Chapter 5 - Alternative dispute resolution


This chapter has so far looked at new dispute resolution mechanisms established by statute. The following discussion concerns a mechanism that may already be available in some trust deeds, involving individual arrangements rather than establishing an external structure. The utilisation of the commonly used techniques of alternative dispute resolution (ADR) may be used to handle trust disputes. ADR refers to a number of different processes, such as arbitration and mediation, which can be used to resolve disputes without recourse to the courts. Some trust deeds may provide for the use of ADR in trust disputes. There is nothing in the Act that makes this generally available, however. Amendments may need to be made to trust law to ensure that more trust disputes can be settled in this way.

The aim of arbitration and mediation is for the parties involved in the dispute to reach a settlement. In a mediation, a broker attempts to facilitate a negotiated settlement at some stage before a trial. Mediation negotiations are confidential and without prejudice.144 In a successful mediation, the mediator will find the common ground between the positions of all parties and create a settlement that all parties can agree to.

Arbitration is a more formal process. It is regulated by the Arbitration Act 1996. Arbitrators make a final and binding decision, which is capable of enforcement.145 Arbitrations have over time been used more frequently to deal with complex commercial disputes. This has resulted in a degree of procedural complexity. The Arbitration Act 1996 appears to be targeted at relatively high cost commercial dispute resolution.146 This means that it is of limited use in most disputes relating to trusts.147

David Hayton “Problems in attaining binding determinations of trust issues by alternative dispute resolution” < > at 2 [“Problems in attaining binding determinations”].

Ibid, at 2.

Chris Kelly “Supervision of Trustees: Enforcement or Problem Solving” (LLM Thesis, Victoria University of Wellington, 2009) at 98 [Supervision of Trustees].

Ibid, at 99.