MEDIATION AND ARBITRATION

MEDIATION AND ARBITRATION

Mediation and Arbitration are essential means of the Alternative Dispute Resolution process. Both facilitate the out-of-the-court dispute resolution. Mediation is a process whereby a neutral third party, called a mediator, actively assists in resolving disputes. Mediators help parties reach an agreement mutually and arrive at the resolution of the dispute. Mediators actively collaborate with the parties to help reach a consensus. Mediation is a non-binding process, and the mediator does not give judgment, award or determination after hearing each side. The parties remain in absolute control of the process in determining where to mediate, the format of the process and the manner of resolution.

Arbitration is a procedure wherein parties voluntarily submit their disputes to an arbitrator, who is an unbiased third party, for a determination based on the facts and arguments to be brought before the arbitration panel. The parties expressly agree to consider the arbitrator's decision, or award, as final and binding. Thus, Arbitration is formal and involves hearing of parties by the arbitrator, determining rules by the agreement, and pronouncing an award that becomes final and binding.

Mediation Pros

Mediation is highly informal; parties actively engage in open dialogues facilitated by the mediator.

It is less expensive; parties retain greater control over the process and outcome than litigation or Arbitration.

The outcome is non-binding; hence, parties can be bound by the agreement reached only when signed and accepted mutually.

Cons

The mediator acts as a neutral facilitator and engages the parties in open dialogue; however, if parties fail, the process becomes futile with no agreement reached.

The outcome is non-binding; it may waste the agreeing party's or parties efforts in vain.

The lack of formal procedure creates uncertainty regarding reaching the consensus procedurally.

Arbitration Pros

It involves a formal dispute resolution mechanism without the rigour of courts' procedure, law and evidence by maintaining the confidentiality and privacy of the parties since the information or the matter of the dispute remains privy to the parties and arbitrator.

It is binding, which means that the parties can enforce the award or conclusion reached for a settlement.

Cons

Since the process is private and confidential, it may lack transparency and create a power imbalance between the parties.

The flexible rules and procedures may delay dispute resolution, defeating Arbitration's whole purpose.

Parties may not enjoy the highest level of control, and the decision may be unfavourable to either party with limited grounds to challenge the decision.

CALDERBANK OFFER

Facts:

Mr and Mrs Calderbank decided to separate after breaking down their marriage and seek a divorce after 17 years. However, the issue was brought before Family Court since it was impossible to divide their assets, which consisted of a home that Mr. Calderbank entirely owned. Only 10,000 of the total 78,000 in marital assets, plus legal expenses, were awarded to Mr. Calderbank by the judge. It is important to remember that Mrs Calderbank had suggested that Mr. Calderbank maintain the house before the trial. The trial judge appraised the home at about 12,000, which is 2,000 more than Mr Calderbank ultimately received. Unhappy with the verdict, Mrs. Calderbank appealed on two grounds, the most important of which was that Mr. Calderbank should not be entitled to legal expenses for unnecessarily drawing out the legal procedures given that he had manifestly rejected an appropriate pre-trial settlement offer.

Issue: Can a party reserve the right to use a settlement offer made in a "without prejudice" communication and relinquish its confidentiality to apply for indemnity costs?

Decision: The Court decided that the losing party may include the settlement offer as evidence to establish an acceptable level of costs payable when the winning party,in a case,rejects a settlement proposal made by the opposing party. In this case, the losing party may be obliged to pay the winning party less expenditures than normal if the assessed damages are less than the earlier settlement offer. The court determined that Mr. Calderbank's initial denial of Mrs. Calderbank's settlement offer of about 12,000 caused unnecessarily long delays in the judicial procedures.

Flowing from the Calderbank case, a Calderbank offer is a "without prejudice" settlement offer proposed to the other party to the litigation to settle the case without impeding the other party's right to trial and litigate further; however, it is reserved for "save as to costs" which means that the proposing party may choose to present the settlement offer in evidence before the court if the court's awarded or decided settlement is less than what the settlement offer provided. It is shown to get indemnity relating to costs of the case and legal proceedings. For instance, whether the party who won should have its costs paid on an 'ordinary' basis (also known as party/party costs),an 'indemnity' basis (in which case all legitimately incurred expenses are rewarded), or even whether the failed party should pay costs at all if they made a reasonable offer.

In a building court case, the Calderman offer would be best recommended to be proposed before the case or the matter goes to the trial to reach practical and workable compromise between the owner and the builder. A well-drafted, pre-meditated, genuine and reasonable Calderbank offer would incentivise the builder to consider the terms of settlement without having to bear the exposure to legal proceedings and without risking the potential litigation in terms of costs if the decision ultimately comes unfavourable to the builder's terms.

Suppose there is uncertainty in arriving at a suitable settlement or precarity in reaching mutually acceptable terms by the house owner or builder. In that case, the Calderbank offer can be put forth before the case's final hearing to arrive at the best possible compromise, by negotiating the deals and terms clearly and expressly. A Calderbank offer is a pure strategical and tactical move; if appropriately utilised, it may save the party from unbearable court expenses, or where it can be foreseen that outcome may not be favourable to the party. Hence, proposing Calderbank's offer before trial, by avoiding the rigour of the complex dispute resolution process as it unfolds in building and construction cases, is the best window of opportunity to compromise the case.

Calderbank's offer shows the willingness of a proposing party to compromise and settle the dispute before it goes to trial.

Calderbank's offer is "without prejudice", meaning that they cannot be shown or used in evidence by either party in a court case but "save as to costs", which is a characteristic feature of Calderbank's offers. This allows the party proposing a settlement offer to reserve the right to receive indemnity in the proceedings' costs depending on the court's outcome or decision.

Calderbank's offer allows flexibility to the parties to negotiate the terms of settlement and attain the finality of the terms by reevaluating their positions and determining the strengths and weaknesses of the case.

It proceeds as a matter of good faith when a party proposes a reasonable and genuine offer and facilitates a practical settlement of the dispute as per the parties' negotiations and understanding.

The proposing party stands to benefit from the costs of the case if the court's decision is unfavourable or less favourable to the proposed party.

The Calderbank offer is an effective mechanism to settle a dispute before it reaches trial. However, the offer must be in a certain way that it clearly expresses and states the offeror's willingness in explicit terms in a way that is reasonable, unambiguous and precise in tandem stating the effect of the offer. Following are the considerations a court will examine to determine whether a genuine Calderbank offer has been made:

For a Calderbank offer to be accepted, its conditions must be unmistakably specific, transparent, and well-written. The proposal must leave the offeree with no room for ambiguity on the scope and substance of the offer.

The offer must be capable of acceptance in terms that are clear and specific while accommodating a range of potential outcomes that the parties have explicitly envisioned.

Before accepting an offer, the opposite party should have appropriate time to consider an offer and obtain legal counsel before accepting an offer. The length of the offer, the intricacy of the case, and the phase of the procedures all affect how appropriate a time limit is.

Costs should be disclosed separately from the principal amount in the offer. Charges should not be included in Calderbank offers to avoid misunderstanding.

The offer must specify that the person making it will depend on the letter concerningthe issue of indemnification expenses and include justifications for the offer's acceptance.

The genuineness of the offer depends on the time given, the extent of compromise, the offeree's prospect of winning, the clarity of the terms, and the stage at which the offer was given.

Research Diary

Assessment 2 Building law (Essay) Spring 2024

Research Goals: The research essay requires legal insight from the point of view of an experienced legal practitioner to address 3rd year university students. The topics that need to be addressed include comparison and difference between arbitration and mediation with pros and cons of each process and analysis of Calderbank case which provides for the Calderbank Offer and its use in building law cases.

Sources (Legal Research)

Julian D. M. Lew; Loukas A. Mistelis; Stefan Michael Krll, Arbitration as a Dispute Settlement Mechanism (2014) Kluwers Arbitration https://www.pravo.unizg.hr/_download/repository/01_Lew-Mistelis-Kr%22oll%2C_pp_1-15.pdf (accessed on 26 September 2023)

This journal article was enriched with the meaning, aspects and definition of arbitration by contrasting international arbitration and commercial arbitration. It contained the characteristics of Arbitration as alternative dispute resolution process. It was helpful in synthesising the lucid and simple definition and meaning of arbitration along with its essential characteristics.

Henry Brown, and Arnold Simanowitz, Alternative dispute resolution and mediation (1995) 4(2) Quality in Health Care 151. (accessed on 26 September 2023)

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1055304/pdf/qualhc00016-0079.pdf

This journal article although limited in scope to medical health dispute resolution by virtue of alternative dispute resolution helped in gaining insight of the meaning and definition of mediation as a process of ADR. It helped in amalgamating how mediation is used as ADR and what are its effect?

Taslim Ahammad, Mediation as Alternative Dispute Resolution (2017) The Asian Age

https://www.researchgate.net/publication/322888087_Mediation_as_alternative_dispute_resolution (accessed on 27 September 2023)

The author of this research essay delved in the process of conduct of mediation whereby the role of mediator and parties was delineated. It helped in contrasting the process of arbitration from mediation based on various aspects.

Maria Goltsman, Johannes Hrner, Gregory Pavlov, and Francesco Squintani, Mediation, arbitration and negotiation (2009) 144(2) Journal of Economic Theory 1397-1420. https://discovery.ucl.ac.uk/id/eprint/14440/1/14440.pdf (accessed on 27 September 2023)

The authors of this research piece separately dealt with the process of mediation, arbitration and negotiation by distinguishing each with the other. It helped in forming analysis as to the advantage and disadvantage of mediation and arbitration compared to the litigation and one another.

MJ Beazley, Calderbank offers (2008) Bar News: The Journal of the NSW Bar Association Summer 2008-2009, 65-73.

http://www5.austlii.edu.au/au/journals/NSWBarAssocNews/2008/60.pdf (accessed on 28 September 2023)

This was a remarkable piece of research paper compiled by honble justice Beazley throwing light on the nature, effect and characteristics of Calderbank offer. The author discusses the public policy underlying the Calderbank offer which helped me in deriving the importance and utilisation in building law cases as to how can Calderbank offer be proposed, and at what stage to gain the maximum benefit and public policy objective.

Lochlan Worrell, The art of Calderbank Offer Moulislegal (Website)

https://moulislegal.com/knowledge/the-art-of-the-calderbank-offer/#:~:text=Calderbank%20Criteria&text=contain%20precise%2C%20clear%20and%20unambiguous,of%20the%20offeror's%20position%3B%20and (accessed on 28 September 2023)

The piece of information contained in this research blog summarised the important aspect of the Calderbank offer and criteria therefor. It discussed landmark cases which upon reading helped me in understanding the legal requirement or examination by the court in determining the genuineness of the Calderbank Offer.

https://vlex.co.uk/vid/calderbank-v-calderbank-794020421 (accessed on 27 September 2023)

It contains the text of the Calderbank case, judgement, facts and decision, of the whole case determined by the court then. The reading of the whole text helped me in understanding the background as to wherefrom the phrase derived its name, its factual background, issues involved and the decision given thereupon along with the comprehensive reasoning. It is only on the through reading of the case law, I was able to draft summary of facts, issues and decision.

Majella Pollard, Kerrie Brown, Calderbank Offers how to make sure the pen is mightier than the sword (2021) Clayton UTZ

https://www.claytonutz.com/knowledge/2021/june/calderbank-offers-how-to-make-sure-the-pen-is-mightier-than-the-sword (accessed on 28 September 2023)

This information source helped in analysing the contemporary relevance of Calderbank offer and how it is approved, recognised and acknowledged within Australia. It helped me in forming analysis as to how Calderbank offer can be used in building court cases. I read the summary analysis of the judgement provided within the source to compile the recommendations.

Conclusion

Having conducted the research and read the materials and sourced cited above, I was able to write my essay which included writing my own analysis of the topic. The essay was written in the simple and lucid language keeping in mind that it necessitates the understanding to 3rd year students from a legal practitioner.