Alternative Dispute Resolution, with emphasis on arbitration and mediation
By Dr. Peter D. Maynard
The regulatory process is in need of change. The adversarial model used by most regulatory agencies is an inefficient, expensive, and conflict-producing procedure. Ill-adapted to resolving issues of great public policy concern, regulation calls out for non-adversarial alternative methods to address the resolution of policy disputes between the players in the regulatory arena. But, there must be a legislative framework, a culture of mediation, and the parties must trust the neutral process.
As advantages, the settlement of disputes by means of ADR:
(i) significantly helps parties to save costs;
(ii) saves parties the delay of litigation in reaching finality in their disputes;
(iii) enables parties to achieve settlement of their disputes while preserving their existing commercial relationships and market reputation;
(iv) provides parties with a wider range of solutions than those offered by litigation; and
(v) is likely to make a substantial contribution to the more efficient use of judicial resources.
The adversarial model of regulation mimics traditional courtroom procedures. It is designed to determine issues of fact, not issues of public policy. To a significant extent, the culture has not developed which is conducive to the non-adversarial resolution of disputes. The fault lies in the absence of a legislative framework which allows the decision making within the agencies and a culture of alternative dispute resolution to develop.
Regarding our justice systems, having a judge determine who is right or wrong, and who is the winner and the loser, is still very much a part of the general concept of justice. The notion of a win-win situation, and of building relationships, is still quite foreign to traditional court systems.
Dispute resolution refers to the range of options available to resolve disputes, from negotiation and consensus-building to litigation and adjudication. The options can best be viewed as a continuum: informal discussion and problem solving, negotiation, facilitation, fact-finding, neutral evaluation, mediation, conciliation, inquiry, board adjudication, arbitration, and the courts. This list is not exhaustive and in some cases, more than one process may be used for different aspects of the same conflict to keep parties moving towards a complete solution.
At one end of the continuum are the means for resolution, which allow parties control over the process and the final arrangements; and at the other end is a procedure which results in a decision made for the parties. Alternative dispute resolution (ADR) refers to options other than going to court, or options that may be used together with litigation. The purpose is to help people explore and understand each other's interests and develop acceptable solutions together.
Arbitration and Mediation defined
Arbitration is a process of adjudication in which evidence and arguments are presented to a neutral adjudicator or panel, empowered by the disputants to impose a binding decision or award.
Mediation means a voluntary process in which a neutral third party assists the parties in reaching their own settlement. The mediator does not have the power to impose a resolution. The role of the mediator is to help the parties achieve their own resolution. That is the goal of the process.
It should perhaps come as no surprise that the form of dispute resolution which has gained the greatest acceptance is the form which most closely mirrors the courts and is adjudicative like the courts. Indeed, the word “arbitration” has 230 occurrences in the Laws of the Bahamas.
In many jurisdictions in the region, arbitration has also had a long history in the field of labour disputes. It has also been used creatively in other contexts. I have had occasion in 25 years of practice to act as arbitrator, sitting as sole arbitrator or on a panel of 3 arbitrators, in labour matters but also in trust matters, for example, to adjudicate disputes among beneficiaries, pursuant to an enabling provision in the trust deeds themselves. I have also done many formal and informal mediations.
Arbitration and Utilities
Arbitration has also been widely used by utility regulators. There is a clear legislative framework for it.
Arbitration is established, for example, in the Out Islands Utilities Act (Ch. 28), which encourages the construction of water supply and sewerage disposal systems on Out Islands by providing for the refund of customs duties and other concessions to the developer of such systems. Agreements under the Act are required to provide for the arbitration of all differences between the Minister and the developer.
Under the Electricity Act (Ch. 194), for the purposes of constructing a supply line or of installing any system of distribution of energy, the Corporation may enter land. A problem regarding compensation may be decided under section 46 by one or up to three arbitrators appointed by the parties or the Supreme Court, if the parties do not agree. Each party has the power to appoint an assessor to sit with the arbitrator.
Under section 5 (4) (b) of the Out Islands Electricity Act (Ch. 195), every agreement shall contain mutual covenants on the part of the Minister and the licensed undertaker providing for the arbitration of all questions and differences between the Minister and licensed undertaker.
The schedule to the South Eleuthera Water Supply Act (Ch. 198) contains a model agreement which provides that “in the event the Company fails to implement the requests of the Director of Public Works, or the Chief Medical Officer, this and all similar matters of dispute under this agreement shall be settled under The Arbitration Act”.
In contrast, the word “mediation” cannot be found anywhere in the laws of the Bahamas, except on one occasion taking effect on July 1, 2004.
Case management by the Court is introduced by the Bahamas Rules of the Supreme Court as recently amended by Order 31A to take effect on July 1, 2004. The amendment foreshadows a dispute resolution conference, and if that fails partly or completely, then a case management conference, pre-trial review, and listing conference are held for some or all of the issues.
According to O.31A, r.4(a), which deals with the procedure for dispute resolution conference, the Judge or the Supreme Court Registrar as the case may be, who conducts the dispute resolution conference may conduct a mediation, assisting the parties by meeting with them together or separately to encourage and facilitate discussion between them in an attempt to reach a mutually acceptable resolution of the dispute or any part of it.
The weakness is that this provision is limited to the Judge or Registrar, and court-sponsored dispute resolution, and does not extend to a mediation conducted by any other third party.
However, the mediation process is really not so new or foreign to us. Conciliation is synonymous with mediation.
UNCITRAL defines conciliation as ”a process, whether referred to by the expression conciliation, mediation or an expression of similar import, whereby parties request a third person or persons (“the conciliator”) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship. The conciliator does not have the authority to impose upon the parties a solution to the dispute.
Conciliation, which is identical to mediation, appears in the Bahamas laws 28 times, usually in a labour or multilateral investment setting.
Conciliation may be mandatory.
For example, under the Industrial Relations Act (Ch. 321), section 70 requires the parties to a dispute to enter into conciliation in good faith, and to attend meetings called by the Minister for this purpose.
The fine on summary conviction is up to $5,000.
It appears that in the rest of the Caribbean, the provisions do not contain that limited appointment of mediators.
For example, in the Belize Supreme Court (Civil Procedure) Rules 2003, Part 25 deals with case management, and the court must further the overriding objective of dealing with cases justly, by actively managing cases. Under Rule 25.1 (c), the measures used by the court may include encouraging the parties to use any appropriate form of dispute resolution including, in particular, mediation (if the court considers that appropriate) and facilitating the use of such procedures.
In the Eastern Caribbean Supreme Court Civil Procedure Rules 2000, from July 1, 2001 when the new Rules took effect, all new civil cases are subject to a reformed system contained in this new procedural code, including mediation.
In the Civil Procedure Rules 2002 of the Supreme Court, which came into effect on January 1, 2003, under Rule 25.1 (e), the court must further the overriding objective by actively managing cases, and this may include encouraging the parties to use any appropriate form of dispute resolution including, in particular, mediation, if the court considers it appropriate and facilitating the use of such procedures. Under Rule 25.4 (a), the person who conducts the conference may conduct a mediation, assisting the parties by meeting with them together or separately to encourage and facilitate discussion between them in an attempt to reach a mutually acceptable resolution of the dispute or any part of it.
Trinidad and Tobago
The Mediation Act 2004 (No. 8 of 2004) of Trinidad and Tobago, assented to on 27 February 2004, originally drafted by the Family Court Mediation Committee, creates and regulates a mediation profession. The Mediation Board is established, chaired by a Judge, to formulate standards for the accreditation of mediation training programmes and for the certification of mediators, mediation trainers and agencies, to accredit such programmes and to certify such mediators, mediation trainers and agencies. It provided for court annexed and also community mediations, and repealed the Community Mediation Act 1998 (No. 13 of 1998), which allowed mediation as an alternative to going to Court for certain summary offences and civil matters.
The civil procedure rules may be found at:
Mediation and Utilities
Mediation is now widely prescribed by utility regulators around the world in disputes between operators and consumers, and between regulators and operators.
Alberta, Canada: http://www.eub.gov.ab.ca/BBS/public/ADR/resolving_issues.htm
Nevada, USA: http://www.leg.state.nv.us/NAC/NAC-704.html#NAC704Sec680359
A prerequisite is, “Does the regulator’s current legislative mandate allow ADR?”
The Public Utilities Commission Act, 1993 (Ch. 306) seems to be able to accommodate an interest based process of collaboration and face to face discussion of the issues and potential solutions among the parties. Section 4 (1) includes among the duties of the Commission “(a) to ensure that the services rendered by a utility undertaking operated by a controlled public utility (hereinafter referred to as "utility services") are satisfactory and that the charges imposed in respect of those services are reasonable; and (b) to promote the interest of consumers, whilst enabling service providers that operate efficiently to finance the provision of utility services;…”
Also, under Section 4 (2), for the above purposes, “notwithstanding anything to the contrary in any law,” the Commission has the powers to determine standards and rates, and “to do anything incidental to or conducive to the performance of its functions or duties under this Act.”
But, a broader legislative framework is needed to give the PUC the power to enter into mediation, and to set the rules and procedure to govern ADR.
Other prerequisites: Is that freedom of action encouraged? Are stakeholders involved? Are confidential and “without prejudice” conditions in place? Are mechanisms in place for reviewing the qualifications of mediators and assuring a high level of competence, determining the numbers of mediators on the roster and adding and removing mediators from the roster? Are there specific objectives and guidelines for performance and time lines for the mediation? Who will pay the costs? Are there effective methods for managing costs?
For mediation to work, the stakeholders must understand the benefits and challenges of mediation. That is cured by better publicity.
Also, the parties must trust the neutral process.
As President of the Bahamas Bar Association from 1997 to 2003, I have seen some very mixed results. Mediation was introduced as an almost free service provided through the Bahamas Bar in:
1998, a 6 month pilot project on mediation regarding settling ancillary matters in divorces;
2001, restorative justice or mediation applied in the context of crime to bring compensation and healing to victims and a second chance for young offenders;
2004, as mediation is offered as a free service in the legal aid clinic of the Bahamas Bar Association.
But, the number of clients has been extremely low. The reasons commonly given were that the legislative framework was not present, that it was impossible to get the other party to agree to the mediation, and that one of the parties preferred to have a Judge decide the matter, with the finality and enforcement of the courts to back the decision.
Culture of mediation
ADR is not as unfamiliar as one might otherwise think. It is a new name for old processes.
Nevertheless, more has to be done to create a culture of mediation, and trust in the neutral process.