Guidance Note 8 – Use of alternative dispute resolution by Commonwealth entities

This guidance note covers:

• the obligations to consider alternative dispute resolution (ADR)
• the benefits of using ADR and considerations when commencing this process
• types of ADR processes, and
• choosing an ADR practitioner.

What is ADR?

1. ADR is a generic term for processes, other than judicial determination, in which an impartial person (an ADR practitioner) assists those in a dispute to resolve the issues between them.

2. The main types of ADR are mediation, conciliation and arbitration.

3. The Commonwealth Attorney-General has policy responsibility for ADR, which falls under the broader policy of access to justice.

Obligations to consider ADR

Legal Services Directions 2025

4. Part 5, Division 2 of the Legal Services Directions 2025 (Directions) requires Commonwealth entities, other than a government business enterprise, to handle claims and conduct litigation in accordance with the Commonwealth’s obligation to act as a model litigant (the model litigant obligation).

5. The model litigant obligation (Part 5, Division 2 of the Directions) sets out the requirement for entities to consider using ADR to resolve disputes as an alternative, or in addition to, legal proceedings.

6. Specific requirements under the model litigation obligation include:

• endeavouring to avoid or prevent legal proceedings wherever possible, or limit their scope, including by considering ADR before initiating legal proceedings and participating in ADR processes where appropriate (paragraph 41(e))
• monitoring the progress of litigation and using methods it considers appropriate to resolve the litigation, including settlement offers, payments into court or ADR (subparagraph 41(f)(iii)), and
• ensuring that representatives of the Commonwealth and Commonwealth entities participate fully and effectively in ADR and have authority to settle the dispute (subsection 43(2)).

Civil Dispute Resolution Act 2011

7. Similarly, consistent with the objective of the Civil Dispute Resolution Act 2011 (Act), entities should undertake early consideration of dispute resolution options, including use of ADR.

8. The Act encourages parties to take genuine steps to resolve disputes before commencing certain proceedings in the Federal Court of Australia and the Federal Circuit and Family Court of Australia (Division 2).

9. The Act requires a person to file a ‘genuine steps’ statement indicating what steps (if any) they have taken to resolve a dispute before commencing legal proceedings.

10. The Act allows the Court to take this into account when exercising its discretion to award costs, as well as impose other consequences.

11. More information about the Act is available on the Attorney General's Department's website.

What are the benefits of using ADR?

12. Using ADR to resolve disputes may assist Commonwealth entities to:

• tailor the process to suit the needs of the entity and the other parties
• create an environment that may be less formal and more relaxed
• narrow the issues in dispute
• enhance the reputation of the entity and the government generally
• allow the consideration of a wider range of remedies
• resolve the dispute at a comparatively lower cost than legal proceedings

Considerations when entering into and undertaking ADR

Obligations under the Directions

13. A starting point for Commonwealth entities in deciding whether to use ADR to resolve a dispute is that the Directions require entities to:

• not commence legal proceedings unless satisfied that litigation is the most suitable method of dispute (paragraph 40(b)), and
• consider other methods of dispute resolution (subsection 43(1)).

14. Entities should also consider other obligations arising from the Directions, including:

• Reporting on significant issues (Part 4 of the Directions)
• Terms of settlement and confidentiality (section 47)
• Settling monetary claims (Part 6 of the Directions), and
• Engagement of counsel (Part 7 of the Directions)
  • The rules on the engagement of counsel apply to counsel representing an entity in ADR processes.
  • The rules on the engagement of counsel do not apply to ADR practitioners or counsel who are engaged to act as an ADR practitioner.

ADR during Caretaker

15. Guidance note 9: Dispute Resolution during caretaker period provides guidance for entities on whether they should continue ADR processes during a caretaker government.

Choosing an ADR process

16. ADR processes can vary greatly in terms of:

• the responsibilities of the parties
• the responsibilities and qualifications of the ADR practitioner, and
• the possible outcomes.

17. Commonwealth entities may find it beneficial to consider the different categories of ADR in deciding which ADR process would work best for their dispute: facilitative, advisory or determinative. The views of the other parties involved should also be considered.

Choosing an ADR practitioner

18. Generally, in choosing an ADR provider or practitioner Commonwealth entities should consider:

• the type of ADR process agreed to use
• whether there are internal guidelines
• whether particular knowledge or skills are required

Mediators

19. Entities are strongly encouraged to use mediators who are accredited under the Australian Mediator and Dispute Resolution and Accreditation Standards (AMDRAS).

20. Information about finding an AMDRAS-accredited mediator is available on the AMDRAS website.

21. The Law Council of Australia has prepared guidelines for parties and lawyers using mediation.

Resources to find ADR practitioners

22. Peak membership bodies such as the Australian Mediation Association and the Resolution Institute may be able to assist entities to find an ADR practitioner.

23. Many State and Territory law societies and bar associations also maintain lists of their members who offer ADR services in addition to legal services.

Monitoring ADR

24. Commonwealth entities are encouraged to build an evidence base about how disputes are managed and resolved. This could assist to highlight the extent to which better dispute management practices save time and money and lead to more consistent adoption of best practice.

25. The proper use of Dispute Management Plans can also assist individual entities to develop a better information base.

Where can I get further help?

26. For further information about ADR, please visit the Attorney-General's Department's ADR webpage.

Office of Legal Services Coordination
Phone: 02 6141 3642
E-mail: olsc@ag.gov.au
Issued: March 2026

This guidance material is of a general nature only and does not convey or contain legal advice.