Donna RossSeptember 8, 2015

MED-ARB OR ARB-MED: ETHICAL AND PRACTICAL

CONSIDERATIONS FOR SINGLE NEUTRALS

TERMINOLOGY

• ADR

• Alternative Dispute Resolution• Amicable Dispute Resolution.

• More common to hear Arbitration and ADR.

• Med-Arbiter or Med-Arbitrator or Mediator-Arbitrator

DEFINITIONS

• Mediation• Voluntary• Parties Control the Process

• Main Types of Mediation• Facilitative• Evaluative• Transformative

DEFINITIONS

• Conciliation• Statutory• Civil Law Countries

• Arbitration• Determinative• Binding – Private judge• Enforceable as judgment

• (Internationally under New York Convention)

ICC STEP CLAUSE• Any and all disputes arising out of or related to this Agreement, the

arbitrability thereof and/or to the relationship between the parties, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by a sole arbitrator appointed in accordance with said Rules. The place of arbitration shall be Paris, France and the language of the arbitration French.

• In the event of any such dispute, the parties shall first submit the matter to settlement proceedings under the ICC ADR Rules. If the dispute has not been settled pursuant to the said Rules within forty-five (45) days following the filing of a Request for ADR or within such other period as the parties may agree in writing, such dispute shall be finally settled as set forth in this paragraph.

• It is the intent of the Parties that, barring extraordinary circumstances, arbitration proceedings will be concluded within ninety (90) days from the date of the arbitrator's appointment. Each party shall pay its own attorney’s fees, expenses and costs.

THE MAIN HYBRID PROCESSES

• Med-Arb• First the parties mediate.• Whatever issues aren’t resolved will be determined by arbitration.

• Arb-Med• An arbitration is conducted and the award drafted.• Then the parties mediate, and either settle on their own or the

award resolves their dispute.

• Arb-Med-Arb• Used primarily to enable a consent award in the Med-Arb scenario.

VARIATIONS ON A HYBRID THEME

Early Neutral EvaluationMini-trialsSummary TrialsExpert DeterminationExecutive AppraisalPrivate JudgingAdjudicationDispute Review BoardsEarly Case EvaluationCase ManagementPendulum Arbitration

Arbitration (Bracketed, Last Offer, Final Offer, Bifurcated FOA, Baseball, Night Baseball, Non-binding)Eval-Med-arbCo-Med-arbBraided Med-arbMEDALOAShadow MediationMediation Assisted SettlementMediator’s Proposal

INTERNATIONAL AND DOMESTIC USE

Institutions

• ICC ICDR CEDR SIAC HKIAC WIPO CPR JAMS CIArb

• “unless otherwise agreed by the parties”.

• More frequently, an “Opt-In” process.

INTERNATIONAL AND DOMESTIC USE

Countries

Asia• China Japan India Bangladesh Hong Kong Singapore

Other civil law countries• Germany Switzerland Austria Sweden Italy Brazil Chile

• Common law countries• US Canada UK South Africa Australia

• Domestically• Labor/Employment Family Will Contests

INTERNATIONAL AND DOMESTIC USE

Australia• CAA NSW Article 27D

• (3)  Mediation proceedings in relation to a dispute terminate if:• (b)   withdrawal of consent by party• (c)  withdrawal of consent by the arbitrator

• (4)  without the written consent • (7) the med- arbitrator must disclose to all other parties f the

information the arbitrator considers material to the arbitration proceedings.

• IAA –does not allow for Med-Arb. • Section 23D(4) only deals with confidential information.

• EfficiencyCost and Time

• FlexibilityParty Control, Relationship Preservation

• FinalityArbitral Award

ADVANTAGES

• MSAs - Mediated Settlement Agreements• In most countries, only enforceable as contracts

Europe: EU Directive 2008/52/EC • Initiative for a “New York Convention” for MSAs

• Consent Awards• Enforceable under the New York Convention, the rules of

major arbitral institutions, Model Law Article 31Some jurisdictions the tribunal must be constituted before the mediation.

ADVANTAGES

RISKS• Challenges to Enforceability

• Bias/Lack of Impartiality

• Coercion of Parties

• Breach of Confidentiality

• Non-Compliance with Rules or Laws

• The main culprit:

Caucussing or Private Sessions

SAFEGUARDS

• Choice of neutral• Trust• Skill set/expertise• Impartiality

• Rules and Laws that Govern the Process• Institutional• General – UNCITRAL Model Law• Local – Law of the Seat or Place of Enforcement• Adopt IBA Guidelines?• Professional/Ethical Rules

SAFEGUARDS

• Process Design and Conduct

• Pre-Mediation or Arbitration Conference • Ensure Parties’ Understanding – not just Counsel

• Med/Arb agreement/Procedural Order/Terms of Reference

• Set forth detailed process

• Clear Delineation Between Mediation and Arbitration

• Caucussing or Not?• If so, disclose or disregard information?

SAFEGUARDS

• Process Design and Conduct

• Consent, Consent, Consent• Clear, Informed and Written

• Waiver• Waive right to challenge the award

• Opt-out• For Parties• For Neutrals

SAFEGUARDS

Reasoned Award• Based only on facts and law submitted during the arbitration phase.

• Use of information learned during mediation could expose the award to vacatur, even if the parties consent in some jurisdictions.

• Include description of process, consent and waivers in the award.

• Include issues agreed by the parties during the mediation phase (partial consent award).

Consent Award• If mediation is successful memorialize the agreement in an

award rather than an MSA.

MED-ARB OR ARB-MED: ETHICAL AND PRACTICAL CONSIDERATIONS

FOR SINGLE NEUTRALS

THANK YOU FOR YOUR ATTENTION