Media

Black comedy of Seven saga cues calls for private battles to quit public courts

The Australian 3 August 2007
By By Chris Merritt, Legal Affairs Editor

Changes would save taxpayers a fortune and reallocate resources to criminal cases

THE huge cost to taxpayers of the Channel 7 litigation has triggered moves to force companies to settle their disputes privately, instead of relying on publicly funded courts.

The peak national body representing private arbitrators urged all governments to consider introducing laws to ensure there can never be a repeat of the $200 million C7 saga.

"It would save taxpayers millions of dollars," said Laurie James of the Institute of Arbitrators & Mediators Australia. He urged governments to "make changes to the civil justice system that have been favoured by IAMA for more than a decade". Those changes would ensure that all commercial disputes were dealt with privately at the expense of the companies concerned with little involvement by the courts. While recognising that this would benefit arbitrators, Mr James said it would also relieve taxpayers of the burden of providing dispute resolution facilities for organisations that can afford to provide their own.

"If that's what they want, they should be prepared to pay for it," said Mr James, who is national president of IAMA and chairman of partners at Perth commercial firm Kott Gunning Lawyers.

Under his plan, companies would still be free to spend vast resources on commercial disputes and claim tax deductions. But they would not have unlimited access to publicly funded courts.

The first stage in his preferred system would involve non-binding mediation. But if that failed, disputes would be sent for binding arbitration.

Private arbitrators or "referees" would hear all the arguments and prepare reports that would go back to the courts. Unless there were associated disputes over questions of law, the dispute would be resolved according to the terms of the arbitrator's finding. Mr James said IAMA's proposal would be more effective in cutting the cost of "mega-litigation" than new court rules encouraging the use of electronic discovery.

"All that will achieve is to make it possible to handle huge numbers of documents," he said. His concerns were shared by Melbourne barrister Albert Monichino, who said electronic discovery "might even make things worse". It could lead to indiscriminate discovery of huge numbers of documents, he said.

"Mega-litigation is a huge problem. We need to think outside the square. There is a private market that works in tandem with the courts and we need to better utilise that," said Mr Monichino, who is also an arbitrator.

IAMA's plan comes soon after federal Attorney-General Philip Ruddock backed a plan to give judges the power to force some commercial disputes to private arbitration without approval of the parties. That proposal will form part of the Victorian Law Reform Commission's report on the state's civil justice system and has also been backed by the federal Opposition and the Australian Lawyers Alliance. But IAMA's plan goes further and would mean that all commercial disputes would be sent to mediation and eventually private arbitration.

"Some parties insist on approaching cases like they are World War III," Mr James said. "They will retain expensive counsel and throw enormous resources at it and treat it like a colossal deduction rather than saying `how can we do this as cheaply as we can'," he said.

"I know there are a lot of judges who get frustrated about this -- look at Justice Sackville's comments in the C7 case, he was really fed up." But he believed there was also a "cultural reluctance" among some judges to subject commercial disputes to alternative resolution techniques.

Mr James said sending these disputes to private arbitration would mean the court resources devoted to commercial matters could be reallocated to easing the backlog of criminal cases: "There would be large numbers of judges you could progressively free up."

But it would not be possible to dispense with commercial judges completely because they would still be needed when there was concern that an arbitrator was biased or had made a legal error.

Mr James said he believed the changes had the potential to lead to savings for taxpayers of tens of millions of dollars.

We gratefully acknowledge the permission from Chris Merritt and The Australian to reprint this article.