Med-Arb: Efficiency vs. Justice?

I had the pleasure recently of co-chairing a one-day seminar on mediation-arbitration (med-arb), sponsored by the ADR Institute of Ontario, the Family Dispute Resolution Institute of Ontario and Osgoode Professional Development.

The program explored the question “Med-Arb: Efficiency or Justice Compromised?”

We were fortunate to have two thought-provoking keynote speakers and many very experienced panelists.

Warren Winkler, former Chief Justice of Ontario, recalled a number of efforts over the years to incorporate both mediation and med-arb into the justice system and talked about the resistance some lawyers and judges have shown to the idea of combined med-arb.

Stephen Morrison, a leading commercial mediator and arbitrator, spoke eloquently about the failure of the civil justice system to meet the needs of disputing parties for timely, cost-effective resolution of their disputes. The courts are simply too slow and too expensive for most people involved in business, family or workplace disputes. So ADR in general – and med-arb in particular – is increasingly filling the gap.

Med-arb is a practical response to the needs of disputing parties. It combines the flexibility of mediation with the certainty arbitration in a single process. When it works, it works well and parties are generally very satisfied.

But when it doesn’t work, there is very real potential for the process to put people in a worse position than they would have been if they had stayed in the court process.

Courts have generally accepted med-arb as a valid process for many years and have shown considerable deference to party agreements (or statutory requirements) to adopt this process.

But when a party is unhappy with the result they will challenge the process any way they can – usually alleging arbitrator bias, misconduct or some over-riding error of law. And it is often easier for a court to find a fatal flaw in a med-arb process that with arbitration alone.

med-arb is very common in family disputes and, as a result, many of the court decisions that have looked at med-arb are in that field as well. Family law is not my area of expertise at all, but I think it’s instructive to look at those cases, because the same issues apply to med-arb generally.

In McClintock v. Karam 2015 ONSC 1024 (CanLII), the court considered allegations of mediator/arbitrator bias. The court reviewed a number of comments made during the mediation phase and concluded that the mediator/arbitrator should be removed and new arbitrator appointed to conclude the matter.

The case involved a claim by the father that the mother was alienating the affections of their daughter, and an application to change the custody arrangements.

The mediation didn’t resolve things, and the mediator/arbitrator set a date about two months later for an arbitration hearing. When the mediator/arbitrator refused a request from the mother’s lawyer to delay the hearing, the court application was filed to challenge both the jurisdiction to arbitrate custody and the arbitrator’s impartiality.

The court had no hesitation finding that the mediator/arbitrator had jurisdiction to deal with these issues. The court also acknowledged the validity of med-arb in theory, but expressed some strong reservations about how works (or doesn’t) in practice.

Mediation/arbitration is a relatively recent phenomenon. Used in the right circumstances, and with proper safeguards, it can be a useful means of dispute resolution. However, care must be taken to ensure fairness, and to ensure that a reasonable apprehension of bias does not arise. [1]

The court, citing previous decisions of the Supreme Court of Canada, said one of the considerations in determining reasonable apprehension of bias is the “special circumstances of the tribunal.”

…In this case, the tribunal is a mediator/arbitrator, and he has been constituted by agreement. It must be concluded that the parties, in agreeing to mediation/arbitration, would understand the nature of the process of mediation/arbitration. The informed person, in deciding whether there is a reasonable apprehension of bias, would also understand the nature of the process of mediation/arbitration.

In order to effectively mediate, the person appointed must engage in a process that has a good deal of informality. Mediative techniques include persuading, arguing, cajoling, and, to some extent, predicting. Mediation is a process to secure agreement, if possible. All of those techniques, as well as others, will come into play in trying to secure agreement.

If the mediator/arbitrator must move to the arbitration phase, it cannot be expected that he or she can 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. [68-70]

The mediation had been recorded with the approval of all parties and the mother was able to provide the court with transcripts of the comments that the court ultimately found to show bias. For example:

You are riding a sinking ship. You need to take this very seriously now. Not – I’m not suggesting that you haven’t taken it seriously. You need to take it seriously in a different way. That’s where my thinking is right now – very transparent, very open.

…

From my perspective, there’s more than ample evidence and concern to demonstrate that knowingly, unknowingly, inadvertently, intentionally, you’re undermining the relationship of your daughter with her father. That’s a real concern.

…

It’s not gonna happen anymore by one of two ways: an arbitration hearing and I change the residential plan, or you change. I have educated, coached, begged, cajoled you. I’m not gonna do any of that anymore. Now I’m gonna arbitrate and you’ll either do it or you won’t. Is that understandable? And I don’t say that facetiously or aggressively or – I do want you to appreciate that. You’re actively teaching your daughter to disrespect her father.

The court considered those comments and concluded that a reasonable person would conclude that the mediator/arbitrator had made up his mind about the behaviour of the mother (which she disputed), and that by refusing to grant a short delay for the hearing he had failed to give her a reasonable opportunity to be heard.

Philip Epstein, a prominent Toronto family mediator and arbitrator, was one of the panelists at the Med-Arb conference. He commented on the challenges that cases like this present for a mediator/arbitrator. He had previously commented on this case in his This Week in Family Law newsletter (March 23, 2015).

Epstein, and other panelists who work in the labour and commercial fields, said the challenge is to balance the parties’ expectations that the mediator will give them a full and frank assessment of the dispute, including the merits of their positions and the potential outcome if they do not settle, against the risk that comments on the merits of the case will be seen as pre-judging it.

In the newsletter, Epstein took issue with the judicial view that parties are more comfortable if a different person performs the mediation and arbitration function. In family law, at least, his experience is that parties prefer med-arb because it is more cost effective and there is a perception that mediation is more likely to be successful if the mediator and arbitrator are the same person.

While mediator/arbitrators must keep the two processes separate, they cannot erase everything they hear during the mediation from their minds. At the same time, Epstein and others who spoke at the conference said they think arbitrators are as capable as judges of putting the mediation out of their minds and deciding issues based only on the arbitration evidence and arguments. They make a conscious effort to do so and, when there is a significant time gap between the two phases, may actually forget much of what they have heard.

I have acted as mediator/arbitrator in a handful of cases, so my experience is much more limited than many of the commercial, labour and family mediator/arbitrators who spoke at the conference, but I agree with much of what they said about this problem.

One approach that was recommended to me some time ago, and I have used in my own cases, is to be very clear with the parties – and with counsel – that there is a difference between “information” and “evidence”.

Arbitrators, like mediators, get a lot of information about a dispute, through pre-hearing conference calls, pleadings, document and witness briefs. Each party will try to put their claims in the most positive light and paint a negative picture of the other side. This is just a normal part of arbitration advocacy.

Parties and advocates also try to influence the neutral during mediation, with information that may not be relevant to the dispute. One can’t refuse to hear this kind of information as a mediator. All one can do is ask: “Why are you telling me this? How is this relevant?”

Everything the mediator/arbitrator learns at the mediation phase – as with the pre-hearing stage of the arbitration – is information; it isn’t evidence. Some of it may become evidence later, if the dispute goes to arbitration. Some will not.

And even if it is part of the evidence, the arbitrator must still determine whether it is relevant and how much weight to give it.

If parties understand this, they may be more open with the mediator, but they will still be reluctant to make any admissions, about the facts or the law, that they think will hurt them if the dispute does not settle. And the mediator/arbitrator must remain very cautious about any comments or evaluation of the merits of the case.

Cases like McClintock are a constant reminder of the traps that may befall the mediator/arbitrator who is a bit to candid with mediating parties.