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Comment : ADR in a statutory adjudication scheme – a New Zealand experiment

(April 2007)

Legislated processes of review and appeal were the sole method of dispute resolution in the area of accident compensation in New Zealand prior to 2001. The introduction of voluntary mediation and facilitation services in 2001, however, heralded a major change to dispute resolution in this jurisdiction. The success of these services has prompted an experiment that goes a step further. It offers not just mediation and facilitation in the context of a statutory adjudication scheme, but a broad range of voluntary dispute resolution options coupled with an advisory service that helps parties select the most appropriate option. Derek Pullen, Manager of the Dispute Resolution Services Ltd (DRSL) in New Zealand, talks about introducing mediation and other ADR processes into the statutory adjudication service.

Accident compensation in New Zealand

New Zealand's unique accident compensation scheme was first introduced in 1972. The current legislation, the Injury Prevention, Rehabilitation, and Compensation Act 2001 prescribes a no fault, comprehensive insurance based scheme to rehabilitate and compensate in an equitable and financially affordable manner those who suffer personal injury. The Act creates the Accident Compensation Corporation (ACC), sets out its powers and responsibilities and contains detailed provisions relating to cover, entitlements and premiums. The Act also prescribes a dispute resolution process with subordinate legislation covering procedural matters and issues such as review costs.

The prescribed dispute resolution scheme

Part 5 of the Act sets out the review and appeal processes. The review process is initiated by a written application for review, which is lodged with ACC. Those entitled to apply for a review are claimants (in respect of all decisions relating to their claims) and in a limited range of situations, employers, other insurers and premium payers.

ACC is required to appoint a Reviewer to hear each review and the Reviewer is directed to act independently and in a timely manner and comply with the principles of natural justice. The Reviewer must hold a hearing unless all parties agree not to have a hearing, keep a record of the hearing and issue a written decision containing reasons, dismissing the application for review or modifying or quashing ACC's decision. Strict time limits apply to the setting of the review hearing and the issuing of a review decision. Evidence is given on oath. The strict rules of evidence do not apply and the reviewer may admit any relevant evidence, whether or not the evidence would be admissible in a court.

In reaching a decision, the reviewer must put aside the insurer's decision and look at the matter afresh on the basis of information provided at the review. The reviewer must also put aside the policy and procedure followed by the insurer and decide the matter only on the basis of its substantive merits. All parties to the review have the right of appeal to the District Court and there is a further right of appeal on questions of law to the High Court and Court of Appeal.

Introduction of voluntary mediation and facilitation

During the late 1990's, the possibility of introducing mediation and facilitation as additional and voluntary dispute resolution services was explored. Dispute resolution professionals working in the area considered these options might be more effective than the statutory review and appeal processes in resolving at least some disputes.

In June 2001, ACC agreed to fund voluntary mediation and facilitation services in specific cases on a 12 month trial basis. These services were provided by trained mediators employed by Dispute Resolution Services Limited (DRSL), which is the subsidiary company of ACC responsible for providing ACC with review services.

Since then DRSL has been building its capacity to provide mediation and facilitation services in addition to the review service. Each year the amount of mediation undertaken by DRSL has doubled.

Mediation pilot scheme

Over the last year, two of ACC's branches have trialled a mediation pilot scheme whereby clients reviewing decisions have in all cases been offered mediation in addition to the right to go to review. The pilot scheme has been successful both in terms of settlement rate and party satisfaction and ACC has indicated an interest in extending this option to all review applicants nationwide.

Proposed scheme offering a range of services

DRSL is uncertain whether mediation is always the best option for ACC and parties with whom it is in dispute. It is considering whether a more targeted approach would be preferable and whether there might be merit in DRSL offering some additional dispute resolution options.

In July 2006, DRSL embarked upon a project to evaluate its existing services and to investigate the feasibility of introducing new services. The objectives of the project were to:

  • Enhance the existing services
  • Increase the range of dispute resolution processes available to customers
  • Assist customers in selecting the most appropriate options

The evaluation of services has involved research and analysis of the full range of dispute resolution services used by individuals and organisations in New Zealand and around the world. It has covered the entire spectrum of dispute resolution methods including facilitative, advisory and determinative processes. There has however been a particular focus on earlier intervention processes that minimise the escalation of disputes.

DRSL has now implemented a three month pilot scheme offering new and enhanced services in a limited number of cases. These cases will be screened by a 'resolution planner' who will provide the parties with information and advice about the range of dispute resolution options, the most appropriate options for the particular circumstances and all procedural matters relating to those options. If the parties are willing to try one of the new services, arrangements will be made accordingly. 'Resolution planning' is itself a new service.

The other new and enhanced services are:

  • Early neutral evaluation – a process whereby parties obtain a non-binding evaluation of their case on its merits from an experienced neutral third person
  • Independent expert appraisal – an agreed expert, or one appointed by one party, conducts an inquiry into the facts giving rise to the dispute and makes non-binding recommendations
  • Facilitated meeting of experts – this process provides a facilitated opportunity for experts to discuss issues, reach consensus or clarify matters requiring determination
  • Mediation-review (Med-rev) – a hybrid process where the third party plays multiple roles. The third party acts as a mediator and then, if proceedings break down, as a reviewer
  • Co-mediation-review (Co-med-rev) – a hybrid process in which a mediator and a reviewer work as a team. First, the mediator conducts mediation. If the parties do not settle the dispute, a reviewer immediately conducts a hearing. The reviewer is not present during the mediation phase and the mediator takes no part in the review proceedings.

Robust evaluation criteria have been developed to test the advantages and drawbacks of the piloted services. A full report will be prepared at the conclusion of the pilot scheme in July 2007 and the future of any new services will be determined at that time.

Further information can be obtained by emailing DRSL.

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