Consultation Paper on Alternative Dispute Resolution - Law Reform ...

Rules of Court] and as reflected in the judgment of the Court of
Appeal in Dunnett v Railtrack plc.‖ 27
7.22 These cases serve to reinforce the increasing weight that the courts
give to ADR but of course, this is underpinned in England and Wales by the
general statutory reforms to civil procedure under the Civil Procedure Rules
1998.
7.23 ADR clauses may, however, be ineffective if they are not properly
drafted. In the Australian case Aiton Australia Pty Ltd v Transfield Pty Ltd 28
Einstein J stated that ―The Court will not adjourn or stay proceedings pending
alternative dispute resolution procedures being followed, if the procedures are
not sufficiently detailed to be meaningfully enforced.‖ 29 In this case the ADR
clause was silent about the remuneration to be paid to the mediator and the
effect of a declined appointment. The Court added that the minimum
requirements applying to a dispute resolution clause, not just to mediation
included the following:
It must be in the form described in Scott v Avery. 30 That is, it should
operate to make completion of the mediation a condition precedent to
commencement of court proceedings;
The process established by the clause must be certain;
The administrative processes for selecting a mediator and in
determining the mediator‘s payment should be included in the clause
and, in the event that the parties do not reach agreement, a
mechanism for a third party to make the selection will be necessary;
and
The clause should also set out in detail the process of mediation to be
followed – or incorporate these rules by reference. These rules will also
need to state with particularity the mediation model that will be used. 31
7.24 While the Commission does not necessarily agree that all these
elements are required in all cases of ADR clauses (because they may inhibit the
flexibility of the mediation process), this case highlights the need for ADR
clauses to be properly drafted. Model ADR clauses are widely available which
27 [2002] EWHC 2059 Comm. at paragraph 1.
28 (1999) 153 FLR 236.
29 Ibid. at 246.
30 (1856) 5 HLC 811.
31 (1999) 153 FLR 236 at 252.
238