The methods of dispute resolution fall into two broad categories:
- Final determination procedures
- Preliminary determination procedures.
Final determination procedures include
- Expert determination.
Preliminary determination procedures include
- Dispute boards.
This piece will look at arbitration and mediation as alternative dispute procedures and why you might consider using them to resolve disputes.
Mediation is a preliminary dispute resolution procedure which has grown in popularity in the last few years.
A mediator does not decide the issues in dispute between the parties; a mediator helps the parties to reach their own agreement through acting as a go-between. A mediator does not express his/her views and should remain impartial throughout.
Any decision of a mediator is non-binding on the parties.
Mediation is a completely confidential process and operates on a ‘without prejudice’ basis. This means that any information furnished be one party to the other cannot be used in subsequent litigation should the mediation not resolve the dispute.
Advantages of Mediation
The advantages of mediation over arbitration or litigation are
- The parties have control over the outcome
- The relationship into the future of the parties should not be damaged
- The parties decide what issues can be introduced into the process with a view to reaching agreement
- Implementation of any subsequent agreement is more likely to be more effective than an outcome reached as a result of one side ‘winning’ and the other side ‘losing’.
A mediation procedure should contain a date by which a consensual agreement is to be reached.
Unlike mediation, arbitration is a final determination procedure.
Arbitration is provided for in a variety of agreements eg holiday booking conditions, Law Society conditions of sale, RIAI building contracts, rent review clauses in most leases etc.
Certain disputes must be, by statute (the Arbitration Acts), resolved by arbitration. Apart from these obligatory arbitration situations, arbitration must be agreed to by the parties.
Advantages of Arbitration
The advantages of arbitration include
- Privacy-arbitration proceedings can be held in private
- Parties can choose who is to arbitrate and can choose an arbitrator with specialist knowledge
- Flexibility-the parties decide on the procedures
- Costs-parties can decide on the costs and retain some control over them
- Speed-the parties can decide the pace of the arbitration procedure
- An arbitrator’s decision is final and binding on the parties
Disadvantages of Arbitration
Some disadvantages of arbitration include
- Costs-the parties will be responsible for the costs of the arbitrator in addition to their own costs
- Collateral disputes-the arbitrator will have no say over disputes with third parties or other issues outside the arbitration process
- Sanctions-an arbitrator cannot impose a sanction on any of the parties.
Irish arbitration law is contained in the Arbitration Act, 1954, the Arbitration Act, 1980 and the Arbitration (International Commercial) Act, 1998.
The ‘Arbitration Acts’ do not apply to employment disputes or to unwritten arbitration agreements.
Generally, any dispute concerning legal rights can be dealt with by way of arbitration, subject to some exceptions eg where the claimant is a child or where public policy issues dictated that some matters must be dealt with by the Courts.
There are 2 types of arbitration agreements:
- Submission agreements-this arises where there is agreement to submit an existing agreement to arbitration
- Arbitration clauses-an agreement to submit future disputes to arbitration
In addition to any specific powers given to the arbitrator by way of the arbitration agreement, an arbitrator also has powers conferred by statute (the Arbitration Acts) including
- The power to make an award (interim or final)
- The power to order specific performance of a contract (other than a contract in relation to land)
- To examine witnesses on oath
- The power to award costs
- The power to refer any question of law for the decision of the High Court.
Courts in Ireland have indicated that they will not interfere in an arbitration process unless they are required to do so by a patent injustice or error.