Category: Dispute Resolution

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What are your pre-trial obligations under the Civil Disputes Resolution Act 2011 (Cth)?

A person who initiates legal proceedings in the Federal Court of Australia or the Federal Circuit Court of Australia must complete a genuine steps statement pursuant to the Civil Disputes Resolution Act 2011 (Cth) (CDRA).[1]

Civil Disputes Resolution Act 2011, Hervey Bay, Maryborough, Bundaberg,

The object of the CDRA is to ensure that, as far as possible, people take genuine steps to resolve disputes before certain civil proceedings are instituted.[2]  In this circumstance, a person taking genuine steps to resolve a dispute is facilitating the just, quick and efficient resolution of the dispute.[3] However, a ‘genuine steps’ statement is not required for either excluded proceedings [4] or where certain exceptions apply such as urgency or safety concerns.[5]

If a person does not file a genuine steps statement the Court may impose costs sanctions under sections 11 and 12 of the CDRA.[6]

A person takes genuine steps to resolve a dispute if the steps taken constitute:

  • A sincere and genuine attempt to resolve the dispute;
  • Have regard to the person’s circumstances; and
  • The nature and circumstances of the dispute. [7]

One of a number of examples of ‘genuine steps’ under sub-section 4(1) of the CDRA is to consider resolving the dispute by a process facilitated by another person such as alternate dispute resolution (ADR).[8] The Explanatory Memorandum to clause 4(1)(d)-(f) of the Civil Dispute Resolution Bill 2010 states,

“[t]he benefits of ADR include a less adversarial process, early resolution of disputes and identification of issues, ownership of the outcomes for parties, flexible remedies and proportional cost where early resolution is achieved.” [9]

ADR is a process in which an independent third party assists the parties to resolve their dispute. There are a number of different methods of ADR such as:

• Arbitration

Arbitration “[i]s a formal dispute resolution process governed by the Commercial Arbitration Act 2013 (Qld) (or the equivalent in other states) in which two or more participants refer their dispute to an independent third person (the arbitrator) for determination.” The result of the arbitration is termed the Award and is enforceable in the same manner as a Court judgement.[10] [11]

• Expert determination

Expert determination is appropriate for disputes that are of a technical or specialised nature. It is an inquisitorial process and can be determinative.

• Case appraisal

Case appraisal is where an independent expert is appointed to investigate and provide an opinion on the issues. The result can be advisory or determinative.

• Conciliation

Conciliation is “… a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner, identify the issues in dispute, develop options, consider alternatives and endeavour to reach an agreement.” This is an advisory role and not determinative.[12]

• Mediation

Mediation is generally a facilitative process in which an independent person assists the parties to identify the issues in dispute and agree upon an outcome which addresses their needs and concerns. This is a facilitative role and not determinative.

If one method of ADR is not successful in resolving the dispute it is arguably possible to consider another method.[13]

In summary, ADR is one example of a ‘genuine step’ that parties can take before instituting certain civil proceedings. There are a number of different methods of ADR that can be advisory, determinative or facilitative. ADR can assist the parties to narrow the issues in dispute and expedite the just, timely and efficient resolution of the dispute.

This article is made available by David J Lee Mediation Services for educational purposes and only to provide general information about alternate dispute resolution such as mediation. This article must not be relied upon as a substitute for professional legal advice from an Australian Legal Practitioner.

In the next article we will explore the role of a mediator?

[1] Sections 6(1) and 7(1) of the Civil Disputes Resolution Act 2011 (Cth) (CDRA) See s5 for an ‘eligible court’.
[2] Section 3 of the CDRA.
[3] Section 37M(1) of the Federal Court of Australia Act 1976 (Cth).
[4] Sections 15-17 of the CDRA.
[5] Section 6(2)(b) of the CDRA.
[6] See also Superior IP Pty Ltd v Ahearn Fox Patent & Trade Mark Attorneys [2012] FCA 282.
[7] Section 4(1A) of the CDRA.
[8] Section 4(1)(d) and (e) of the CDRA.
[9] Explanatory Memorandum Civil Dispute Resolution Bill 2010 per Attorney-General Hon Robert McClelland MP
[10] Section 35 of the Commercial Arbitration Act 2013 (Qld).
[11] www.resolution.institute/dispute-resolution/resolving-a-dispute
[12] www.resolution.institite
[13] Section 4(1)(f) of the CDRA.

Is a Dispute Resolution Clause an enforceable term of a contract?

Contract Dispute Resolution ClauseA contract should have a Dispute Resolution (DR) clause. An effective DR clause is a term of the contract in which the parties agree in advance to a mechanism for resolving a dispute. The DR clause may provide for expert determination or arbitration or mediation as a condition before pursuing legal proceedings in a court.

The minimum requirements for a DR clause to be enforceable were summarised in Aiton Australia Pty Ltd v Transfield Pty Ltd (Aiton Australia)[1] as follows:

  • It should operate to make completion of mediation [or other methods of dispute resolution] a condition precedent to commencing court proceedings. That is, there is a postponement of the parties’ rights to litigate until the completion of the dispute resolution process: Aiton Australia. [2]
  • The process established by the clause must be sufficiently certain. There cannot be stages in the process where agreement is needed on some course of action before the dispute resolution process can commence. This would amount to no more than an ‘agreement to agree’: Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd. [3]
  • The administrative process for selecting the mediator and their remuneration should be included in the clause and in the event that the parties cannot agree a mechanism for a third party to make the selection necessary; and
  • The clause must set out in detail the process to be followed or incorporate these rules by reference. These rules will also need to state with particularity the mediation model that will be used.

A DR clause cannot oust or exclude the jurisdiction of the courts: Aiton Australia.[4] Thus a DR clause that purports to prohibit a party from commencing legal proceedings and only allows them to participate in say arbitration may be unenforceable.

The DR clause should be precisely drafted and clearly define the mechanism and process for resolution of the dispute. Otherwise the clause may constitute an ‘agreement to agree’ and will not be enforceable as a term of the contract: WTE Co-generation and Visy Energy Pty Ltd v RCR Energy Pty Ltd & Anor [5]

Furthermore, the DR clause should be drafted after considering the nature of the contract, the particular needs of the parties, the types of disputes that can occur and the likely commercial consequences of such a dispute. [6]

In summary, a DR clause can be an enforceable term of a contract. This means that if a party to a contract does not follow the dispute resolution mechanism as stipulated in the DR clause they may be in breach of contract.

This article is made available by David J Lee Mediation Services for educational purposes and only to provide general information about alternate dispute resolution such as mediation. This article must not be relied upon as a substitute for professional legal advice from an Australian Legal Practitioner.

In the next article we will consider the DR processes as required by legislation.

[1] [1999] NSWSC 99 at [69] per Einstein J.
[2] [1999] NSWSC 99 at [43].
[3] (1982) 149 CLR 600 at 604.
[4] [1999] NSWSC 99 at [43].
[5] [2013] VSC 314.
[6] ADRAC Toward Accord “DR Clauses in Contract” 14 Sept 2016.