As formal dispute resolution (i.e. arbitration) is beginning to mirror litigation in both time and expense, lawyers practicing in the international marketplace should examine other ADR options to better serve parties in a dispute. One alternative (often described as mediation/ arbitration or “Med/ Arb”) involves, in essence, the same individual acting in the capacity of both mediator and arbitrator.
While a devoted convert to ADR, I must confess that I am still enough of a barrister that I twinge at the notion of the same person wearing one hat, taking it off for another and, perhaps later, going back to the first hat. Some of the discomfort is, of course, based on a sense of proprietariness of one’s own ability to juggle these roles while feeling skeptical about another’s ability to so do. When sitting as mediator, I have no doubt of my own impartiality and ability to not let what I may have learned in, say, a break out session, influence my impartiality should I then find myself as the adjudicator in the same matter. On the other hand, if I am acting as counsel I would be, depending on the situation somewhat to extremely, concerned about the appropriateness of such structure. lt’s a bit like one of those irregular verbs: I...am impartial; you... are, l’m sure capable of being impartial; he...is likely biased.
Nevertheless, if we are to make ADR a flexible, forward looking and useful tool for clients and the commercial process in general, it is important, I believe, to examine new ideas and consider better solutions.
One of the most important factors underlying the consideration of using the Med/Arb hybrid is that it will speed up the process and save time and cost. ln turn, I believe, the underlying logic behind that reasoning is that if the same person becomes immersed in the dispute between (as well as the respective positions of) the parties, he or she will be better able to resolve the problem in a more time and cost efficient way and accord a mutually agreeable settlement.
I have recently experimented with a variation of the traditional Med/ Arb model. I admit that it has been successful (in the six instances where I have employed it) in a particular situation with a particular background. Given the particular situations involved, some will observe that the variation has limited application to full-blown disputes. Others may also say that it is culture bound. Both these observations may well be accurate, but I put the idea forward less to suggest it is as a panacea, or that it may have application to everyone’s situation, but more so to encourage dialogue and further refinement.
To qualify the phrase Mediation/ Arbitration with the word conventional is a bit of a misnomer. lt would be difficult, indeed, to come up with a single acceptable definition of what is involved in a “typical” Med/Arb process. There is, for example:
“Mediate first and if mediation fails, arbitrate; start arbitration proceedings and allow for mediation at some point during the arbitration; mediate some issues and arbitrate others; mediate, then arbitrate some unresolved issues, then return to mediation; mediate, if unsuccessful ask for an ‘advisory opinion’ by the mediator which is binding as an award unless either party vetoes the opinion within a limited period of time. Another med/arb variation growing in popularity is mediation, if unsuccessful, followed by a final offer by each side, coupled with limited argument, following which the mediator turned arbitrator must choose one or other of the offers.”.
Med/Arb’s advantage, fluidity, appears to also be its greatest disadvantage because of a lack of structure. This lack of structure runs headlong into the hybrid’s Achilles’ heel when the mediator removes his or her mediator cap and changes roles to arbitrator. I should hasten to add that in many jurisdictions, including Japan, this is not seen to be as serious an issue as in jurisdictions based on the common law. As a practical matter, however, at least in my practice, since typically one of the parties will be from an Anglo-American based system, the idea of the same individual shifting from mediator to arbitrator or, even worse back again, is anathema.
MED/ARB ACHILLES’ HEEL
While many commentators have couched the “Achilles’ heel” problem in terms of natural justice: “Audi altrem partem” and “ln camera nullis.” That is, everyone should be able to be heard and whatever may be said to the mediator by a party should be heard by the other party if the mediator turns out to be not the facilitator of a possible settlement but its sole adjudicator.
While this may be the theoretical problem, as a practical matter from a practitioner's perspective, the problem might be better expressed as: the mediator who has now become an arbitrator may have developed a skewed view of a position which my client may not have an opportunity (or ability) to set right. lt is a variation of the classic tautology: I can’t tell you what you do not know because I do not know what you do not know. Likewise, I (i.e. counsel) cannot correct a misrepresentation that may have been made to you (i.e. the mediator/ arbitrator) in a break-out session, because I don’t know what may have been said nor can I gauge what evidentiary weight you have already given it in your mind. lt is not particularly what has been said that makes you no longer impartial, but that I have no effective method of determining if there has been a “bias” formed. Like most risk adverse people, and employing a quick risk analysis, I would rather not take a chance if my sense is that I might lose, so it is easier to not take a chance and move for a potential conflict motion.
A POSSIBLE ALTERNATIVE
As suggested at the end of the introduction to this paper, I have experimented with a structure of the traditional hybrid formats involving mediation and arbitration which , in my experience, does a good job of protecting from the Achilles' heel exposure. lt is too facile to dismiss it out of hand and I ask the reader to (bear with me as I attempt to give a full accounting and) not be tempted to engage in the equivalent of a philosophical “drive by shooting”.
I admit, at the outset, that in the six instances where I have employed this concept, the parties, though in a significant commercial dispute, expressly stated their intent to continue their business relationship and had (at least so they said to me and to each other) no intention of terminating their relationship. ln addition, in all three cases, one party was Japanese and the other American. I draw no particular conclusion or inference from that fact but simply state it as a common feature for the record.
lt dawned on me that the most effective way to disarm a possible challenge to my ability to maintain my impartiality in both the role of an arbitrator as well as mediator was to switch the order of my functions; that is, in a phrase: Arb/Med rather than Med/ Arb. Therefore, the meetings began much the same way as a full-blown arbitration hearing begins, with briefs prepared in advance of the hearing date and full formal presentations by the parties to the single arbitrator.
After free and full questions, answers and dialogue (the shortest period was one day; the longest, three) in the context of a hearing, I in all cases adjourned and went off to prepare a formal arbitral award advising the parties that I wished to meet with them the next (or in one instance the following) morning to provide them with my award.
At the meeting, I placed an envelope on the table which contained two copies of my full arbitral award, signed and sealed. I informed the parties that I was now fully discharged and vacated of my duties and office as an arbitrator.
I then suggested to the parties that if they both wished and both agreed, I would be prepared to attempt to mediate the dispute between them. The rules were that they had to agree to this in writing and all of us (each party as well as myself) would, at any time, be free to stop the proceedings and call for a termination of the process.
ln all three cases, the parties eagerly accepted the suggestion for mediation, because neither party wanted to see what the envelope contained. Of course, the envelope, to one degree or another, proclaimed a winner and loser. Particularly where the parties apparently expected to continue a business relationship, this all or nothing solution was judged to be better avoided if possible. ln all three cases, the matter was successfully mediated and settled.
I might say that the parties were much more focused during the mediation part of the process. First, because they felt that they had been given a full chance (in the adversarial sense) to put forth their case in its best possible light. During the post arbitral mediation, this resulted in less grandstanding and belligerency. There was a clear atmosphere, motivated much more purely to avoid a win/lose situation and to focus on compromise to achieve settlement. At the same time, my role as a mediator became liberated and empowered. Liberated because I could be assertive (in a positive sense) and somewhat opinionated without ruffling feathers or risking the possibility that someone could claim bias. My arbitration award was already on the table and, after all, at any point either party could end the mediation. Empowered because I now knew the soft spots of each party’s case and could “move” them towards seeing a possible compromise solution with a free hand and foreknowledge. ln essence, I am able to avoid the risk of bias.
ln short, I was able to play a much more effective role as a mediator where I was vacated of my responsibilities and duties as an arbitrator and could, importantly, by agreement and voluntarily, bring out the interests and weaknesses of the parties in order to expand the dialogue and achieve settlement.
A final advantage of the modus operandi above is that it avoids another common problem of Med/ Arb wherein, if it is understood that the mediator will become the arbitrator in due course, the parties may well use the process to present their position not with a genuine view to achieving a settlement, but tactically; to lay the groundwork for the subsequent adjudicatory phase of the process.
The suggestions put forward have not been made to provide a panacea for all the problems associated with the Mediation/ Arbitration hybrid that have been raised by commentators. Nor are they meant to be viewed as being applicable to all situations where the hybrid may be effectively employed. Rather, they are meant to stimulate dialogue and attract comments from other practitioners and academics who may have innovative suggestions on how to better make the Med/ Arb hybrid an effective tool for alternative dispute resolution.