MSc in Construction Law and Dispute Resolution - Coursework Example

MSc in Construction Law and Dispute Resolution work Assignment Brief (Module CDR 505) DISPUTE RESOLUTION AND CONSTRUCTION Assignment Numberxx Word Count: Student ID Date of Submission: Enforceability of international and local mediation outcome may face difficulties in UAE and many other countries. Discuss the enforceability of mediation outcomes and provide recommendations to overcome such difficulties. 1. Introduction Disputes are inevitable due to the escalating demand of byzantine and fast-track construction projects. Therefore, it is imperative for a person in the managerial or administrative position to possess skills in resolving disputes. Recent years have registered a growing trend of alternative dispute-resolution methods, for instance, mediation, adjudication, conciliation, and various other hybrid arrangements1. This can be attributed to the drawbacks associated with arbitration and litigation, namely, the upsurge in costs, deferrals and hostile relationships between parties. Unfortunately, during the last decade superfluous and increasingly complicated stipulations were incorporated in construction contracts. In general, this involved the addition of numerous alternative dispute resolution methodologies and arbitration divided into redundant tiers2. These apparently more economic and swift alternative dispute resolution techniques only rendered the process more ineffective instead of the other way round. Mediation plays an integral role in determining the conditions of contracts. The exercise of Alternative Dispute Resolution has gained widespread prominence for working out differences in every sphere of life. During recent years legal systems have increasingly adopted restorative justice practices3, this implies that Alternative dispute resolution is even employed for dealing with criminal cases. This philosophy has empowered people from all walks of life including laymen by escalating their knowledge of successful negotiation that tends to focus on their benefits rather than their social standing4. However, this relatively comprehensible approach occasionally ends up in agreement breakdowns regardless of the fact that parties voluntarily negotiated in a facilitated mediation process where they had every opportunity to advocate their interests. 2. Dispute Resolution Methods Dispute resolution method potentially ensues in the following three outcomes, namely, an agreement (negotiation), compromise (conciliation) or judgment (court or arbitration rulings). The mediation outcome falls under agreement and cannot legally bind parties to abide by the mediation outcome unlike arbitration or court proceedings5. But to be an ideal solution, the agreement should meet the interests of all participant parties. 3. Categorization Of Mediation Outcome Arbitration comprises a ruling given by a neutral, mutually nominated arbitrator. However, mediation outcome can be classified as a contract6. By taking into account elements that validate a contract, we can notice that in a mediation outcome, the opposing parties exchange informed offers and acceptances in order to determine an outcome. Moreover, consideration and intention to enter into a legal relationship exists so it can be concluded that it is simply not a concurrence of offers and acceptances. Therefore, mediation outcome meets the criteria of a contract and should not be confused for a judgment which is a legal determination imposed on parties regardless of their consent. 4. Discharging Mediation Outcome The creditor should normally expect a voluntary settlement as regards to the obligation as is the case in normal contracts. However, in the case where the debtor continues to defer the obligation, the outcome will vary according to the commencement of the mediation process. Normally, two hypothetical circumstances exist: 4.1 Parties choose Mediation over Litigation As mentioned before, mediation outcome is simply a contract; hence, the creditor can utilize the same remedies as are available to a contractor. In other words, he can initiate a legal proceeding on the ground of breach of contract and require specific performance, rescission, reformation or compensation in the form of damages etc. but it is imperative to remember that in these instances, a court is obliged to hear out such cases before settling the dispute. Only when it announces its judgment, will the contract be legally enforceable. Therefore, mediation outcome simply serves as a facilitation process rather than a dispute resolution process like arbitration or adjudication. To put it another way, if the aggrieved party repudiates an agreement, the court can only resolve a dispute after the existence and validity of an agreement are proved.Before moving onto the enforceability of remedies from the mediation outcome, the court first needs to consider the worth and position of the mediated dispute. Realistically, mediation outcome is wastage of time for such disputes as it only leads to procrastination and seems irrational. 4.2 Mediation after Initiation of Court Proceedings This option does not affect the mediation outcome process being classified as a contract. The only difference is that the judgment of a court will ensue in a “consensual judgment”. Alternatively the same applies to a settlement which is better known in Australian law as a ‘consent order’7. The proceedings which have already been initiated in a court will then include such court intercession. At times parties may seek the court for re-assessment of the outcome. However, in both situations the outcome will not only be seen as a contract but rather as a court order. In truth, the mediation process is non-existent; the mediation outcome (contract) only served as evidence for the court judgment. In the aforementioned theoretical situations, the creditor is likely to benefit more under the latter option if he seeks a court remedy due to non-fulfillment of obligations by the debtor as decided by the mediation outcome (contract), is likely to benefit more under the latter option. Under the first option, he will probably encounter prolonged proceedings as the debtor can use acceptable allegations to be excused from specific performance e.g. emergency, frustration and the like8. But in the second scenario, the proceeding will assume the form of an enforcement proceeding because either the debtor declines to comply with the court judgment or fails in enforcement of the court order (Australian terminology). In certain situations, legislation or the outcome of mediation or any other such agreements might necessitate particular solutions when non-cooperation results from the outcome of the mediation. This tends to stand true without regard to any form of classification. For instance, a bigger contract might entail dispute resolution provisions stipulating that disputes should be settled in several stages. One of these stages is mediation and in case it proves futile, then arbitration can be used. Mediation might fail as its outcome usually does not provide a long-term remedy. Additionally, mediation can be exercised by parties beforehand or subsequent to reappearance of a dispute. No law prohibits this course of action. Debtors have to face repercussions as a result of prolonging proceedings. Contempt of court is the bare minimum punishment unlike general proceedings. Debtors should carefully review repudiating a mediation outcome since this can prove quite costly. A prudent mediator will deliberate and debate about an issue from all angles to eradicate any prospective vitiating reasons and to formulate a long-lasting solution before drawing the agreement. Similarly, a judge cannot be expected to restate a consensual judgment or alternatively a consent order without putting the mediation outcome to test for durability. 5. Enforceability of Mediation Outcome A mediation outcome ensues from either of two cases. In the first case a contract is signed into effect by the disputing parties acting outside the domain of the court system. This could also occur when a court issues an order such as in Australia: normally, the court takes control of the alternative dispute resolution. On the other hand, jurisdictions and in particular where civil and sharia law systems9 have been implemented, the outcome of the mediation or the suluh concurrence passed by the court may be known as a consensual judgment. In these circumstances, the consensual judgment is deemed as conclusive and significant judgment, against which no appeals could be made to the court of appeals regardless of the fact that parties go to the court on their free will and ask for a mediation outcome to be re-issued. Thereby, the implementation of an outcome of mediation is dependent on the outcome’s nature of formality. To put it another way, the method of outcome will be determined in the light of the kind of the outcome’s final mediation which could be a consent order, consensual judgment or an agreement. From the above, it can be deduced that the enforceability of a mediation outcomes rests on a court order; otherwise it cannot be legally enforced on its own. Another critical issue is whether a mediation outcome is synonymous to a dispute resolution outcome. The answer is negative; two points should be borne in mind. Firstly, the legal system must adopt the mediation outcome as an “enforceable outcome per se”. In other words, the national legislation should give statutory recognition to the enforceability of a mediation outcome or ratify a distinct new legislation governing mediation in every aspect. Such legislative practices are being undertaken in some jurisdictions. For instance, since 1984 the government of Australia recognizes mediation as a community service10. The Court (Mediation and Arbitration) Act (Cth) was enforced with regard to Commonwealth Legislation in 1991. In addition, during the Workplace Relations Act (Cth) sanctioned a recommendation to mediation in respect of industrial disputes for the first time in history. Several national and international organizations now exist to smooth the progress of mediation in all types of disputes. Consequently, various bodies developed a code of practice. An example would be the New South Wales Law Society which has established a guideline to facilitate practicing mediators. In Australia this legislative development has resulted in the issuance of a National Accreditation Standard for Mediators11 as a result people are proscribed from acting as mediators unless they hold a valid national accreditation. Australia is one country that has taken pragmatic steps for overcoming flaws in the mediation practices as a part of the alternative dispute resolution process. Nonetheless, the legislative still needs to take implement one last conclusive measure for making the process flawless. They legislature should grant legal enforceability to a mediation outcome signed by an accredited mediator, similar to the status of a judgment made by courts in Australia. If this step is taken, it will not render the process exceptional but only assign it as much weight as an arbitration award. The similarities between the two should be taken into account. Firstly, both arbitration and mediation outcome are branches of dispute resolution processes; secondly, both involve parties voluntarily seeking an alternative remedy to resolve disputes without the burden of litigation. However, arbitration award carries legal weight and a determinative decision enforced on parties. As opposed to this, an outcome of mediation is considered as the consensual remedy requested by the involved parties to settle a dispute; therefore, it sounds more rational and coherent with the overall legal system to award legal enforceability to the later so that parties abide by the solution. In plain terms, it seems logical and categorically acceptable to coerce parties into accepting a mediation outcome. Furthermore, it is noteworthy that in today’s globalized world, the bulk of commercial disputes comprise transnational disputes, hence international assistance is required for effectively resolving them. Thereby, the first step should be legal enforceability of mediation outcomes on a national level, and then countries should work together for recognition and enforceability of mediation outcome at the international level. United Nations can play an instrumental role in this regard. The United Nation Convention on the Recognition and Enforcement of Foreign Arbitral Awards, (also known as the New York Convention 1958) was adopted for the international enforceability of arbitration awards12. National and global acknowledgement of outcomes of mediation in line with arbitration awards concerning the nature and legal enforceability needs to be established. Only then would mediation become a genuine and functional dispute resolution technique. 6. Court In spite of the increasing accentuation on the use of informal methods to resolve conflicts, the legal settings is still “aimless, meandering, and … confusing”. The courts have failed to lay down plain, comprehensible and well-reasoned approaches regarding dispute resolution. This is reflected by the fact that traditional arbitration law which comprises of judicial decisions which are relevant to federal or state stipulations are being applied to alternative dispute resolution that is dissimilar to conventional arbitration. The interface between conventional arbitration and prior stages in dispute resolution depict the fault of the courts to clearly specify well-reasoned and lucid methodology for the new generation. Arbitration law encompasses a wide variety of particular legal repercussions that have a bearing on several different facets of the dispute resolution process. The application of these standards to mediation as well as nonbinding adjudication carries little significance and appears irrational. The courts become ineffective during judgement and enforceability, as they are required to conduct an analysis for every single case to determine the federal or state arbitration law it relates to. Due to the increased complexity and judicial intervention, courts find it difficult to formulate a new body of law for dispute resolution cases. It is integral to consider whether litigation should be ceased and a nonbinding process compelled. Moreover, should immunity be extended to a third party decision maker or adjudicator? A handful of international courts have incorporated the law of contract concerning legal and equitable solutions in relevance to alternative dispute resolution. However, others have not adopted this for myriad reasons; namely, mistrust, lack of awareness of alternative dispute resolution, and comprehensible shortcomings concerning equitable relief. Courts require a guideline for the legal implementation of dispute resolution processes and for avoiding interface between conventional arbitration and dispute resolution agreements. Statutory measures could be employed but this will ensue in dangers and obstacles, if immediately applied on a large scale. Therefore, courts should consider “the development of a restatement of dispute resolution.” If nothing else, at least this multi-disciplinary and well thought out debate would shed some light on the problems13. The adoption of mediation has been rather slow. A study of the mediation pilot in United Kingdom revealed that only five percent of the parties involved in cases agreed to mediate. This attitude can be attributed to numerous factors. For instance, normally the opposing party construes mediation as a sign of weakness, lawyers also lack experience in this relatively new legal concept, and parties often disdainfully view the notion of compromise. Moreover, lack of public awareness also plays a role in the slow take up of alternative dispute resolution. 7. The Situation in UAE In the case of UAE, judicial mediation is a preferred option and is taken to action through the Conciliation and Settlement Committee that operates in federal courts. This body was established under the Federal Law No. (26) as well as the Procedures of the Conciliation and Settlement Committee (Ministerial Resolution 133 of 2001). The purpose of this body and the overall mechanism is to promote mediation over conflicts that might end up in litigation. According to Article 101 of the Civil Procedure Law both parties can choose to stop action by asking the judge and this effort can be turned over to mediation. However, it is up to the judge to decide if mediation or arbitration should be allowed or not. The efforts for mediation could be done either before or after the dispute. Moreover, mediation could be part of the contractual obligations although it does not always have to be as such. Other than the Conciliation and Settlement Committee no other mechanisms are available in UAE codes to settle disputes through mediation and this effectively limits the efficacy of such a body. In case that an arbitration clause is present in a contract, the particular dispute cannot be taken to a court of law in UAE. This happens as the arbitration clause removes the case from the jurisdiction of the court of law. However, in the case of mediation clauses the bereaved party can take the case to a court of law. The court may choose to forego its jurisdiction in order to initiate mediation. In case that mediation fails, the court still retains its jurisdiction to solve the problem. Mediation however is limited in that either party does not have to act in good faith during mediation. This means that either party cannot sue the other party for lack of good faith during mediation as made apparent by the Avril v Civilmar14 case. If mediation is carried out under the LCIA rules then Article 10 provides for confidentiality. 8. Conclusion Mediation is an ingenious and peaceful notion to settle disputes between hostile parties by bearing in mind their interests, cost limitations and time restraints. Productive mediation can only ensue from the genuine and mutual endeavours of various parties such as lawyers, psychologists and other smart individuals or organizations15. As discussed above, mediation is a productive tool to draw an existing dispute to close by assisting rival groups to conclude an acceptable agreement. However, the durability of such an acceptable agreement is full of doubt as the existing national and international legal systems do not provide any tools to coerce the repudiator to impose the outcome. Moreover, manipulation of the process can occur at the hands of a malicious party16. Unfortunately, up to this point in time a mediation outcome cannot be legally enforced until it is re-issued by a court; thus, so far it does not amount to a dispute resolution outcome. In fact, it should be viewed as a court judgement instead of a mediation outcome, after the re-issuance of an outcome by a court. The outcome as a part of an agreement would not directly conclude a dispute and in itself, it carries no legal worth. Hence, the legal analysis of classifying an outcome of mediation as a reliable method for dispute resolution proves flawed and incorrect. It is merely a facilitative technique in an attempt to avoid litigation. Similarly, the mediator is not technically a dispute practitioner but rather acts as a helper in contracts. 9. Recommendations Attention needs to be paid to reform the process to render mediation outcome as an acceptable and effective dispute resolution choice. Two sum it all up, two proposals should be considered. Firstly, a Mediation Legislation should be endorsed which would represent all the amendments and developments in relevance with mediation outcome to the present time. In addition, this Act should decree that mediation outcome would hold the same statutory significance as an arbitration award in terms of the nature and enforceability of outcome17. Secondly, in consideration of transnational disputes, countries should collectively strive in international forums for the endorsement of a treaty that would offer international acknowledgment and enforceability of mediation outcomes18. United Nations has already ratified the United Nation Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the ‘New York Convention 1958’, and can prove effective as an international platform for formulating an agreement pertaining to mediation outcomes. Moreover, 192 countries hold membership in the United Nations out of 243 countries, which would ensure that the international adoption of an Act would extend to the maximum countries possible. 10. Bibliography Books David Spencer, Essential Dispute Resolution (2nd edn, Cavendish Australia 2005) David Spencer and Michael C Brogan, Mediation Law and Practice (Cambridge University Press 2006) Norwood, Establishment of the Community Mediation Services (1st edn, South Australia Press 2010) Richard Garnett et al, A Practical Guide to International Commercial Arbitration (Oceania Publications Inc 2000) Roger Fisher and William Ury and Bruce Patton, Getting to Yes (Negotiating an agreement without giving in) (2nd edn, Random House 1991) Sai-On Cheung and Henry C H Suen and Tsun-Ip Lam, Fundamentals of Dispute Resolution Processes in Construction (1st edn, Routledge 2001) Thomas Stipanowich, The Arbitration Penumbra: Arbitration Law and the Rapidly Changing Landscape of Dispute Resolution (1st edn, Maxwell 2007) Journal Articles eLaw Journal: Murdoch University Electronic Journal of Law (2010) 17(2) John Braithwaite ‘Restorative Justice and De-Professionalization’ [2004] The Good Society 13 (1): 28-31 Miryana Nesic (2001) ‘Mediation - On the Rise in the United Kingdom?’ Bond Law Review 13(2) Article 10 WALRC, Review of the Criminal and Civil System in Western Australia Final Report Project No 92 (1999) Case Law Avril v Civilmar 605 So. 2d 988 (Fla 4th DCA 1992) National Australia Bank v Freeman [2000] QSC, 295 Scanlan’s New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169, Frustrated Contracts Act 1978 (NSW); Frustrated Contracts Act 1988 (SA) Statutory Law Administrative Appeals Tribunal Act 1975 (Cth) S 34d(2) Website Lloyd Duhaime, ‘Sharia Law Duhaime’ accessed 4th May 2012 NADRAC, ‘Home’ accessed 2nd May 2012 Read More