WAIDM LAUNCH – THURSDAY 28 SEPTEMBER 2006 

MURDOCH UNIVERSITY SCHOOL OF LAW  

JUSTICE C. D. STEYTLER  

I am very pleased to have been given the opportunity to officially open the Western Australian Institute of Dispute Management.

I recently had cause to look at the case of Burchell v Bullard, decided last year by the English Court of Appeal. It gives some insight into where we might be if there were no alternatives to dispute resolution by courts.

Mr and Mrs Bullard had contracted with a small builder, Mr Burchell, to carry out extensive renovations to their home. The contract provided for progress payments and, after some work had been carried out by Mr Burchell, he lodged a bill for a progress payment. The Bullards refused to pay it, saying that the work was defective and that they wanted it remedied before paying. Things deteriorated to the point where lawyers became involved. Mr Burchell stopped work on the site and proceedings were issued by him. Mr and Mrs Bullard counter claimed. In the end, after a trial, a little over £5000 passed from Mr and Mrs Bullard to Mr Burchell. In order to get it, Mr Burchell spent about £65,000 in legal fees. He also had to pay subcontractors' costs of £27,500. Mr and Mrs Bullard incurred costs that were estimated at about £70,000. The overall result, for Mr Burchell, was that the recovery of £5000 had cost him around £136,000 (or about $343,000), given that he had been ordered to pay some of Mr and Mrs Bullard's costs.

Mr Burchell appealed against the costs orders that had been made. The appeal cost him a further £13,500. It cost the respondents a further £9000. The upshot of all of this was that a judgment of £5000 would have been procured at a cost to the parties of about £185,000 (or about $466,000). If that does not highlight the need for alternative forms of dispute resolution, I don't know what does.

When I started out in practice, some 30 years ago, alternative dispute resolution was not an issue of much significance, although there were, of course, arbitrations in cases, usually building construction cases, in which a specialist tribunal was considered to be necessary. So far as international law was concerned, we had, of course, the International Court of Justice, which sat very occasionally, and we all learned a little about private international law. While there were international commercial arbitrations, these did not have a particularly high profile.

Since then, globalisation has increased dramatically. So, too, has the character of many disputes. These days, we see many more disputes crossing national boundaries than before. Also, disputes of this kind involve a wider range of people than was previously the case. Many small businesses now take part in international activities and engage, in one way or another, in foreign trade.

We have seen what Catherine Kessedjian, speaking at the Sir Kenneth Bailey Memorial Lecture, has described as "contractualisation" of the law, by which she means an increasing right on the part of actors in different countries to regulate their own activities. We have also seen a greater tendency for victims of criminal wrongs to claim financial reparations and civil damages in respect of them.

All of this has resulted in a substantial increase in the burden on courts. However, that increase has come at a time when governments have been more reluctant than ever to provide the courts with the necessary resources to deal with this expansion in their workload. It has also come at a time when legal fees have become so high that access to the courts has become prohibitively expensive to many.

Fortunately, we have also seen an increase in what has been described as the "privatisation of justice", essentially reliance on alternative modes of dispute resolution, especially arbitration and mediation.

Arbitration is, of course, nothing new. In one form or another it has been around for centuries. Unfortunately, as lawyers have turned increasingly to arbitration as an alternative to litigation in the courts, so they have made the process more procedurally technical and rigid. It is often no cheaper than recourse to the courts. Sometimes, it is more expensive. That, in turn, has led to a dramatic growth in other forms of dispute resolution, primarily conciliation or mediation, but also other mechanisms, such as the mini trial and the Med-Arb system which combines mediation and arbitration.

Of course, arbitration still retains an important place in the spectrum of dispute resolution mechanisms, especially in the international sphere. There are significant advantages in selecting arbitration over the courts in the case of international disputes. Most importantly, arbitration agreements and arbitral awards are enforceable worldwide under the New York Convention, which has been implemented by the International Arbitration Act of 1974. That Act also implements the Washington Convention, which provides for a special system of arbitration for disputes between countries and foreign investors. By agreeing to arbitration, parties can keep their disputes out of foreign courts and achieve international recognition of the arbitral award. It is consequently a development of some significance for this State to have a registry of the Australian Centre for International Commercial Arbitration established here at Murdoch Law School .

It is particularly timely to see the creation of the Institute of Dispute Management. The need for an Institute of that kind is obvious, given the problems which have become increasingly apparent in having the courts as the sole, or even primary, dispute resolution mechanism. Having available to them a range of alternative dispute resolution mechanisms gives to the parties much more flexibility in resolving their disputes. It also provides them with an opportunity to make substantial savings in legal costs, at least if there is a willingness on both sides to select a mechanism that is proportionate to the dispute, or to adjust a mechanism so as to make it proportionate to the dispute.

I believe that there are many opportunities for development in the area of alternative dispute resolution. I also believe that the courts will be willing participants in this process. Unlike most businesses, courts do not have as their goal an increase in output and they have no interest in attracting repeat customers. Consequently, judges have become more willing to refer the parties to mediation, either within or outside the court system, and also to explore with them other alternative dispute resolution mechanisms that might better be pursued than the standard litigation processes. Even at the appellate level, mediation is encouraged and our success rate in the Court of Appeal in this respect has been gratifying. In the criminal field, the Supreme Court has recently implemented a system of mediation designed to limit the range of issues that will ultimately be tried and to encourage more realistic assessments of the likely outcome of the trial process.

There have been some interesting developments overseas. One such is the Swiss doctrine of the so called "Juge D'Appui", a notion developed by a Frenchman, Berthold Goldman. A judge of this description works in tandem with the arbitration process, lending assistance when needed by making such court orders as might be necessary to facilitate the process or to enforce particular measures when no other enforcement mechanism is readily available. The judges also have power to suspend proceedings to set aside an award in order to give the arbitrator an opportunity to eliminate the grounds for setting it aside, where that can be done.

Courts are also prepared to penalise parties who litigate when they could have mediated. If I might return to Messrs Burchell & Bullard, the Court in that case, and in others, has indicated a willingness to make costs orders against those who refuse a reasonable offer of mediation, or some other more appropriate dispute resolution mechanism, and then run up costs which are disproportionate to the dispute.

The Institute will, I have no doubt, play a very important part in educating Western Australia ns about the different processes that are available, in training arbitrators and mediators, in providing advice in respect of alternative dispute resolution mechanisms, in liaising with the courts and, of course, in providing commercial arbitration, mediation and conciliation services itself. Not least important, is the research which it will be able to undertake in this area, so as to develop a wider range of available processes and to take advantage of the massive developments in technology that we have experienced in the last couple of decades. I understand that some countries already offer "online" dispute resolution or electronic ADR. Who knows, with the evolution of computer technology, it is possible that disputes will ultimately be resolved without the need for human intervention.

For the moment, at least, we still need people and there is a pressing need for bodies such as the Western Australian Institute of Dispute Management. I am very pleased to see it launched and wish it every success.