Disruption is the current buzz word being applied to describe events, developments or people who are challenging the traditional ways and means of doing things by identifying, developing or implementing alternatives to existing processes. It is being predominantly used where technology has been incorporated into existing businesses to radically change the operation of that business.

How does this then apply to mediation?

My view is that it applies in two ways:

  1. the first is that although the current proliferation and use of the term ‘disruption’ is recent, the concept itself has been around for many years which is why we have not had to invent a new word to capture what is meant by the impact it has. When first introduced into dispute resolution in Australia mediation was the ‘disruptor’ of formal institutionalised dispute resolution processes of its day and continues to be so today; and
  2. the second is that as a disruptive influence on formal legal dispute resolution, mediation continues to evolve, be adapted by users, legislature, regulators and legal practitioners and change the landscape of dispute resolution.

It was with some concern then that at a panel session at the recent 2015 National Franchise Conference annual franchise convention that I heard one of the panellists say in response to a question about the resolution of potential unfair contract term claims involving small business that these claims should be dealt with in first instance by tribunals legislatively empowered to adjudicate on such claims.

Admittedly the question appeared to have been unscripted and caught the panellist by surprise however I find it worrying that the panellist’s instinctive reaction to a new area of legal dispute is to empower a formal adversarial institution as the forum for the resolution of claims in this new area.

Particularly so in the context of the franchising sector where successive Commonwealth governments have managed to ‘disrupt’ the management of disputes in the sector by not only introducing into the Franchising Code of Conduct a mandatory dispute resolution process of mediation, but also funding the creation and operation of the Office of Franchising Mediation Adviser (OFMA).

In a report published by the Commonwealth government Parliamentary Committee on Corporations and Financial Services for the period 2008-2010, the Office of Mediation Adviser (now OFMA) was cited as:

OMA statistics indicate that around 75 per cent of mediations conducted through the OMA result in a binding settlement.... On average, mediations cost each party approximately $1,500 and average completion time after the appointment of the mediator is five weeks.

Dispute resolution through other programs, such as Small Business Commissioner lead resolution initiatives, dispute resolution centres, residential tenancies programs, retail shop lease processes also have seen control over outcomes being granted to the parties to the dispute, a relatively inexpensive and time efficient process to resolve matters compared to the formal, adversarial, lengthy and costly formal litigation process.

If mediation, which was viewed sceptically when first introduced and with the same suspicion some more recent ‘disruptors’ are presently being viewed, can reduce the number of disputes and parties participating in formal court or tribunal processes by encouraging resolution early and more cost effectively, whilst leaving courts still available for those matters unable to be resolved then this surely is a benefit for everyone and something to be encouraged.

The 2015 Productivity Commission report on Government Services stated:

Nationally, 463 200 cases were lodged in civil jurisdiction courts (excluding family courts, the Federal Circuit Court, coroners’ and probate courts), comprising 458 200 cases in the State and Territory supreme, district/county and magistrates’ courts, and 5000 cases in the Federal Court. In the states and territories, an additional 68 500 probate matters were lodged in the supreme courts.

The National Alternative Dispute Resolution Council of Australia report on ADR statistics published in 2003, recorded increasing trends in numbers of cases referred to mediation by the courts after proceedings had commenced and resolution percentages of court referred mediation averaging between 50-65%.

Anecdotally the most oft-repeated assertion is that of all formal court proceedings commenced only approximately 5% get to trial / hearing stage and the overwhelming majority resolve or finalise along the way.

In addition to mediation ‘disrupting’ the referral of disputes to formal adversarial litigation processes, it and the thinking about how disputes / claims can be resolved early and without recourse to formal institutional government bodies, such as courts and tribunals, also has continued to evolve. The influence of mediation on avoiding or seeing the early resolving of court / tribunal processes has itself been disrupted with for example:

  1. Businesses have developed and incorporated internal dispute resolution procedures within their businesses;
  2. OFMA introducing early intervention processes prior to mediation; and
  3. Mediation models being developed into other hybrid dispute resolution tools such as MedArb or ArbMed, expanding by consent from a facilitative mediation model to one where an opinion can be requested of the mediator which is non-binding on the parties, or also being truncated to compulsory conferences in specific areas of legal dispute.

It is in this context I think we all need to champion more often in our internal discussions the use of early dispute resolution processes, in our industry organisations for formal acceptance and uptake of existing mediation services and with government, where it is considering implementing new legislation to resolve disputes, the benefits of a requirement to engage in structured dispute resolution before formal court or tribunal processes. We should seek to have, like set out in the Franchising Code, requirements to attend and participate in dispute resolution, such as mediation, or some other dispute resolution process prior to resorting to courts or tribunals

Whilst this may sound strange coming from a Queensland Law Society Accredited Specialist in Commercial Litigation, as a Nationally Accredited Mediator and Arbitrator, I am of the view clients prefer to successfully resolve disputes on terms satisfactory to them, with relatively minimal cost and distraction from their businesses where it maximises the chances of maintaining an ongoing relationship with the other party to the dispute.

Like death and taxes I do not think we will ever see a dispute free world however I encourage everyone to actively engage in efforts, either formal like the OFMA processes, or informal, such as internal dispute resolution processes, prior to resort to formal institutionalised determination processes. This includes for future disputes involving small business and allegations about unfair contract terms.