Mediation-Arbitration: More Than Just a Mash-Up

One of the objections we often hear to Mediation-Arbitration (Med-Arb) is that it is “neither fish nor fowl”. It is not an effective form of mediation because the mediator is constrained by their dual role. The impartiality of the arbitrator is somehow compromised by also acting as mediator.

I think this is a misunderstanding of what med-arb is all about. It’s not just a hybrid mash-up of two forms of dispute resolution. It’s a unique form of its own, with its own benefits and challenges. And it can take many different forms, to suit many different kinds of disputes.

My friend and colleague Colm Brannigan describes an integrated five-stage model of med-arb, starting with the med-arb agreement, then a mediation phase, a transition phase, an arbitration phase, and ending with a settlement agreement or award.

(Colm, incidentally, is the first person in Canada to be awarded the Chartered Med-Arbitrator designation, and teaches, with Richard Moore, an online course for those who want to pursue that designation. I’ve written an earlier column about the ADR Institute of Canada’s Med-Arb Rules and the Chartered Med-Arbitrator designation.)

I think the integrated model of med-arb is a very useful way to look at the process, not as a hybrid, but as a unique whole.

Start with the med-arb agreement. It’s an essential tool to set the rules and procedure that will apply to the process, but equally importantly, to set the expectations of the parties and their counsel.

It is a submission to arbitration. After all, if the parties can’t agree on a resolution during mediation, the matter will go to arbitration and a final award on the issues. (It may or may not proceed with the same person as arbitrator; we’ll come to that shortly.)

The freedom and flexibility of mediation must give way to the finality of arbitration. But the agreement should also re-enforce the fact that fairness and impartiality are essential elements of both mediation and arbitration, so there is no inherent conflict between the two.

The agreement should also deal explicitly with two of the common concerns about med-arb: confidentiality and bias.

Will the mediator-arbitrator meet separately with the parties during mediation? Is anything said in those meetings confidential? How will information disclosed during mediation be used in the arbitration phase?

I don’t think there are hard and fast rules about this. There are advantages and disadvantages to each approach to the mediation phase. The mediator-arbitrator needs to have a frank discussion with the parties and come to a common understanding about how they will make the mediation as effective as possible, without compromising the arbitration if there is no settlement.

The agreement phase is also the time to talk about arbitrator bias.

In the mediations I do, the parties are often looking for some kind of evaluation based on my expertise in the technology and intellectual property field. Is that appropriate for a med-arb? If the parties still want that, I need to be very careful how I express any opinions, and they need to understand that those opinions don’t mean I have actually decided anything. It’s a difficult balancing act, but not impossible.

In some other fields, however, any opinion expressed by the mediator-arbitrator may fatally taint the arbitration phase. If that’s the case, the mediator-arbitrator needs to be very clear up front that, while they will help the parties explore settlement options, they will not express any opinion on the merits of the matter during mediation.

Transition is also a critical phase of any med-arb. There must be a clear line between the mediation and arbitration phases. The mediator-arbitrator and the parties must clearly understand that:

  • The mediation phase has ended. This is not always clear. The parties may continue to exchange settlement proposals, or equivocal responses to proposals previously made, either between themselves or with the arbitrator.
  • What issues, if any have been resolved. In some cases, an issue may be partly resolved or resolved conditionally, depending on the resolution of a related issue. For example, the parties may have agreed on the amount of damages (or a range of damages), but still dispute liability.
  • What issues have not been resolved. These are the issues (and the only issues) that will proceed to arbitration. The parties may not agree.

Some ask whether a med-arb can go back to mediation after the arbitration phase has begun. It can, if the parties think renewed settlement discussions are worthwhile. But it compounds the risk, if there is no settlement. I’d insist on another transition phase, if the matter goes back to arbitration, so there’s no confusion over where things stand.

The ADRIC Med-Arb Rules set default rules for determining when the mediation phase has ended. They also require that both resolved and unresolved issues be documented in writing. If the parties can’t agree on the issues, the mediator-arbitrator will identify them.

One of the important transition questions that I think should be decided at the beginning of the process, in the med-arb agreement, is the ground rules for determining whether the mediator-arbitrator will continue as arbitrator after mediation. There are several possibilities:

  • Opt-In. The parties and mediator arbitrator must expressly agree to continue. This, I believe, is the rule under the Quebec Code of Civil Procedure, where the arbitrator acts as mediator or amiable compositeur.
  • Opt-Out. The mediator-arbitrator may withdraw or a party may ask for removal. The question then is whether there have to be reasons for withdrawal or removal. Usually, those reasons would include doubts as to the mediator-arbitrator’s ability to continue impartially, but the parties may agree on other grounds for removal.
  • Separate people. The parties may agree from the start that they will have a separate mediator and arbitrator, and choose both at the start. It may still be worthwhile to treat the matter as a med-arb, with a single agreement, rather than two separate processes.

Even if the mediation agreement doesn’t have an express opt-in or opt-out provision, a party may still challenge the mediator-arbitrator’s impartiality. Under the ADRIC Med-Arb Rules, this must be done at the beginning of the arbitration phase if the challenge is based on the mediation phase. If a party does not object then, they can’t wait to see how the arbitration turns out before launching a challenge. The mediator-arbitrator must decide any challenge before proceeding with the arbitration.

That’s why it’s a good idea to include terms in the med-arb agreement, setting out the grounds for any challenge.

One approach is to expressly state that private meetings with the parties, disclosure of information or the expression of opinions on matters in dispute do not disqualify the mediator-arbitrator.

Alternatively, simply say the mediator-arbitrator will not do any of those things.

If the reasons for removal are too broad, or if no reason is required, it effectively becomes an opt-in. Any party that just doesn’t like the way things seem to be going can opt for a “do over” with a new arbitrator.

The ADRIC Rules also state that 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.

So, again going back to the med-arb agreement, it is useful to consider in advance how mediation briefs and other information may be used if the matter goes to arbitration. One of the benefits of med-arb is reduced time and cost if the parties don’t have to start at square one with the arbitration.

When the arbitration phase starts with an agreed statement of the resolved issues and the issues still in dispute, some of the information disclosed in the mediation phase will not be in dispute. The parties may agree that it can form part of the evidence. This may include relevant documents and undisputed facts contained in mediation briefs.

This evidence can be formalized in sworn witness statements for purposes of the arbitration, allowing the arbitration phase to focus on the unresolved issues and specific factual or legal issues in dispute.

When the parties and mediator-arbitrator treat med-arb as a unique integrated process, they can anticipate and deal with these and other challenges. Even the nay-sayers may find that med-arb offers a better prospect that the dispute can be resolved through mediation, and the certainty of an enforceable award if it is not.

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