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3 The Use and Provision of ADR in New Zealand

3.1 ADR Techniques
3.2 Types of Disputes Amenable to ADR
3.3 Use and Trends in ADR Take-Up
3.4 Provision of ADR Services
3.5 A Profile of ADR Practitioners
3.6 Experience and Training in ADR
3.7 Delivering ADR Services

This section focuses on the use and provision of ADR in New Zealand. It commences with a discussion of the range of techniques that constitute ADR. It then looks at the types of disputes for which ADR tends to be used and finishes with a discussion of the range of ADR providers and the way in which the provision of ADR services are delivered and regulated.

3.1 ADR Techniques

Ninety-nine percent of the 145 ADR practitioners surveyed in the ADR Practitioner Research Project identified mediation as a technique falling in the range of ADR. Eighty-three percent of ADR practitioners identified arbitration as a technique falling within the ambit of ADR. ADR practitioners reported that the ADR techniques that they used most often were mediation (86 percent of surveyed ADR practitioners), negotiation (62 percent of surveyed ADR practitioners), arbitration (48 percent of surveyed ADR practitioners).

Lawyers also identified mediation and arbitration as key ADR techniques but also tended to identify negotiation, including informal lawyer-to-lawyer discussions, as an ADR technique. Some lawyers saw Judicial Settlement Conferences as an ADR technique.

The largest proportion (around 62 percent) of disputants in the Disputants ADR Research Project identified mediation with ADR, with only around 28 percent of disputants identifying arbitration with ADR and around 18 percent of disputants identifying negotiation with ADR.

It has already been noted in previous reports [5] that throughout the world ADR embraces a number of different activities and techniques. What the data presented above demonstrates, however, is that most stakeholders in New Zealand readily identify mediation and arbitration with ADR.

Formal negotiation is, to a lesser extent, associated by stakeholders with ADR. Other techniques recognised by stakeholders as ADR techniques included facilitation and conciliation. But only small minorities of each of the stakeholder groups identified those latter techniques with ADR.

While Judicial Settlement Conferences were identified by some lawyers as a form of ADR, the judiciary were careful to distinguish the use of mediation-like techniques, which many used in the Judicial Settlement Conference context, from mediation itself. Judicial Settlement Conferences were not seen by the judiciary as ADR but as a unique form of dispute/case resolution.

Disputants were typically less concerned with distinguishing between different types of ADR techniques. They were frequently confused as to where Judicial Settlement Conferences fitted in the broad range of mechanisms through which they could attempt to resolve their dispute. Some disputants mixed up Judicial Settlement Conferences with judicial hearings. Others saw Judicial Settlement Conferences as a form of mediation.

Those confusions represented a pervasive lack of knowledge among disputants about the courts and its processes and procedures, as well as limited information about terms such as mediation, arbitration and adjudication. Even disputants who had been previously involved in a case filed within a civil court remained largely ignorant of terms and activities familiar to lawyers, the judiciary and court staff - including activities such as discovery, interlocutories, conferences and hearings.

3.2 Types of Disputes Amenable to ADR

The international literature suggests that ADR can be used in a wide variety of civil disputes. This view is supported by both lawyers and ADR practitioners.

As Table 3.1 shows, however, lawyers perceive ADR being typically used in a relatively narrow set of disputes - predominantly in commercial contracts, building/construction disputes and employment related disputes.

Table 3.1 Lawyers' Views on the Types of Case Typically Taking-up ADR (Lawyers Survey) [1]

Type of Dispute District Court High Court
Responses % of Lawyers (n=132) Responses % of Lawyers (n=122)
Building construction 108 81.8 92 75.4
Commercial contracts 98 74.2 108 88.5
Employment related 90 68.2 66 54.1
Family related 57 43.2 43 35.2
Property disputes 47 35.6 43 35.2
Insurance 42 31.8 45 36.9
Environmental 23 17.4 24 19.7
Consumer disputes 22 16.7 17 13.9
Agricultural/Farming 20 15.2 15 12.3
Tenancy 12 9.1 6 4.9
Local Government 8 6.1 8 6.6
Maori Issues 8 6.1 4 3.3
Taxation 2 1.5 4 3.3
Immigration 1 <1.0 1 <1.0
  1. Multiple response.

Significant proportions of ADR survey respondents also reported dealing with the following sorts of disputes in the 1 January 2002-31 December 2002 period:

  • Commercial relationships and contracts - reported by 63 percent of ADR practitioner survey respondents.
  • Building and construction disputes - reported by 39 percent of ADR practitioner survey respondents.
  • Property disputes - reported by 37 percent of ADR practitioner survey respondents.
  • Employment related disputes - reported by 30 percent of ADR practitioner survey respondents.
  • Family disputes - reported by 26 percent of ADR practitioner survey respondents.
  • Environment related disputes - reported by 21 percent of ADR practitioner survey respondents.
  • Insurance related disputes - reported by 16 percent of ADR practitioner survey respondents.

Data from the focus groups as well as the ADR practitioner survey indicates some of the sectors in which they practise most frequently. In the agriculture/farming sector, especially around share-milking in the dairy industry, ADR appears to be an industry practice. This is also the case with the building industry. In the latter, as well in employment matters, arbitration has been a prominent form of ADR. Similarly arbitration has a long history in property and contractual disputes because of the frequent inclusion of arbitration clauses in contracts. Family disputes, particularly around estates, were also seen as significant areas in which ADR techniques, particularly mediation, could and did contribute.

Fourteen of the 60 disputants who participated in in-depth interviews around a filed case resolved over the previous year, reported that ADR had been used during the course of their case. Table 3.2 summarises those fourteen cases, the position of the disputant in relation to those cases and the case outcomes. A review of the issues in dispute in those fourteen cases also shows the wide range of situations in which ADR can be used.

Table 3.2 Summary of Cases Reported on by Disputants Using ADR

Issue in dispute Party Court Outcome
Sale and purchase agreement of farm Defendant High Settled
Debt recovery in company liquidation case Defendant High Settled
Sale and purchase Defendant High Summary Judgment
Misrepresentation of a business for sale. Plaintiff (purchaser) seeking order for seller to repurchase business Plaintiff High Settled
Dispute between business partners Defendant High Settled
Contractual dispute about time over-run Defendant High Settled
Breach of copyright Plaintiff High Settled
Developers seeking compensation from local authority after building delayed Plaintiff High Settled
Misrepresentation of stock value in sale of business. Plaintiff District Settled
Sale and Purchase Agreement Defendant District Settled
Faulty cladding on new building. Home owners sued developers. Defendant District Settled
Faulty cladding on new building. Home owners sued developers. Plaintiff District Settled
Contractual agreement - dispute over goods supplied Plaintiff District Settled
Rental dispute - commercial property Defendant District Settled

3.3 Use and Trends in ADR Take-Up

With the exception of disputants themselves, all the stakeholder groups expressed a view that the use of ADR is increasing. Among ADR practitioners, however, both among those who combine ADR provision with an active legal practice and among those who focus entirely on ADR, there is a view that the increase in ADR take-up, especially mediation, has not been as pronounced or as extensive as predicted in the 1980s and 1990s. Nevertheless, it is clear that in some sectors, ADR has become a significant mechanism for dispute resolution often prior to disputes being filed within the courts. This is particularly the case in relation to building disputes, insurance, and professional indemnity claims.

It also seems that there is the beginning of a movement away from arbitration as an extra-court or ADR mechanism for dispute resolution and a move towards the use of mediation techniques. This in part reflects a view expressed among lawyers that arbitration fails to give the benefits of other forms of ADR. Many lawyers see arbitration as a costly exercise with the appointment of an appropriate arbitrator often leading to considerable delay. The processes of arbitration are seen as often embracing the adversarial nature of court adjudication without the safeguards of the court in relation to appeal and precedent. Some lawyers felt that there was an increasing trend towards challenging arbitration outcomes on technical grounds, which increased the cost of the arbitration pathway. At the heart of those appeals was a fundamental dissatisfaction among parties with arbitration processes.

Despite perceptions that mediation has benefits that exceed those of arbitration, the lawyers participating in the lawyers survey reported that mediation is still only used in a minority of cases. Lawyers report that in relation to:

  • Unfiled cases within the District Court jurisdiction, only 12.2 percent were resolved by mediation and 5.5 percent were resolved through arbitration. The vast majority of disputes were resolved through lawyer-to-lawyer negotiation.
  • Unfiled cases within the High Court jurisdiction, 36.6 percent were resolved through mediation, 6.9 percent were resolved through arbitration and 44.9 percent were resolved through lawyer-to-lawyer negotiation.

Lawyers and ADR practitioners tend to agree that there are significant regional variations in the interest shown towards ADR, especially mediation. ADR practitioners - both those in legal practice and other practitioners - identified Auckland, Hamilton and the Bay of Plenty/ Rotorua as high-use regions for ADR.

The reasons why some areas were more likely to use ADR, especially mediation, are varied and complex. In general, the data from stakeholders suggests that high levels of negotiation and/or mediation were used where:

  • the local legal culture was non-litigative
  • courts were seen as unlikely to be able to adjudicate or provide Judicial Settlement Conferences in the timeframes desired by disputants
  • the use of ADR had become the 'usual' pathway, such as for professional indemnity and other significant insurance related disputes
  • the judiciary supported ADR
  • there was a trusted pool of ADR practitioners well-known and acceptable to lawyers.

It was suggested by some lawyers in Christchurch that Judicial Settlement Conferences in the High Court rather than ADR became a preferred pathway. The Christchurch High Court was seen as providing rapid access to Judicial Settlement Conferences. Those Judicial Settlement Conferences in the High Court were seen as being effectively managed and effective and many lawyers saw a benefit in having disputants being exposed to the weight that a member of the judiciary could bring in encouraging disputants to have realistic views of the implications of pursuing litigation.

3.4 Provision of ADR Services

One of the critical issues for lawyers in confidently referring disputants to an ADR process, especially mediation which, unlike arbitration, is not governed by statute, is the perceived quality and availability of ADR services.

Seventy-six percent of lawyers saw the willingness of the participants as an important factor in the efficacy of an ADR process (Table 3.3). The following discussion provides an overview of the ADR sector, profiles ADR practitioners (including their skills and training) and comments on the regional supply of ADR services.

Table 3.3 Lawyers' Perceptions of Determinants of ADR Efficacy (Lawyers Survey)

Perceived Determinant Total Lawyers Working Primarily in District Court (n=74) Lawyers Working Primarily in High Court (n=64) Lawyers Working Equally in High Court and District Court (n=58)
Disputant willingness 76.0% 80.8% 78.1% 69.0%
Experienced ADR practitioner 62.8% 68.5% 60.0% 66.1%
Supportive counsel 40.3% 37.5% 40.6% 45.6%
Judicial support 14.8% 21.9% 10.9% 10.7%
Ongoing relationship between disputants 14.3% 13.7% 15.6% 14.3%

The Arbitrators and Mediators Institute of New Zealand Inc (AMINZ) is one industry body for those who undertake dispute resolution in New Zealand. AMINZ accredited membership is associated with undertaking dispute resolution study with the Dispute Resolution Centre in the Massey University Graduate School of Business.

Membership or accreditation is two-tiered with initial qualification levels being achieved by associates, and fellows requiring advanced training and assessment through the fellowship programme, which consists of two written examinations, a practical test and interviews. AMINZ has panel lists of mediators and arbitrators with advanced accreditation, information about which is available to the public. Membership of the panels is based on qualifications and experience and not all associates or fellows are on the panels.

AMINZ has a separate code of ethics for both arbitrators and mediators and also operates disciplinary procedures for members. AMINZ has also been approved as an Authorised Nominating Authority by the Minister for Economic Development for nominating adjudicators for construction disputes under the Construction Contracts Act 2002. AMINZ has developed a public panel list of adjudicators and has just completed a series of seminars for members who may be eligible for the adjudicator list.

LEADR has a national office in Sydney, Australia with a New Zealand chapter administered from Wellington. The organisation is set up to serve the community by promoting and facilitating the development, acceptance and usage of ADR, promoting education and researching in ADR, and disseminating information for the benefit of its members and the community.

LEADR provides a range of services, including those directed to putting the community in touch with its members to access ADR services provided by its members; training; research, and ADR promotion. For members there are benefits including accreditation as a mediator, networking and inclusion in LEADR promotional activities, and professional development.

Membership and accreditation is to LEADR Australasia, with all LEADR chapters requiring standard skills and competencies of members to attain accreditation. Accreditation is available to those who have completed the 4-day LEADR mediator workshop or those who have been assessed as otherwise eligible to join. On the LEADR website there is a list of those organisations who have received in-house training from LEADR. Included in the list are a number of law firms, one New Zealand corporation, a number of Australian public sector agencies and government departments, and judges of the High Court of New Zealand and various Australian courts.

The accreditation requirements of LEADR and AMINZ are set out in Infobox 3.1 and Infobox 3.2.

Infobox 3.1 LEADR Accreditation Requirements

  Membership Type Accreditation Requirements Requirements for Retention of Accreditation
LEADR Provisional Panel The requirements for accreditation are:completion of an approved 4-day LEADR workshop N/A
Panel The requirements for accreditation are:
  1. completion of an approved 4-day LEADR workshop, and
    (i) satisfactory completion of a video assessment including simulated role play of an ADR process; or
    (ii) satisfactory completion of an assessment process agreed by the Accreditation Committee as appropriate to the particular ADR process in respect of which ADR is sought; or
    (iii) demonstration of the skills required of a practitioner in the process by reference to actual practice in the field.
To retain LEADR accreditation practitioners must in the three year period immediately preceding 30 June each year after initial accreditation or deemed initial accreditation, have:
  1. conducted for periods of no less than 75 hours in total the relevant ADR process; or
  2. attended workshops, courses or e-lectures relating to that process for periods of not less than 25 hours; or
  3. attended workshops, courses or e-lectures relating to that process for periods of not less than 12.5 hours and taught that process for not less than 12.5 hours.

Unless the Accreditation Committee has exempted the practitioner from doing so.

Advanced Panel The requirements for advanced accreditation are:
  1. compliance with the requirements for meeting and retaining accreditation as detailed above; and
  2. in the three years immediately prior to application for advanced accreditation, the satisfactory completion of a minimum of 250 hours of practice in the relevant process. Satisfactory completion being demonstrated by written evaluations of not less than 20 parties or their advisers that the practitioner's conduct of the process has demonstrated a high level of competence in the process, or the assessment of two qualified independent assessors approved by the Accreditation Committee.

In order to retain advanced accreditation a practitioner must, during the six months following the expiration of each three year period after the initial advanced accreditation or deemed advanced accreditation, provide the Accreditation Committee with written evaluations in respect of the conduct of not less than ten matters applying the process for which the practitioner is accredited that the practitioner's conduct of the relevant process has demonstrated a high level of competence.

Unless the Accreditation Committee has exempted the practitioner from doing so.

Infobox 3.2 AMINZ Accreditation Requirements

  Membership Type Accreditation Requirements Requirements for Retention of Accreditation
AMINZ Affiliate N/A - Non-qualified members  
Associate The requirements for accreditation are:
  • Attaining a mark of 50% or more in four 200 level papers as part of the Massey Dispute Resolution Centre's Graduate Diploma in Business Studies (Dispute Resolution) - three theory papers and the 8 day Dispute Resolution practicum; or
  • Attaining a mark of 50% or more in each of the equivalent courses offered by any other University or tertiary educational establishment which may in the future be recognized by the Council of the Institute as providing acceptable training for Associate Members; or
  • Otherwise satisfying the Council that the practitioner in question has the necessary training and/or experience to satisfy the standard prescribed for admission as an Associate member in the Institute's by-laws.
Accredited members are expected to continue their professional development by participating in educational events with the Institute and furthering their own knowledge and experience in dispute resolution. Associate, fellow and panel members who submit a continuing professional development (CPD) return and fulfill the CPD requirements will be acknowledged as holding a current CPD status with the Institute.
Fellow The requirements for accreditation are:
  1. meeting the requirements for accreditation as an associate member; and
  2. Attaining pass marks in written fellowship examinations administered by the institute - Fellowship Examination IIA (50% pass mark) and Fellowship Examination IIB for arbitrators or IIC for mediators (75% pass mark); and
  3. Attaining a pass mark of 80% in the Fellowship Final Test - a one day practical, and
  4. A final interview with two Fellowship Admissions Assessors who then make a recommendation to the Institute's Council.
Accredited members are expected to continue their professional development by participating in educational events with the Institute and furthering their own knowledge and experience in dispute resolution. Associate, fellow and panel members who submit a continuing professional development (CPD) return and fulfill the CPD requirements will be acknowledged as holding a current CPD status with the Institute. The fellowship qualification is internationally benchmarked against the Chartered Institute of Arbitrators (UK) with reciprocity for fellowship (arbitration).
Public Panel The criteria for admission to the Mediator and Arbitrator Panels are:
  1. Be an associate or fellow, and
  2. Have requisite experience as an arbitrator or mediator, and
  3. Be a member in good standing i.e. no disciplinary matters have affected the status of the member, and
  4. Submit documents from at least three arbitrations or mediations for peer review by the AMINZ Panel Committee, and
  5. Attend an interview with two members of the Panel Committee and satisfy the interviewers that the necessary requirements are met.
Panel members are required to have the knowledge, experience and personal qualities and qualifications to qualify for admission to the panels. Panel membership is overseen by the Panel committee. To remain on the panels, members must satisfy the Institute's Continuing Professional Development requirements.

3.5 A Profile of ADR Practitioners

The ADR Practitioners Survey indicates that the vast majority of accredited ADR practitioners are men (83 percent of ADR Practitioners Survey participants) and are almost entirely New Zealand European/Pakeha. Only four of the practitioners surveyed identified as Maori, a further two identified as a Pacific Island person, and two were from one of the Asian communities.

Accredited practitioners tend to be older. Seventy-nine percent of the surveyed ADR practitioners were aged between 40 years of age and 64 years of age. Around 94 percent of the accredited ADR practitioners were aged forty years or more.

There is a strong representation of people with legal training among accredited ADR practitioners. Many of these combine a legal practice with a practice in ADR. In the ADR Practitioners Survey, 59 percent of respondents reported combining their ADR work with legal practice as a solicitor or barrister. It should be noted that the ADR Practitioner Survey sample population has a slight bias in favour of practitioners with a legal background because it surveyed accredited practitioners from LEADR and the AMINZ public panels. Although now open to much wider membership, LEADR as an organisation was originally set-up for lawyers engaged in ADR. In addition, there is a predominance of practitioners with a legal background, including past members of the judiciary on the AMINZ public panels. AMINZ estimate that across all their members, beyond those only on panels, the proportion of lawyers is around 20-30 percent.

The majority (59 percent) of the lawyers also providing ADR services spend 20 percent or less of their time undertaking ADR (Table 3.4). Fifty-six percent of lawyers providing ADR services reported that 15 percent or less of their income was associated with ADR service delivery (Table 3.5). ADR is, consequently, a supplementary rather than a core activity for those lawyers.

Table 3.4 Proportion of Time Associated with ADR work for those ADR Practitioners Combining ADR work with Legal Practice (ADR Practitioners Survey)

Proportion of Time Spent on ADR Service Provision ADR Practitioners % of ADR Practitioners
0-5 percent 14 17
6-10 percent 12 15
11-15 percent 6 7
16-20 percent 16 20
21-25 percent 5 6
26-30 percent 8 10
31-50 percent 8 10
51-75 percent 7 9
76+ percent 6 7
Total 82 101 [1] 
  1. Due to rounding.

Table 3.5 Proportion of Income Associated with ADR work for those ADR Practitioners Combining ADR work with Legal Practice (ADR Practitioners Survey)

Proportion of Income from ADR Service Provision ADR Practitioners % of ADR Practitioners
0-5 percent 23 30
6-10 percent 11 15
11-15 percent 9 12
16-20 percent 7 9
21-25 percent 7 9
26-30 percent 4 5
31-50 percent 4 5
51-75 percent 7 9
76+ percent 4 5
Total 76 99 [1]
  1. Due to rounding

3.6 Experience and Training in ADR

All the stakeholders considered that skilled ADR practitioners were a critical success factor in ADR. Experience and training were seen as underpinning the ability of ADR practitioners to ensure that ADR is carried out with:

  • well-defined and agreed processes
  • clear engagement of the disputants rather than their lawyers in the mediation process
  • a focus on the dispute, rather than legal 'niceties', and its resolution
  • outcome oriented process
  • neutral but firm mediation or arbitration.

It was notable that those lawyers and disputants who felt that ADR was not an effective dispute resolution mechanism, typically referred to ADR situations (either directly experienced or heard about through others) with poorly implemented or non-transparent processes. Especially among lawyers, anxieties around referring clients to ADR often focused on the perceived competencies of the ADR practitioner.

The average length of ADR practice reported by ADR practitioners was 14 years. The median number of years' experience was 11 years. Fifteen ADR practitioners established practices prior to or in 1975, but only nine practitioners reported undertaking formal training in ADR techniques in that period.

Table 3.6 shows the number and proportions of the surveyed ADR practitioners trained in particular periods and the number and proportions of ADR practitioners establishing practices in particular periods. The "take-off" of interest in ADR in the 1991-1995 period is clearly evident.

Table 3.6 Year Training Commenced and Year ADR Practice Established (ADR Practitioners Survey)

Period Commenced ADR Training Established ADR Practice
Practitioners % Practitioners %
1975 or before 9 8 15 10
1976-1980 6 5 14 10
1981-1985 16 14 11 8
1986-1990 21 19 22 15
1991-1995 31 28 50 35
1996-2000 23 21 28 20
2001 or after 5 5 3 2
Total 111 100 143 100

Table 3.6 demonstrates the tendency for some ADR practitioners to be undertaking ADR practice without formal training. These practitioners tend to have established ADR practices prior to 1981 and have built up considerable experience prior to the establishment of the range of qualifications and accreditations now available.

Many ADR practitioners have gone through the LEADR training course in New Zealand, established in 1991, and/or joined AMINZ as associates or fellows by undertaking dispute resolution training administered through the Massey University Dispute Resolution Centre, studied overseas, or completed the AMINZ Fellowship programme, which is internationally benchmarked.

Table 3.7 demonstrates the importance of the four-day LEADR accreditation workshop for ADR practitioners and the AMINZ qualification but the relatively low involvement of the universities in training ADR practitioners.

Table 3.7 ADR Qualification and Training* (ADR Practitioners Survey n=145)

Training/Qualification ADR Practitioners
Responses % of ADR Practitioners
4 day LEADR Accreditation Workshop 95 66
AMINZ Fellow or Associate 66 46
On-going training 44 30
Dispute Resolution Diploma, Massey 21 15
Dispute Resolution LLB papers [6] 2 1

* Multiple response.

Only 15 percent of the ADR practitioner respondents reported having completed the Massey University Dispute Resolution Diploma while only two respondents (out of the 85 ADR practitioners that combine ADR practice and legal practice) reported having undertaken dispute resolution papers as part of their law degrees. Table 3.7 also highlights the importance of on-going training usually in the form of day sessions and workshops. [7]

3.7 Delivering ADR Services

The supply of ADR practitioners varies regionally. Figure 3.1 below sets out the distribution of AMINZ/LEADR members by region.

Figure 3.1 National Distribution of Current AMINZ/LEADR members*+

fig3.1.JPG

* In addition, a small number of members are currently based overseas - AMINZ 27, LEADR 3.

+ Note ADR practitioners are frequently members of both AMINZ and LEADR


Footnotes:
  1. Saville-Smith, K., Fraser, R., and Stevenson, P., 2001, Alternative Dispute Resolution Scoping Study. Report prepared for the Department for Courts. CRESA, Wellington.
  2. The early 1990s saw universities and other tertiary institutions developing qualifications in mediation and other dispute resolution subjects. See Boulle, L. et. al. 1998. Mediation: Principles, Process, Practice (New Zealand edition), Butterworths, Wellington.
  3. It should be noted that the sample frame was constructed by reference to AMINZ and LEADR membership. While there is a link between the AMINZ accreditation system and the Massey University Dispute Resolution Diploma, ADR practitioners who are not members of AMINZ or LEADR may be trained through university-based tertiary courses such as those provided by Massey University.