Issue: June 2012 / August 2012
Editorials

DISPUTE RESOLUTION

Mediation before litigation

Itís about to become obligatory. Thereíre advantages for boards and members of pension funds, potentially the greater if there were more skilled mediators to handle the oncoming workload.


Brand . . . big advance
Mediation has long been recognised, along with conciliation and arbitration, as part of alternative dispute resolution (ADR). Actually, it’s not so much an alternative but rather a preferable means to resolve disputes.

Certainly, it’s preferable to arbitration and litigation. Both are costlier and both, in their nature, are adversarial. Mediation, by contrast, is more amicable in that parties look to settle their differences without the hostility and complexity of legalistic point-scoring. It’s a process to assist parties find a sensible business outcome they find satisfactory, wholly different from them presenting their legal cases for a third party to determine which is good and which is bad in law.

They don’t need to be innovative with what they say under oath, be embarrassed about what they might have to disclose in the discovery process, or entrust the outcome to extraneous judicial vagaries. All they need do is sit down under the guidance of a mediator, free from interventions by opposing legal representatives, to reach agreements with which they can respectively live; not to fight for the best settlement terms and not to extract victories.

Thanks to King III and the new Companies Act, mediation has been given a leg-up. Introduction of official court-referred mediation is imminent. If a litigant doesn’t submit to mediation prior to the trial or hearing, the court may make a costs order against the litigant who unreasonably refuses mediation.

John Brand of Bowman Gilfillan, a father of ADR in SA, points out that a set of draft mediation rules has already been approved: “Whenever an appearance to defend is entered or a notice of motion to oppose an application is delivered, the clerk or the registrar of the court must refer the dispute to a dispute resolution officer. In addition, the court may at any stage refer a matter to mediation.”

Never mind the big commercial stuff. There are any number of disputes, routinely afflicting pension funds, that routinely cry out for mediation. For example, between:

  • Funds and service providers. Often, where long relationships and large amounts of money are involved, they go to the High Court;
  • An employer and a fund. These tend to be arbitrated;
  • The Financial Services Board (the regulator) and a fund or service provider. These also go to the High Court except when they go instead to the FSB Appeal Board (a judicial body);
  • A fund and a member where it doesn’t go to the Pension Funds Adjudicator.

Most of these are classic disputes of law interpretation, for instance on contract or agency, rather than specific to pension funds. The cost of referring a dispute to mediation would be tiny relative to the percentage of fees that a fund spends monthly on administration.

It’s necessary expenditure. As pensions lawyer-turned-mediator Gail le Grellier has found, disputes between trustees can affect the functioning of whole boards. Dave Crawford, another mediator, mentions amongst others the reconciliation of warring trustee factions, disputes over rule interpretations, disagreements with service providers and (especially with umbrella funds) members’ refusal to accept benefits lower than they’d expected.

Standard service-level agreements of pension funds should be amended, Brand suggests, to provide in the first instance for mediation to resolve disputes. Only if it fails should parties have the right of referral to adjudication. References to no dispute being referred to arbitration should be struck out.

Another advantage of mediation is its confidentiality. This is sacrosanct because without it the process would be undermined. As such, it differs from court actions or complaints to the Pension Funds Adjudicator where the subject matter and identities of the disputing parties are open, then publicly recorded in judgments or determinations.

But it might nevertheless be preferable, to develop a body of precedent and for public confidence to be enhanced, that mediation outcomes be made known. It could well be worthwhile for agreements to be published in much the same anonymous way that the Income Tax Special Court does with its decisions.

The big disadvantage at present is the lack of suitably trained mediators. This is being addressed by the introduction of accreditation standards and the launch of the Dispute Settlement Accreditation Council (DiSac), a voluntary ‘opt-in’ system for setting mediators’ standards.

With mediation soon to be compulsory in civil and commercial disputes headed for the courts, the need for skilled mediators is self-evident. Training courses are likely to proliferate. The more reputable and recognised the training institution, the more credible the accreditation it can offer.

Already established is the Africa Centre for Dispute Settlement, headed by Barry Jordaan at the University of Stellenbosch Business School and run in conjunction with the Mandela Institute at Wits University. It’s the first centre in Africa and the eighth in the world whose qualifications are certified by the International Mediation Institute. ACDS has developed a set of standards for mediators, mediation service providers, mediation trainers, coaches and assessors to become accredited once they’ve passed its courses.

An ardent advocate of the need for professionalism in this unregulated industry, Jordaan points out that ACDS’ present standards only meet the minima for mediation practice in such countries as the UK, Italy and certain parts of the US.

Unfortunately, he adds, “because of cost factors and opposition from particular interest groups, it is unlikely that we will soon be able to increase these minimum standards to a level that apply in certain parts of western Europe, such as Germany and the Netherlands, where at least 100 hours of training plus proven experience constitute the minimum requirement for certification as a mediator”.

Nevertheless, he’s encouraged by the good start made locally. It’s illustrated by the establishment of DiSAC where some of the biggest players in the mediation industry have found common ground on professionalisation.

That’s good indeed. Now to overcome the sceptics, perhaps only to happen in the traditional SA way by the untangling of errors that a lack of suitable skills invites. When unaccredited and unregulated mediators begin to practise in the new court-referral system, it’s almost inevitable.

BRING THEM ON

The Dispute Settlement Accreditation Council points out that a national uniform system of practitioner accreditation would usually have such objectives as:

  • Improving practitioner knowledge, skills and ethical standards;
  • Promotion of standards and quality in mediation and arbitration practice;
  • Protecting the needs of consumers of mediation and arbitration services, and the provision for accountability where these needs aren’t met;
  • Conferring of external recognition on practitioners for their skills and experience;
  • Developing consistency and mutual recognition of practitioner training, assessment and accreditation;
  • Broadening the ability and public acceptance of dispute-settlement services and practitioners.

In most jurisdictions, DiSAC notes, the need for a uniform national standard became pressing as soon as the use of mediation or arbitration was institutionalised through government initiative.

“The most crucial question is whether government intends for there to be a standard body in SA that accredits practitioners of alternative dispute resolution,” says DiSAC chair Zarina Kelleman.



ESSENTIAL CHARACTERISTICS

Even post-graduate university degrees and years of professional practice as say a lawyer, accustomed to negotiating settlements, are not automatic qualifications for a mediator. Experienced mediators prefer to identify necessary attributes as, for example:

  • Impartiality. “Unless you demonstrate it, the parties won’t open up to you”;
  • Integrity. “The parties are trusting you not to import information from outside the mediation”;
  • Ability to listen. “Substance knowledge, for instance on pensions or labour law, can be helpful but is less important.”