The ADR Institute of Canada (ADRIC) has recently adopted Med-Arb Rules and announced a new Chartered Mediator-Arbitrator (C.Med-Arb) professional designation to enhance the use of med-arb in Canada.
The new Rules and professional designation recognize that med-arb is a distinct process that is different from either mediation or arbitration on their own.
In med-arb, the same person acts as both mediator and arbitrator, typically endeavouring to help the parties settle their dispute in a first mediation phase, then making a binding decision on all unresolved issues in a second arbitration phase.
The process offers parties both flexibility and finality, and if done effectively, can save time and money by having a single mediator-arbitrator conduct the entire resolution process.
However, med-arb has many traps for the unwary and inexperienced. If the dispute is not settled and goes to arbitration, lawyers for the unsuccessful party will use every effort to find a fly in the ointment that they can fashion into an albatross to present to a reviewing judge to hang around the successful party’s neck.
(It should also be noted that, while arbitration statutes in Canada generally allow an arbitrator to act as mediator, this must be done by express written consent of the parties. International arbitration rules also generally allow this dual role, but rules in other countries may not.)
I think most people who do med-arb would agree that the best practice is to agree in advance on procedures to be followed to ensure fairness and an enforceable agreement or award at the end of the day.
The ADRIC Med-Arb Rules, which are the first in Canada, should advance this goal considerably. Together with ADRIC’s existing Mediation Rules and Arbitration Rules, they provide a complete procedure for both the mediation and arbitration phases of the med-ab process.
According to ADRIC, the C.Med-Arb professional designation is unique in the ADR world. It is part of ADRIC’s national mandate to protect the public and promote best practices in ADR.
The new designation will set national standards for mediator-arbitrator training and experience. Applicants will be required to hold both of the existing C.Med and C.Arb designations. They must also complete 16 hours of specialist med-arb training and have completed a minimum number of mediations and arbitrations, plus at least one med-arb. In addition, everyone holding this designation must comply with the ADRIC Code of Ethics and Code of Conduct.
The ADRIC Med-Arb Rules are quite simple and straightforward. By incorporating ADRIC’s Mediation Rules and Arbitration Rules by reference, they provide a complete procedure for both the mediation and arbitration phases of the med-arb process.
The Rules, therefore, provide a complete default process for med-arb, simply by incorporating them in any kind of dispute resolution agreement.
And, since many of the specific rules may be modified by agreement of the parties, they also provide a high degree of flexibility when the parties wish to do so. But one must still take care not to try to modify the rules in ways that are contrary to mandatory provisions of family law and other statutes.
The Rules set out the process for starting a med-arb and provide a mechanism to appoint a mediator-arbitrator, if the parties can’t agree on an appointment
Section 5 of the Med-Arb Rules requires that the mediator-arbitrator must remain independent and impartial at all times. It also makes it clear that merely acting as a mediator, meeting separately with parties or questioning the merits of a party’s position during the mediation phase, will not amount to procedural unfairness or result in a loss of jurisdiction (two common grounds for challenging the final arbitration award).
These rules will not eliminate potential bias claims arising from a med-arb. It is still useful to look at the cases to avoid the mistakes that have landed mediator-arbitrators in hot water in the past.
For example, in McClintock v. Karam 2015 ONSC 1024 (CanLII), a family law case involving changes to child custody arrangements in a separation agreement, one of the parents successfully challenged the impartiality of the mediator-arbitrator after the parents could not settle during the mediation phase.
After reviewing how the mediator-arbitrator handled the matter, the Court concluded that “the proceedings were tainted by a lack of fairness” and ordered the removal of the mediator-arbitrator.
(Unfortunately, this meant the parties had to go back to med-arb and start over. Not a result either of the parties would have wanted, I imagine, when they opted for med-arb in their separation agreement.)
In coming to that conclusion, the Court looked at a number of things the mediator-arbitrator said and did during the mediation phase and in the transition from mediation to arbitration.
- Strong comments on the merits of each party’s position on key issues during the mediation.
- Statements during mediation like: “there’s more than ample evidence that…”
- The arbitrator’s determination to move quickly to arbitration over the objections of one of the parties.
- Statements made in correspondence with counsel for both parties, which appeared to favour one side over the other regarding the issues to be arbitrated.
The transition from the mediation phase – when everyone is at least trying to get along and come up with a settlement – to the arbitration phase – when everyone suits up to fight over the remaining issues – is the most fraught part of any med-arb.
Section 6 of the Med-Arb Rules deals with these crucial transition issues. It says:
- The mediation phase ends when an agreed time limit expires, the parties have settled all issues in dispute, the parties agree in writing, or the mediator decides to end it.
- When the mediation phase ends, the parties must confirm which issues have been resolved (to be documented in a settlement or consent award).
- The parties must also identify the unresolved issues to go to arbitration. If they can’t agree, the mediator-arbitrator will identify those issues.
- At the beginning of the arbitration phase, the mediator-arbitrator will decide any challenge arising from the mediation before continuing with the arbitration. Any party that does not object is deemed to have waived any such challenge.
- Any other objection to the mediator-arbitrator, such as impartiality or qualifications, must be resolved under the ADRIC Arbitration Rules.
- During the arbitration phase the mediator-arbitrator must not use information from the mediation phase unless it becomes evidence in the arbitration or the parties consent to its use.
Several of these provisions are noteworthy because they expressly deal with common concerns about the med-arb process.
There must be a very clear, bright-line transition from mediation to arbitration. This is sometimes unclear, especially when there is little or no time between the phases, or the med-arb is being conducted more informally.
This may impose some time gap between the two phases, unless there is clear agreement that the mediation has ended and the arbitration will begin. While it may be more efficient to do everything at once, especially when parties and witnesses have to travel or the matter is urgent, undue speed may hurt in the long run.
The parties and the mediator-arbitrator must document the issues that have been resolved and those that have not. This may be tricky in some cases. For example, agreement on one issue may be dependent on resolution of another. The parties may be reluctant to commit to the first until they know how the second is decided.
If a party has an objection to the mediator continuing as arbitrator for any reason, they must raise it right away. They can’t wait to see how things go and raise the objection later, if the award goes against them.
The rule against using information from the mediation unless it becomes evidence in the arbitration puts a responsibility firmly on the arbitrator, and on each of the parties, to be very clear about what information is in evidence and what is not.
As has been said before, there is a difference between information and evidence, but that difference is not always apparent to the disputing parties.
Each party is entitled to know what evidence the arbitrator intends to consider in making a final decision, especially when potentially conflicting information (either in documents or statements made by the parties) has been provided at each stage. Some of the information exchanged earlier in the med-arb may not be relevant (or even admissible) as evidence in the arbitration phase. And fairness dictates that each party have the opportunity to address any evidence that the arbitrator considers to be relevant.
As noted by the judge in McClintock v. Karam, the mediator-arbitrator “cannot be expected [to] entirely cleanse the mind of everything learned during the mediation phase, and of every tentative conclusion considered, or even reached, during the mediation phase. However, at a bare minimum the parties are entitled to expect that the mediator/arbitrator will be open to persuasion, and will not have reached firm views or conclusions.”
We can hope that the ADRIC Med-Arb Rules, the C.Med-Arb designation, and a continuing discussion about best practices for med-arb will take us closer to consistently meeting that goal.