Alternative dispute resolutions within administrative contracts: attributes and enforcements
| Author | Mihaela V. Carausan, PhD |
| Position | National University of Political Studies and Public Administration, Faculty of Public Administration, Bucharest, Romania |
| Pages | 113-121 |
Alternative dispute resolutions within administrative contracts… 113
ALTERNATIVE DISPUTE RESOLUTIONS WITHIN
ADMINISTRATIVE CONTRACTS: ATTRIBUTES
AND ENFORCEMENTS
Assoc.prof. Mihaela V. Cruşan, PhD
National University of Political Studies and Public Administration,
Faculty of Public Administration, Bucharest, Romania
E-mail: mihaelacarausan@gmail.com
Abstract
This study provides an overview of the attributes of the alternative dispute resolutions
(ADRs), and attempts to address the missing information about the use of these methods in
Romania. Particular attention is given to the arguments that take a dispute out of the court.
ADR schemes are known as out-of court mechanisms, which have been developed across
Europe to reach a peaceful agreement. ADR schemes usually use a third party such as an
arbitrator, mediator or conciliator, negotiator to help the parties to reach an amicable
settlement. The advantages of ADR schemes are that they offer more flexibility; they are
cheaper, quicker and more informal than the court. Within the world based on the country
development, legal culture and traditions, business environment, and other factors ADR
techniques have evolved differently in each one of them, even in the countries which are
member of the same legal family. This article defines the basic ADR traits and reviews the
theory, history, controversies, and future of alternative dispute resolution processes in
administrative contracts.
Keywords: quality of ADRs, construction contracts, peaceful settlement of dispute.
JEL Classification: J52, K23.
Introduction
One of the greatest paradigms of our legal system, strongly influenced by the
French political and legal culture, is this division between public and private law.
Regardless of the forms in which the administration's reform policies affect this
binomial, most of the time, a cleavage between the two sections of our legal system
is invoked. Alternative dispute resolution is caught between them, and the use of it
is seen most of the time as an escape of the lengthy public court system, especially
in the public procurement contracts. The Romanian new regulations established
based on the European Directives for public procurements have established in Law
Law Review vol. VIII, issue 2, July-December 2018, pp. 113-121
114 MIHAELA V. CĂRĂUŞAN
no. 101/20161 the possibility to appeal to ADR, namely to arbitration
2. More
recently, in Government Decision no. 1/20183 recognises direct negotiation,
mediation and arbitration as mandatory dispute resolutions processes [1].
The new legislative solutions seems to give an answer to the requests of the
construction industry for a faster, friendly and inexpensive procedure. But, in the
Romanian doctrine the administrative contract, in principle, is subject to a regime
governed by public law and, where appropriate, and if it is compatible, rules of
private law will apply. Each type of administrative contract will also comply with
the provisions of the applicable special laws, and here is the situation of the
construction contracts stated in GD no. 1/2018. The dispute public – private law is
not under review in our research, but because of the new regulations we are keen
to find out which were the guiding ideas that supported the implementation of
arbitration and other ADR methods in the Romanian legal system for
administrative contracts. The research is based on the literature review and public
documents which demonstrates why arbitration, and other ADR are preferred
instead of court. Beside the mimetic phenomenon of taking other institutions
specific to different law system, we will try to demonstrate the utility of ADR in
the Romanian legal system which is in a full process of adaptation to the new
market requirements.
Many private legal system increasingly use different solution to resolve
disputes during the course of contractual relationship, and do not take into account
contract withdraw as a solution. ADR includes the basic processes of negotiation,
mediation and arbitration, and a variety of hybrid processes such as med-arb,
minitrials, summary jury, or judge trials and early neutral evaluation, which vary
in providing opportunities for settlement of cases, advisory opinions, or decisions.
[2] These solutions are developed outside of the court system when the parties
consider that the judicial system no longer serve their interests. Furthermore, in
practice [3] the alternative solutions are seen more and more as the appropriate
solutions to overcome the dissent. Appropriateness depends of different factors –
the urgency of the problem, costs, type of dispute, legal regime of the contract,
circumstances, registered delay and many others.
1 Law no. 101/2016 on legal means and remedies regarding the award of public procurement
contracts, sector-specific contracts and works and services concession contracts, as well as the
organization and functioning of the National Council for the Solving of Complaints published in the
Official Journal of Romania no. 393, May 23, 2016.
2 Article 57 states: "The parties can make arrangements so that disputes concerning the interpretation,
conclusion, enforcement, modification and termination of contracts shall be settled by arbitration".
3 Government Decision no. 1 on the approval of general and specific conditions for certain
procurement contracts related to investment objectives financed by public funds published in the
Official Journal of Romania no. 26, January 11, 2018
Alternative dispute resolutions within administrative contracts… 115
In and Out of the Court
The construction contract partners should look for other ways, than the
judicial one, to solve their disputes, because by using the legal route could harm
the spirit of the alliance and increase the gap between their specific interests.
Alternative dispute resolution can aid the participants in finding solutions for
their disputes while conserving their relationship. This process will help them to
protect the outcome of the contract. Going to court over a dispute will harm the
relationship of the parties, their status quo is changed, and they become the
accused and the complainant. Besides that, the use of ADR is not as expensive as
the court, it can prevent the parties from falling into disagreement with each other,
and decrease the hostility. Many contractors found that there is no winner when a
claim is field and goes to arbitration or litigation [4]. The construction industry has
gone over the paradigm of winning with any price, the constructors do well when
the projects do well. Romanian construction industry needs an incentive to go
further the paradigm, and for this reason we consider the ADR a good provisory
solution for our legal system.
Alternative dispute resolution is at the interests’ conjuncture of three actors –
citizens/business people, state, European Union, each one of them found the
escape from the “heavy” court system into it. Alternative dispute resolution
registers a growing interest from all European Union countries, and even from the
European Union. The main reasons which support the interest are:
an increasing awareness of ADR as means of improving general access to
justice in everyday life;
a close attention from the Member States, many of which have passed
legislation encouraging it, even for the public contracts;
the European Union’s opinion on these alternative techniques, set as political
priority, that can ensure an environment propitious to future development of the
information society, and because it can guarantee quality.4
In some countries, such as Romania, ADR is preferred because offers a
solution to the problem of access to justice faced by citizens/business people due
to three factors:
the increased volume of disputes brought before courts;
the lengthiness and the costs of the proceedings;
the quantity, complexity and technical obscurity of the legislation.
Cross-border dissent are even more difficult than the domestic ones, and often
raise complex issues which involve conflicts of laws and jurisdiction and practical
difficulties of finance and language. Moreover, in an era of cross-border
e-commerce where lex digitalis, with an autonomous private regime, amplifies the
4 Green paper on alternative dispute resolution in civil and commercial law, COM/2002/0196
final.
116 MIHAELA V. CĂRĂUŞAN
necessity for better, faster and more specialised solutions, ADR is perceived as the
sunshine in disputes.
Alternative dispute resolution governed by the private law can take different
forms, based on specific legal provisions. One of the distinction made is between
ADRs conducted or entrusted by the court to a third party (see the Mediation
Directive), and ADRs used by the parties in an out-of-court procedure
(conventional ADRs: mediation, negotiation, transaction, conciliation).
In Romania besides ADR procedures, such as mediation and arbitration,
which provide alternatives to the access to justice, for the administrative contracts
we can also use the administrative, non-judicial bodies, such as the National
Council for the Solving of Complaints in the pre-contracting stage. All of them may
advance access to justice by providing quicker ways of obtaining remedies or by
allowing collective redress. However, they must not override individual’s right to
access the formal system – the court, and should generally be subject to judicial
supervision.
All the alternatives to solve disputes are preferred based on the optional
nature of proceedings and, in some cases, the lack of involvement of state
authorities. European Union encourages the use of ADR with legislation5, and by
creating a variety of methods for consumer protection6.
The cases and administrative and legislative actions set forth many of the key
developments in alternative dispute resolution in the last period of time [5]. The
world movement is either to compel or to avoid solution like arbitration.
Menkel-Meadow [6] stressed that the “quality” of justice should remain the
paramount goal and ADR only in some situations produce a just result. Even so,
none of the ADR precursors could not capture the degree of ADR development in
the detriment of the court, the competition between traditional litigation and
various modes of ADR [7]. As courts and theoreticians recommend major shifts
from the traditional of adjudication, questions on jurisprudential impact arise.
That is why the attributes of ADR should be seen comparatively with the ones of
the traditional litigation.
Alternative Dispute Resolutions’ Attributes
ADRs aimed to improve access to justice, but in effect they complement
judicial procedures, and help the parties to enter into dialogue where this was not
5 Directive 2008/52/EC of the European Parliament and of the Council, of 21 May 2008, on
certain aspects of mediation in civil and commercial matters, Official Journal of the European Union,
L136/3 on May 24th, 2008.
6 For detailed methods in specific areas consult the in-depth analysis of Jana Valant, Consumer
Protection in the EU – Policy Overview, European Parliamentary Research Service, retrieved at
http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/565904/EPRS_IDA(2015)565904_E
N.pdf, on 3rd of December, 2018.
Alternative dispute resolutions within administrative contracts… 117
possible before, and to come to their own assessment of the value of going to court.
Dispute resolution has attracted the interest of many researchers and practitioners.
Most of them determined the appropriate method which could be used for a
peaceful settlement, but only few of them get beyond and managed to determine
the attributes of ADRs.
Table 1. Attributes of Alternative Dispute Resolutions
Attributes
Brunet
(1987)
[7]
David
(1988)
[9]
Goldber
g et al.
(1992)
[10]
York
(1996)
[11]
Brown
and
Marriott
(1999)
[12]
Cheun
g
(1999)
[13]
Hibberd
and
Newman
(1999)
[14]
1. Cost
2. Confidentiality
3. Consensus
4. Control by parties
5. Creative agreement
6. Enforceability
7. Fairness
8. Flexibility
9. Formality
10. Knowledge in
construction
11. Liabilities to opponent’s
cost
12. Neutrality
13. Power to compel
consolidation
14. Preservation of
relationship
15. Privacy
16. Speed
17. Range of issue
18. Width of remedy
19. Willingness
Source: Completed and adapted after Cheung et al. [8]
Cheung et al. [8] used a panel of experts to identify the attributes of ADR, and
to this panel we add one more author, Brunet [7]. Based on it and in comparison
with the rules of the GD no. 1/2018 we will try to determine the attributes of the
ADRs stated as mandatory in the construction contract. The attributes identified as
118 MIHAELA V. CĂRĂUŞAN
critical include: first - cost and speed, second - confidentiality, control by parties,
flexibility, preservation of relationship, privacy, and width of remedy. Even in
practice neutrality is considered as very important in ADR, based on the panel is
recognised as tertiary, along with enforceability and creative agreement. All the
others even are mentioned by some authors are not considered as critical for the
existence of a simple and effective ADR process.
As it concerns the GD no. 1/2018 rules and the state of facts for construction
contracts we can determine as important attribute of ADR: cost, flexibility,
neutrality, preservation of relationship, privacy and speed. Cost and time are two
interrelated attributes; as soon as a resolution is achieved, the overall cost are
reduced. It is difficult to calculate how long a dispute will take as each is unique.
The duration of an ADR process can be measured in days or weeks, rather than
months or years, as it is the case with litigation or arbitration. Because of the time
stress to solve a claim within the contract some unnecessary procedures should be
avoided, but for this the parties should have an objective evaluation of their
interests, and of the outcome they want to obtain. ADR processes are usually more
flexible than the court process. Most of the ADRs will usually bring both parties
together for a face-to-face discussion. Neutrality and fairness depend on the
competence, training, and integrity of the neutral third parties, and it is a
barometer of impartiality of the solutions. The maintenance of the contractual
relationship is one of the key elements of any organisation, either public or private,
and is closely related with the reasonability of the claims. The success of such a
process depends very much on the attitude of the disputants and the interest to
find an amicable solution.
As soon as disputes arise, the parties should not wait until they turn into a full-
sized problem. The parties should seek assistance when they find that it is not
possible to resolve the dispute between them. Most of the ADRs maintain privacy
of the parties, leaving to them the decision to make the solution public or not.
Formality and enforceability are the two attributes more specific to arbitration,
and less to mediation and direct negotiation. Even so, in the last period of time we
could remark a European movement to the formalisation of mediation. In this
sense the Council of Europe established through the European Commission for the
Efficiency of Justice (CEPEJ) standard mediation forms and the European code of
conduct for mediators.
At European Union level mediation is promoted as an extrajudicial and
autonomous ADR. According to the Mediation Directive (Directive 2008/52/EC)
the courts suggest mediation to parties in civil and commercial cross-border
disputes. Even e-commerce and construction contracts have a high degree of cross
border, if they are concluded with a public authority they are not under the rules
of the Mediation Directive due to the legal administrative regime. But, the
Alternative dispute resolutions within administrative contracts… 119
Mediation Directive emphasis few gaps in the regulatory system to which any
state/public authority should pay attention, among them we can mention: the lack
of transparency regarding to the rules applicable to mediation, the lack of
awareness on the benefits of accessing mediation, the existence of factors which
influence the confidentiality of mediation, the costs and quality.
All the attributes of ADRs were determined based on the theoretical
framework developed in other legal systems, and not by taking into account the
quantitative data. One of the criticism of the ADR methods is the lack of
quantitative data, and the fact that pragmatic evaluation cannot be done.
Furthermore, there are no data on the decrease of the lawsuits or on how much
was spent for a dispute to never make it to court [14].
Although ADR has been considered, principally an Anglo-Saxon legal method
substitute to courts, the use of ADR is spreading around the world, being used to
relieve court congestion, provide expertise in various subject matter disputes (e.g.,
construction, e-commerce, labour matters, family law), and offers alternative
justice systems where there is distrust of existing judicial institutions. [15]
As it concerns the administrative contracts and the use of ADRs, the Romanian
doctrine is quite poor in studies, and most of them resumed to the analysis of the
legal provisions and less on the effect in practice. Even more, because the
regulations (Law 101/2016 and GD 1/2018) are new, there are no data available for
a better evaluation of their efficiency in our legal system.
Conclusion
Increasingly, many national legal systems ruled and accepted the ADRs in
their legal civil system, but now we are witnessing the mimetic phenomenon in the
public law, in the administrative contract provisions. The analysis of diverse
aspects of the ADRs and the lack of data on the use of them have revealed us that
countries, which are in the process of modernisation, such as Romania, have
tendency to adopt other country’s ADR experiences and develop similar working
mechanism even they are specific to a different legal culture. We should take a
closer look to the use of ADRs in countries that are in the same Romano-Germanic
law system, and which consider that the administrative contracts have a different
legal regime than the commercial or civil one. The research have revealed that
there are six attributes of ADRs that we can determine in the Romanian regulation,
to which we have to give a proper attention in a future research. It can be
concluded that even at the European level (Council of Europe and European
Union) rules concerning the ADRs were concluded none of them are
recommended for the administrative contracts. Overall the ADR system has to take
into account the legal similarities and the sectorial competences. We do not
consider that we should reject the use of them, but the simple inclusion in few legal
120 MIHAELA V. CĂRĂUŞAN
provisions could harm more the disputes, if their enforcement is not properly
prepared. Above all, ADRs methods will be widely accepted if they meet the
interests of users.
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