6.7.2.2 Alternative dispute resolution methods

Home Page  <<  >>

Mediation

Mediation is the dispute resolution method in which a properly qualified mediator, neutral towards both parties, helps them to negotiate and conclude to a commonly accepted solution. It is usually chosen in cases where the amicable settlement between the two parties has been interrupted, failed due to lack of experience in the negotiations technique or when the progress rate of the amicable settlement is quite low. During the mediation the Contracting Authority and the Contractor play a particularly active role in trying to discover the solution that is most beneficial to them. Exactly because the approach here is also a conciliatory one, the probability that the parties are able, following the resolution of the dispute, to maintain their relations is high.

The role of the mediator is to facilitate the communication and negotiations between the Contracting Authority and the Contractor and not to choose side in favour of one or the other. He/ She is entitled however to ask questions to both parties related with their position over the dispute each time in order to ascertain their objectivity in the assessment of the strong and week points of their position as well as that of the other party. The mediator must also direct the Contracting Authority and the Contractor to concentrate in the quest for a creative resolution of the dispute by focusing their attention to the future and discourage them from insisting with the presentation of past events in an effort to consolidate their legal rights.

The mediator is not necessarily required to have knowledge on the issue and the subject of the dispute. However, he/she should have knowledge of negotiation techniques and great experience in their application.

Mediation is a flexible process that does not include any absolutely specified or standardised steps. Before it begins it would be expedient for both parties to sign a mediation agreement which will regulate the procedure to be followed and specify who the mediator will be. In general, the actions to be executed are as follows:

Preparation: Each party prepares a brief report in which he presents his attitude towards the dispute. This report, along with the necessary accompanying documents is forwarded to the mediator and the other party, at least a week before the mediation begins.  
Kick-off meeting: This is attended by the mediator and the two parties. During the mediation the Contracting Authority as well as the Contractor present a summary of their position regarding the dispute and its resolution.
Person to person meetings with each party separately: The person to person meetings are confidential and depending on their development there may be a need for additional meetings with representatives from both parties.
Achieving accord: When the two parties conclude to a commonly accepted solution of the dispute, the terms of the agreement are written and signed by both parties.

Mediation usually goes through a stage in which the likelihood for the two parties to come to an agreement seems to be very small. Because, however, practice has proven that things are overturned and usually the mediations lead to a result, the parties involved should not be disappointed from the start but rather insist on their goal.

Mediation as a method of dispute resolution is characterised by the following advantages:

Speediness: Mediation usually comes to a result within a few days from its start with the maximum period being one month.
Low Cost
The mediator is likely to cause new and different dynamics in the course of negotiations and reheat the relations between Contracting Authority and Contractor.

Conciliation

Conciliation is a method of dispute resolution similar to the mediation. Their difference lies in the fact that in case of conciliation, the third party, apart from directing and facilitating the talks/ negotiations between Contracting Authority and Contractor is also entitled to suggest a solution.

Neutral Evaluation

Neutral evaluation is employed as a method to resolve disputes referring to legal issues. Each party deposes in writing to a neutral evaluator, who is usually a retired barrister or judge, a general review of the case and information regarding the evidence of proof and the testimonies he would present before the court if litigation had been chosen. The neutral evaluator examines the position of each party and renders his/ her opinion on what he/ she assesses to be the conclusion of the trial, had the dispute been referred there for resolution. This assessment may set the basis for the resolution of the dispute or to start off new negotiations between Contacting Authority and Contractor.

Arbitration

Arbitration is a method for resolving disputes where the two parties agree to accept and enforce the solution that will be indicated by a thirty party, i.e., the arbitrator. Arbitration is considered to be an aggressive method. In order to be enforced it is required that either there is a relevant provision in the contract or that a concord is signed between the two parties a posteriori.

Arbitration as a method of dispute resolution presents the following advantages and disadvantages:

Advantages

The parties to the disagreement choose the arbitrator, who is a specialist on the subject/ topic of the disagreement.
The process guarantees the resolution of the problem.

Disadvantages

A time consuming and high cost process
The arbitration decision is binding and cannot be contested by judicial means
The relationship between Contracting Authority and Contractor is ruined
The solution that will be adopted depends on a third party.

Litigation

The litigation (or refernce to justice) is chosen as a method to resolve disputes when efforts to find a compromising solution between the two sides have failed. This is a time consuming process requiring a serious preparation by both parties (finding arguments, evidence of proof, documentation of views) before they appear in court with their solicitors.

The litigation as a method to resolve disputes presents the following advantages and disadvantages:

Advantages

The court rulings are binding but there is always another instance of jurisdiction. Therefore in case that one of the two parties disagrees with the ruling issued, it may appeal to a higher court.
If the Contractor is unwilling to cooperate in order to find a solution, the reference to trial is the only way to settle the disputes.

Disadvantages

A time consuming and high cost process
The relationship between Contracting Authority and Contractor is ruined
The solution that will be adopted depends on a third party.

In the Table below there is a summary presentation of all the possible methods to resolve disputes and their basic characteristics.

 

Table 6-19: Dispute Resolution Methods and their characteristics

Name

Frequency in use (internationally)

Aggressive/ amicable

Speediness

Cost

Third party involvement

Role of the Third party

Communication - Meetings

Decision

Binding of decision

Amicable Settlement

Very high

Friendly

Varies

Low

N/A

N/A

Meetings between the two parties and negotiation to find a commonly accepted solution

Decision made jointly by representatives of each party

Not binding (at least not in the sense of the arbitrator's or courts ruling)

Mediation

High

Friendly

High

Low

Mediator

Promote & facilitate communication of two parties

Initial meeting of mediator with the team of each party.
Individual meetings of Mediator with the team of each party.

Decision made by the representatives of two parties and not by the mediator

The terms of decision are recorded and signed by reps of both parties and the mediator.

Conciliation

Medium

Friendly

High

Low

Mediator

Promotes & facilitates communication of two parties as well as suggests specific solution

Initial meeting of mediator with the team of each party.
Individual meetings of Mediator with the team of each party.

Third party may suggest solution, but decision is made by the two parties.

The terms of decision are recorded and signed by reps of both parties and the mediator.

Neutral Evaluation

Low

Friendly

High

Low

Evaluator, usually retired solicitor or judge 

Studies the views and documentation of each party and renders opinion on likely court ruling had there been trial.

Meeting of two parties' reps with the evaluator is not necessary.

Once evaluator issue rule, the two parties can use it to come to solution.

Evaluator's view  is not binding.

Arbitration

High

Aggressive

Quite low

High

One arbitrator or two - each one appointed by one party and one umpire appointed by the arbitrators.

Arbitrator or umpire assumes to resolve the dispute

Meetings of arbitrators with reps of each party.

Final ruling issued by the arbitrator or umpire.

Final ruling is binding.

Litigation

High

Aggressive

Low

High

Court - each party's solicitors

Solicitors assume defence of each party and the court reviews the case in order to determine and enforce solution.

A trial is held where two parties are represented by their solicitors

Ruling issued by the court

There is another instance of jurisdiction

 

 


© 2007 Republic of Cyprus, Treasury of the Republic, Public Procurement Directorate
Home Page | Government Web Portal | Disclaimer | Webmaster