Also at the UIA Forum in Amsterdam, a panel on “Med/Arb: Myth or Reality!” was offered, complete with exclamation mark. The panelists were from the US and the UK, which seemed odd inasmuch as I had understood that the practice of med/arb — that is, of wearing more than one hat — is more broadly accepted in every region of the world other than those two.
After an introduction of the topic by Rahim Shamii, of the ADR Group in London, his American colleague Tom Valenti suggested that the original model (whereby a mediator is asked to make a final and binding decision) has morphed into a more nuanced set of practices. For example, sometimes the parties select a different arbitrator rather than the mediator. Sometimes that appointment can be accompanied by a recommendation of the mediator. Sometimes the mediator works at the same time as the arbitrator. Sometimes these processes are planned and sometimes adopted on the spot (or planned with an opt-out). And there is arbitration where the award is sealed pending immediately ensuing mediation. Sometimes mediation takes place during periodic “windows” of the arbitration process, focusing either on the whole dispute or on a discrete part of it. Valenti posed both advantages and risks to the same neutral’s serving in processes that rely on (in the one instance) confidential ex parte communications and (on the other) open presentation of evidence with opportunity for rebuttal and challenge.
Colin Wall, who until recently practiced as a mediator and arbitrator in Hong Kong, noted the Chinese historical practice of conciliating problems within villages in order to keep everyone in the same communities. He argued that litigation was considered shameful from the time of Confucius through Mao. That is why CIETAC arbitrations always had conciliation provisions. Similar Arb-Med-Arb provisions are found in Hong Kong, Singapore and Australia. UNCITRAL, IBA and other acknowledged rules permit arbitrators who have acted as mediators to resign if they are uncomfortable returning to their role as arbitrator. Wall also noted that Article 5 of the New York Convention can be read to require the initiation of arbitration prior to coming to a mediated settlement in order for an enforceable award to be issued. Wall concluded that Arb-Med-Arb has no practical viability, both because of its structural flaws and because of the sufficiency of more orthodox processes.
Ana Virginia Bauder of CEDR noted that the acceptability of hybrid practices is a function of cultural predispositions. Few cases filed with CEDR (based in the UK) go to a Med-Arb route, and those that do tend to be IP disputes and cases below a million pounds value. This dual process rarely is triggered by a contractual clause. The parties can’t agree in mediation; they value finality, however, as well as efficiency, and they share a desire to continue commercial dealings with each other. So as a matter of practicality they decide to give the mediator authority to determine an outcome within whatever boundaries they agree upon. Thus, sophisticated parties can design processes that address their particular concerns, such as “binding mediation” in which caucuses take place but the mediator is authorized to render a final decision after the consultations are ended.
Dr. Debbie De Girolamo, Senior Lecturer in Law at the Centre for Commercial Studies at Queen Mary University in London, presented data on how mediators behave in the circumstances of switching to the role of arbitrator – that is, in the original meaning of the term, where the same individual acts in both capacities. The mediators in her study saw themselves as facilitators who assisted parties to come to a resolution, but expressing no view as to the comparative merits implicated in the dispute. Involved in this “facilitative” role, however, are the skills of empathizing with each party, challenging each party, assisting each party in formulating strategies, and making demands of each party – behavior that would seem to be inconsistent with a mere facilitator. For this mediator, having taken on these roles, to assume the ultimate authority of a decision maker of a claim of legal entitlement is improper, Dr. Girolamo argued, inasmuch as such a process opens the arbitration stage to extraordinary challenges. These may include frustrated due process expectations, and inadequate disclosure of arbitral predispositions. Informed consent by the parties is, by definition, impossible in such a circumstance, because no one party can possibly know the nature and extent of the neutral’s behavior or knowledge base with respect to dealings with the other side during private and confidential caucus.
One is left with that familiar but unpleasant taste of lawyer/mediators correcting their clients. A business person can agree to an imperfect process. Indeed, they do so every day. One might argue that American litigation itself (including notions of due process) is, to say the least, imperfect. Who are we to express ethical discomfort because the parties fail to adhere to our understanding of what process they ought not to choose?