Dispute Resolution, The Options

Some years ago the Institute changed the process for resolving disputes between Members in that it (The Institute) was no longer involved in the resolution process.
 

The previous system involved a three person panel hearing the disputes in an informal manner, without witnesses or legal representation. This became unsatisfactory if for no other reason than the amount of money involved which could (particularly with transactions for commercial and industrial properties) amount to six figure sums.

 

The current method is defined in Rule 15 which describes three alternative methods for resolution. They are Mediation, Arbitration and any other method that “the members have agreed in writing that they will adopt.”      Note: (November 2010) Rule 15 has been abandoned.    it is now up to Members to agree to the process.

 

Literally the third option could mean anything from an informal hearing to tossing a coin. The danger with these options however is one of enforcement. Prior to my conducting arbitrations as provided for under the Arbitration Act 1996, two informal “adjudications” that I conducted were reneged on by one party in a way that could not happen under an “Arbitration”. Fortunately they were only two of a considerable number that I had conducted over many years but it was two too many.

 

Mediation is where the two parties present their cases in front of an independent chairperson (Mediator) whose job it is to help them reach a mutually acceptable resolution. If agreement is reached, the Mediator will specify the terms in writing and once signed by the parties the decision is binding and enforceable.

 

In the event that Mediation fails, or the members choose to avoid this option, the matter then goes to Arbitration. This is where each party presents their case, again in front of an independent chairperson (Arbitrator) and the Arbitrator makes a binding decision (the award). The disputing members have the opportunity to cross examine one another, use witnesses, have legal representation and have evidence given under oath. The decision is binding and enforceable with very limited grounds for appeal.

 

Because the process is not conducted by the Institute, the procedures will vary according to the Mediator or Arbitrator.

 

If the members cannot agree to the process to be taken then the member initiating the claim must go through the proper steps. The first of these is to notify the other member in writing that the dispute exists (Rule 15.1.1). If the second member fails to respond or cooperate then the applicant should contact a Mediator or Arbitrator who will arrange the hearing.

 

Ultimately and in the worst case, an Arbitration can and will be held without the presence of the second member and the Award will be binding and enforceable. I am unaware of this having ever happened despite the occasional threat of non–attendance.

 

In the best case and most common scenario, the members go away happy that they have had their “day in court” and have seen that the process is very fair and transparent.

Michael Pinkney FREINZ AAMINZ
National Councillor
First Published January 2003