subject matter expert is required in a less structured or discrete way than mediation.|
|Facilitation||Less defined, informal group discussion and problem solving facilitated by a third party.||For early intervention and groups.|
|Mediation||Parties seek to address a dispute with the assistance of a third party. A number of different models.||Most common form of alternative dispute resolution and generally appropriate when a consensual process is required.|
|Restorative Practices||Focuses on addressing harm. Includes restorative justice.||Restorative justice is only appropriate where one party has acknowledged wrongdoing or admitted fault.|
|Determinative||Adjudication||Parties present arguments and evidence to a dispute resolution practitioner (the adjudicator) who makes a determination. Commonly operates within the traditional judicial system, but may also be outside where the adjudicator is empowered by contract or statute.||Appropriate where legal precedent or a rights-based determination is required.|
|Arbitration||Similar to adjudication, where the practitioner decides the matter in dispute and issues an award. Arbitrations are governed by the Arbitration Act 1996.||May be used where it is appropriate for binding decisions to be made away from the courts or by people other than those appointed to determinative roles. There is limited use of arbitration in statutory schemes.|
|Expert Determination||The decision maker has subject matter knowledge or expertise.||Where there is a need for an impartial third person to have particular knowledge or expertise.|
|Disputes Committee/Panel/Board||A standing body used to help parties avoid or overcome disagreements or disputes. Typically set up to cover the implementation of mid-to-long term contracts. Practitioners may be from a mix of backgrounds (eg, subject matter expertise, legal expertise etc).||May be appropriate where the particular context may raise a number of disputes that involve fundamental legal rights in a specialised subject matter area. A good example is the Dispute Board established for the construction of the Christchurch Justice & Emergency Service Precinct, which was able to hear disputes that arose about this development.|
|Commissioner or Ombudsman||Officials appointed to investigate individuals’ complaints against a company or organisation, especially a public authority.||Where determinations are made on fundamental legal rights or entitlements.|
There are also tiered processes involving both consensual and determinative elements. A progression of dispute resolution processes allows for a number of possible intervention points. For example, parties could move from negotiation, to mediation, to a determinative process. Parts of the process could be mandatory before progression is permitted, or by invitation only.
A hybrid investigation/conciliation/determination model has become common in consumer-industry dispute resolution schemes, such as the financial services industry schemes (eg, Financial Services Complaints(external link) and The Insurance & Financial Services Ombudsman(external link)). These schemes feature a complaint investigation stage, followed by an attempt to conciliate an agreed resolution between the parties, followed by a determination of the dispute if it remains unresolved. It is usual for the industry body to be bound by any determination but for the consumer complainant to be able to pursue legal remedies if they are unsatisfied.
Generally speaking, the third party in one tier (eg, a consensual mediation process) should not be the decision-maker in the next tier (eg, a determinative arbitration process) due to natural justice considerations.
Your agency will also need to be mindful of the time it can take to resolve disputes and consider whether a process for timely escalation may be desirable. You could also consider whether a ‘fast track’ dispute resolution option should be available.
Assessing the issue' s nature and what action to take
You need to have an effective system for identifying the right intervention at the right time. It is helpful to have a triage process that initially assesses the nature (eg, type, size, parties etc) of any issue and directs the right course of action. Complexities may arise due to:
- not all matters raised are a complaint or dispute (eg, they may be a query) as discussed in Understanding your disputes
- some matters may be suitable for early resolution (eg, they could be resolved with a phone call or email), but others may not be
- some issues may be outside the jurisdiction of the scheme
- disputes may come in and out of the scheme (eg, parties may initially try to self-resolve but come back to the scheme when the issue escalates to a complaint)
- a single complainant may have a range of issues that need to be dealt with in different ways (eg, some are within and some are outside of the scheme’s jurisdiction).
The triage process may need to be quite sophisticated (eg, undertaken by skilled and experienced staff or supported by an IT infrastructure) if the scheme handles a significant volume of disputes. It may be more informal for a smaller scheme (eg, someone monitoring an email inbox and coordinating responses).
Participation – mandatory or voluntary
Your agency needs to decide whether it is appropriate for the parties to be compelled to participate in the dispute resolution process. If so, exceptions to that requirement may be necessary, such as matters requiring access to the formal justice system for reasons of urgency, safety or public interest.
This is more likely to be appropriate in government-provided schemes (eg, under the Employment Relations Act 2000 - see sections 159 and 188).
In other circumstances, it may be appropriate to compel one party to participate at the request of the other (eg, where the second party is in a more dominant position, or where fundamental rights or entitlements are at stake).
Many industry dispute resolution schemes are based on this model, and are voluntary for consumers but mandatory for industry members.
Confidentiality, privacy and admissibility
Confidentiality is a core feature of many alternative dispute resolution processes.
However, there is a need to balance the parties’ desire for confidentiality with the public interest in understanding the disputes that arise and how they are resolved. Agencies need to consider how important information can be collected from dispute resolution processes without compromising confidentiality (eg, by anonymising data).
There may also be issues relating to privacy and admissibility, including without prejudice privilege that you need to consider. If it is necessary for parties to be able to access their personal information, they should be able to do so within reasonable timeframes so as to not to unduly delay the process.
You should talk to your legal advisors about how these matters are best dealt with in your circumstances.