Asking for advice about business-to-business dispute resolution is something that the VACC Business & Consumer Affairs department gets asked about frequently.
Disputes between businesses and suppliers for goods and or services can result in disputes which the parties may be unable to resolve satisfactorily without external help. There is obviously the Victorian Civil and Administrative Tribunal (VCAT) or court pathway which can be costly and time consuming. VCAT and the civil courts are decision-making bodies. Their decisions in most cases are final and binding. In some cases, however, VCAT or the courts might order the parties in a dispute to attend mediation or a compulsory conference to attempt to resolve the matter.
So, here is an alternative approach to initiating a VCAT or court action in the first instance. Make an application to the Victorian Small Business Commission (VSBC) for mediation. The VSBC doesn’t make decisions about who is ‘right’ or ‘wrong’ in a dispute. Instead, they attempt to guide the parties to reach a solution that works for them and that they can agree to. They provide support through preliminary help and through a low-cost mediation service. You can apply for mediation via the application page on the VSBC website.
Here’s a step-by-step overview of how the process works:
- On arrival at the mediation venue, each party goes to the reception area where they pay the mediation fee (currently $185.00) and sign the mediation agreement and confidentiality forms
- Each party is then directed to separate, private breakout rooms
- The mediator enters each breakout room and introduces themselves and has a short private discussion with each party
- The mediator invites both parties into the main mediation room
- The mediator will explain the mediation process to both parties
- The mediator invites each party to explain their position and understanding of the dispute
- The mediator might ask questions to clarify a party’s situation or argument
- During mediation, a party should direct any questions through the mediator rather than to the other party
- The mediator attempts to simplify and clearly identify the key issues in the dispute
- The mediator asks each party to return to their separate breakout rooms
- The mediator moves between the parties. At this stage, they are seeking options that might resolve the dispute, clarifying positions and identifying opportunities for compromise, negotiation or creative alternatives, until a decision is reached to settle or not
- If mediation results in a settlement, terms of settlement are drawn up. All parties confirm and sign the terms
- If settlement is not achieved, mediation ends and either party might request a certificate to take the matter to VCAT. The mediation session might also be adjourned, if the mediator or parties consider that doing so could help in resolving outstanding issues
- The mediation concludes.
What happens if a mediation agreement breaks down? A certificate is issued only if the parties don’t come to an agreement and the dispute remains unresolved. The terms of settlement is a binding agreement. If one party breaks the agreement, a certificate can be requested to apply to VCAT for enforcement of the agreement.
VACC has observed the process over a number of years and would endorse it as a most useful, cost effective and bona fide way forward.
Useful links
VACC: VACC Business & Consumer Affairs
Victorian Small Business Commission: Guide to mediation
Victorian Small Business Commission: Application forms