Options to resolve a dispute


If you’ve decided to get help or take action to resolve a dispute, your options may include:

Your options in resolving your dispute will depend on the outcome you want. If you want to preserve your business relationship with the other party, it’s worth considering ADR. If you just want to get your money or finish the contract and move on, it may be better to use a debt collection service, a lawyer or, if necessary, take the matter to court.

In addition to saving a business relationship, ADR is often less expensive and stressful than going to court.

Alternative dispute resolution (ADR)


You can use ADR to settle disputes without going to court. It usually involves an impartial person, such as a mediator, who helps both sides to discuss and resolve the issues.

ADR may help you resolve your dispute before it becomes so big that a court or tribunal gets involved. You can use ADR before, during or even after a court process. Courts and tribunals also provide more formal ADR and is often required to be undertaken by the parties before a matter proceeds to a hearing.

ADR has a number of advantages. It can:

  • save you time and money
  • be flexible and informal
  • give both sides more control
  • be confidential
  • help both parties deal with emotions
  • narrow the scope of a dispute to the issues that matter to both sides
  • offer broader and more creative solutions
  • help you both preserve your business relationship

Mediation

Mediation is the most common form of ADR. It’s a confidential, informal process in which you and the other party, with the assistance of an independent mediator:

  • listen to each other and are heard by each other
  • identify the disputed issues
  • develop options
  • consider alternatives
  • aim to reach an agreement if an agreement is appropriate

It begins with the mediator listening to each person separately to decide whether mediation will be suitable. During mediation, the aim is for both sides to work together to reach an agreement or a solution that you can both live with. The mediator decides on the mediation process, you and the other party decide what you want to discuss.

What happens at mediation?

  1. Intake session – the mediator listens to your point of view without the other party there. The mediator will also listen to the other party separately.
  2. Introduction – the mediator welcomes the participants, including support people, and explains how the session will be conducted.
  3. Issues set out – the mediator then works with the participants to summarise the issues in dispute.
  4. Discussion – the participants fully discuss the issues and their concerns.
  5. Negotiation – discussion about options and possible options for resolution.
  6. Agreement – if the participants reach an agreement they record it in writing. If no agreement is reached and the dispute continues, the mediation will often have made it clear what the issues in dispute are. Further mediation may be necessary or someone may choose.

Example of mediation

Caryl and Serge are in dispute about payment of Caryl's invoice.

Caryl is an interior designer and contractor. Serge is the owner of a boutique hotel. Caryl does not want to damage her working relationship with Serge as there is potential for work on other hotels he owns. Caryl's invoice is greater than the amount she originally quoted. Serge is very happy with Caryl's work and would like to hire her again if they can resolve the dispute.

Serge and Caryl agree to a mediation session. At the session they both have the opportunity to explain their side of the dispute. Caryl explains that the job was much more involved than she initially thought. That is why the invoice exceeds the quote. Caryl acknowledges that she should have sought approval from Serge before continuing with the work. To ensure effective communication, the mediator reminds them to listen to what the other has to say and stop interrupting each other.

Serge offers to pay Caryl's account if she reduces it by 10%. Caryl agrees and they make a written record of their agreement. The dispute is resolved and they hope to work together again soon.

Franchising disputes and mediation

The Franchising Code of Conduct is a mandatory code that applies to all businesses involved in a franchise agreement. The Code also describes the behaviours expected of franchisees and franchisors and includes a process for managing disputes.

The Code states that parties must act in good faith. This means parties must act honestly, and not arbitrarily, with each other and cooperate to resolve the dispute.

In brief, the process starts by either party issuing a notice of dispute. If the dispute remains unresolved after three weeks, either party may then refer the dispute to a mediator. The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) can assist in this process.

Costs of ADR


The costs of ADR vary depending on the circumstances. Factors that may influence costs include:

  • the experience and expertise of the practitioner
  • the complexity of your dispute or the subject of the contract
  • the state or territory you live in
  • whether you live in a capital city or a regional area

The costs of ADR may include:

  • Practitioner's fees – conciliation may cost more than mediation because the advice provided can take longer.
  • Travel expenses (including accommodation and meals) – if you or the practitioner need to travel to the session.
  • Room hire fees – you may need to hire a room for the dispute resolution session. The fee is usually shared between the participants unless otherwise agreed.
  • Other expenses – such as long-distance phone calls, video conferencing, postage or freight charges, photocopying and other miscellaneous expenses. These fees are usually shared between the participants unless otherwise agreed.

Resources to help you resolve a dispute


Go to the Australian Business and Family Enterprise Ombudsman website for:

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