Understanding existing dispute resolution arrangements

Before designing a new dispute resolution scheme, it is essential to consider what arrangements may already be in place for resolving disputes.

How issues or disputes are resolved currently

In some circumstances, the parties may resolve issues informally, or they might engage mediators privately to help them (eg, for commercial disputes).

There may be a structured dispute resolution scheme in place that is run by a government agency or a sector/industry body. Some sectors may have more than one scheme operating, either in competition or to cater for different segments of the sector.

Where there is no early resolution or dispute resolution method in place, disputes can by default end up in the tribunals and courts system.

There will also be disputes that remain unresolved where parties may just decide to walk away from the relationship or the arrangements within which the dispute has arisen.

For example…

In the building sector, there are a range of options for dispute resolution depending on the nature of the issues:

  • The Construction Contracts Act 2002 covers disputes relating to payment, invoicing, retentions and breach of contract.
  • Buildings affected by leaky homes issues are dealt with by the Weathertight Homes Tribunal and Weathertight Homes Resolution Service.
  • The Disputes Tribunal can hear minor non-technical building related disputes for claims up to $15,000, or $20,000 by agreement. The District Court hears civil claims for less than $350,000, and the High Court hears claims that are complex or over this amount.
  • The Ministry of Business, Innovation and Employment can also make legally binding determinations under the Building Act 2004 about matters of doubt or dispute to do with building work.
  • Complaints about the conduct and competency of building sector workers can be made to the appropriate professional bodies.

How the scheme or process is accessed

Parties may access the dispute resolution processes through a range of channels eg, they may make an application directly to the scheme, or they may be referred to the scheme by a sector body or a government agency.

A dispute resolution process may also be a compulsory step before action can be taken to the relevant court or tribunal.

For example…

All applications to the Tenancy Tribunal are automatically referred to the Tenancy Mediation Service, with the Tribunal only available for matters that have not been resolved to the satisfaction of both parties through mediation.

Voluntary or mandatory participation

Parties to a dispute may agree to take a matter through a dispute resolution process. If action is initiated by just one party, the other party’s participation in the process may be voluntary or mandatory.

Some schemes appear to be voluntary, but are not in effect (eg, mediation under the Employment Relations Act 2000).

It is sometimes compulsory for providers in an industry to be affiliated with a particular scheme through which members are required to participate in any dispute resolution process initiated by a consumer (eg, Utilities Disputes for gas and electricity complaints).

Consensual or determinative process

A consensual process is where the parties are supported to come to a decision themselves about how the matter will be addressed.

A determinative process is where the outcome is decided by a third party.

There might be a consensual process first, and then a decision by a third party if the matter cannot be resolved by the parties directly involved. This type of mixed model can be referred to as Med-Arb.

How the scheme is funded

How well the scheme is resourced can have a significant bearing on its effectiveness and the quality of outcomes for users.

Dispute resolution schemes can be fully, or partially, funded by government. These decisions are usually influenced by assessments of the degree to which provision of the scheme is seen as a public service or to the benefit of private individuals. The user may pay a nominal fee (eg, $20.44 for tenancy disputes) or the fee may be set to try to recover the full cost of the scheme (eg, $3300 for complex unit titles disputes).

Industry schemes are often free for consumers but paid for by way of a levy on scheme members (eg, the Immigration Advisers Authority and related tribunal).

Key questions about arrangements

  • How are disputes currently resolved? Is there a formal dispute resolution scheme in place? Is there more than one? If so, what is the coverage of each of these schemes?
  • What are the channels for accessing the scheme (eg, application, referral etc)?
  • Is participation voluntary or mandatory for users? Is using the dispute resolution scheme a requirement before the issues can be escalated to the formal justice system?
  • Are the parties supported through the process to come to a decision themselves (consensual), or is the outcome decided by a third party (determinative)? Is there a tiered process (ie, consensual and then determinative if agreement is not reached)?
  • How is the scheme funded (eg, full or partial government funding, or paid for by industry)? What does the user pay? Is the scheme adequately resourced?

Next steps

The next page in this guidance is Understanding the wider context for disputes.