Consumer and employment arbitration is a difficult topic upon which to find rational discourse.  It seems that folks tend to follow Pogo’s advice: “Don’t let the facts get in the way of your research.”  Yet here are Co-Chairs Tom Stipanowich and Nancy Welsh forming a Planning Committee comprising Lisa Bingham, Larry Mills and Homer LaRue to invite 30 scholars, advocates, representatives, policymakers and ADR professionals to have a rational conversation on the topic last February.  The session was conducted under “Chatham House Rules“  and a summary report reveals not only the topics discussed, but a work plan coming out of the initiative.

Some topics for empirical research, and of brainstorming, were:

• Class Actions
• Frequency of Class Action Preclusion
• Alternatives to Pre-Dispute Arbitration
• Arbitration CLauses, Notice and Consumer Understanding and Awareness
• Costs and Benefits of Consumer Arbitration
• Online Dispute Resolution of Small-Value, High-Frequency Consumer Disputes

Participants engaged in three days of respectful and constructive dialogue, the most contentious topic being the recent Supreme Court ruling in Concepcion that class action waivers in consumer arbitration agreements are enforceable under the Federal Arbitration Act.  Rather than seeking consensus, the participants formed five Working Groups to pursue further empirical research:  (1) Disputes amenable to ODR; (2) Sources of data for information regarding arbitration clauses and programs; (3) Development of private alternatives such as Tom Stipanowich’s recently proposed Arbitration Fairness Index; (4) Development of “final offer arbitration” for consumer disputes; and (5) Development of options for improved consumer access to attorneys.

These five Task Forces will report at a follow-on meeting of the National Roundtable, to be held at Penn State in Fall 2012.  That meeting will focus on employment dispute resolution.

Copies of the Summary Report will soon be posted at the ABA Dispute Resolution page and are available from Nancy Welsh.  It is about time that the ADR community stopped yelling and sat down to do the hard work of finding out what is happening, and perhaps devising policy options that are more nuanced than those currently being considered.

EBay, Paypal and Modria offer consumers the opportunity for redress in high-volume, low-value disputes.  While the lawyers parse out class action arbitration and the intricacies of distinguishing recent Supreme Court decisions, Colin Rule is just going ahead and getting it done.  Here’s how:

Online, it’s entirely possible to enter into a transaction in which an English buyer and a Polish seller arrange for the sale of goods to be shipped from Brazil or America.  If that transaction goes awry, what court has jurisdiction?  What law prevails in the deal?  Who would represent these three entities, and where, and when, and how do they get paid?

In Colin Rule’s world, the law takes a back seat — or, a step further, it sleeps in.  Instead, the parties communicate through the internet, advising what the buyer wants and what the seller is prepared to do.  This dispute resolution process is an “alternative” to nothing — no court and no law is involved. 

The driving energy is a shared concern for the integrity of the online marketp[lace.  Users must trust the efficiency of the marketplace — buyers and sellers equally — and have an interest in disputes being acknowledged and resolved efficiently. 

Indeed, according to Colin, people who have filed disputes with EBay use EBay more frequently than those who have not.  And 6,000,000 disputes a year get filed and resolved.

No “judicial backlog,” either.

Dispute resolution without the law?  O brave new world, that has such creatures in it!

Seeking quick, efficient resolution of any disputes between them, Oxford and Dr. Sutter agreed that:

No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the Rules of the American Arbitration Association with one arbitrator.

The doctor initiated this process, however, by filing a complaint on behalf of himself and other Oxford providers in New Jersey Superior Court, arguing that referral of class claims to arbitration would violate New Jersey public policy.  Oxford successfully moved to compel arbitration, the court leaving to the arbitrator the question whether a class should be certified in the arbitration proceeding.

The arbitrator (the estimable William L.D. Barrett) determined in 2005 that the agreement allowed for class arbitration, basing his finding on his interpretation of the arbitration clause.   Oxford unsuccessfully moved to vacate that Class Determination Award before the US District Court, and the denial was affirmed by the Third Circuit in 2007. 

Then the arbitration proceeded to the merits.  (See how quick arbitration can be, students?) 

In 2010, the US Supreme Court decided Stolt-Neilsen S.A. v. AnimalFeeds International Corp., ruling that an arbitrator exceeds her powers when ordering class arbitration where the parties have stipulated that no agreement on that issue had been reached.  Oxford the repaired to the US District Court a second time, and for a second time its motion to vacate the arbitrator’s class certification award was denied.  And once more Oxford appealed to the Third Circuit.

Affirmed.

The Third Circuit noted the presumption that an arbitration award is enforceable and could be vacated only on the four narrow grounds set forth in Section 10(a) of the Federal Arbitration Act.  It also noted that “the task of an arbitrator is to interpret and enforce a contract.  When he makes a good faith attempt to do so, even serious errors of law or fact will not subject his award to vacatur.”

Thus the nub of the Third Circuit’s analysis, affirming the denial of vacatur despite Stolt-Neilsen:  While an arbitrator may exceed his powers by ordering class arbitration without contractual authorization, he does not do so where there is a contractual basis for concluding that the parties agreed to that procedure.

In Stolt-Neilsen, the parties stipulated that their agreement was “silent” on the issue of class arbitration, in the sense that they had not reached an agreement one way or the other on the issue.  The Supreme Court held that, in the face of a stipulated finding that there was no agreement with respect to class certification, the arbitrators were not empowered to behave as if there were one and certify a class.

By contrast, Arbitrator Barrett’s 2005 award was based on a contract that was by no means ”silent” in the way that the parties in Stolt-Neilsen stipulated that theirs had been.  Oxford contended that the clause did not refer to class arbitration and therefore did not permit it.  Dr. Sutter never stipulated to that effect, and indeed actively argued that the arbitration clause, on its face, required “all” and “any” claims to be arbitrated.  The arbitrator found for the good doctor, relying on the text of the clause. 

It begins: “No civil action concerning any dispute arising under this Agreement shall be instituted before any court….”  The arbitrator reasoned that the phrase was very broad — broad enough to include every type of action whatsoever, including class actions.  If this is so, then the second phrase, requiring arbitration of “all” such actions, would compel every type of civil action — including class actions — to be arbitrated.

The Third Circuit’s opinion is enlightening and, if broadly adopted, may seriously limit the consequences of the holding in Stolt-Neilsen.  Where it has been conceded by the parties, or determined by the arbitrator, that no agreement to arbitrate class claims exists between the parties, then the arbitrator may not order it.  But where no such stipulation or finding exists, and the arbitrability of class actions is to be determined based on contested contract interpretation, then Stolt-Neilsen would not apply, and the arbitrator’s finding would stand.

One would guess that the former instances are rare.  Thus, Sutter v. Oxford Health Plans might herald a marginalization of Stolt-Nielsen, and a re-empowerment of arbitrators to interpret and enforce the contracts before them as to the question of arbitrability of class claims.

The Walnut Valley Sailing Club didn’t like being sued, and it terminated Mr. Hand’s membership in the club.

Mr. Hand didn’t like getting terminated, so he sued again, this time for unlawful retaliation under the ADA.

The U.S. District Court for the District of Kansas ordered the parties to mediation, which proved unsuccessful.  And after the mediation Mr. Hand sent an e-mail to at least 44 club members (and others) disparaging the club’s positions and relating all the details of the mediation, including what the mediator said and the amount of the club’s settlement offer.

The District Court didn’t like that.  Indeed, it didn’t like it so much that it dismissed Mr. Hand’s suit with prejudice, by way of sanction.  Mr. Hand did what any good American would do — he appealed to the Tenth Circuit Court of Appeals.

The Tenth Circuit, in an opinion dated April 4, 2012, offered little comfort to Mr. Hand.  The Tenth Circuit noted that the claimant had “demonstrated complete disrespect for the confidential mediation process,” in which “an assurance of confidentiality encourages parties to participate in mediation with candor and is essential to the success of mediation programs,” particularly those in which participation is mandated by the court.

The people who received this confidential information included club members who might testify as to the ultimate question of the case — why Mr. Hand was expelled from the club.  Along with the animosity engendered by Mr. Hand’s disclosures — to which the club could not reply without itself revealing confidences — no sanction short of dismissal “would adequately admonish [Mr. Hand] for his complete disregard for and willful violation of the confidentiality rule, deter similar conduct by others in the future, restore respect for [the] Court’s authority, repair the damage caused by [Mr. Hand] to the integrity of the Court’s ADR program, and minimize prejudice to the [club].”

Affirmed, said the Tenth Circuit, applying the standard of abuse of discretion.  “Mr. Hand committed a serious violation of the confidentiality rule.  He didn’t just share a few tidbits about the mediation with a friend, he revealed extensive and prejudicial details about the mediation to over forty people, many likely witnesses in the case.  And he did so not accidentally but intentionally.”

Now, as Robert Frost wrote in “Mending Wall,” Spring is the mischief in me.  Why, really, are litigants cautioned to treat mediation communications in confidence.  Isn’t it where there are juries, or judges, or folks who might get diverted by knowing that a party once offered money to get out of the case?  But there are no juries here.  Those that heard the information were witnesses at most.  And if a witness knew about the settlement discussions, does that change the witness’ testimony as to what happened two years ago when Mr. Hand was kicked out of the club?

The rationale behind mediation confidentiality is the same behind Federal Rule of Evidence 408.  The communication is privileged and inadmissible in order to serve the public policy of encouraging settlement and in order not to place before a trier of fact information that is not probative and may be prejudicial.

But does it taint a witness?  Does it damage the integrity of a court-ordered ADR program?  Or did it just tee off the court?

On Wednesday April 18, there’s a full-day Symposium on ADR in the Courts, with panels on the Philadelphia and Maryland civil experiences as well as cutting-edge reports from criminal courts.

On Saturday September 21 there is a full-day Symposium on ADR in Legal Education and the speaker list is a roll call of the stars in the field: Scott Peppett, Andrea Schneider, Michael Moffitt, John Lande, Dwight Golann, Jim Coban, Charlie Craver, etc., etc.

Also on Saturday, the Section’s International Committee (led by Manon Schonewille and Jeremy Lack) has assembled a full-day International ADR Workshop, with more speakers, working groups, projects, case study exercises, cross-border topics and cutting-edge stuff than one could possibly imagine could be fit into a single day’s work.

Meanwhile, stuffed into Thursday, Friday and Saturday are scores of plenary sessions, concurrent sessions, and other events, notably the award recognition of that great husband-wife team Linda Singer and Michael Lewis - who trained me in my first mediation course, in 1998! 

Among all the rest of the promising and tantalizing fare is a panel that I will be moderating on Friday April 20 at 11:30.  Three of the best thinkers in the business — Lawrence Susskind, Margaret Shaw and Howard Bellman — will consider “The Leader as Negotiator: President Obama’s Negotiating Style.”  The audience and speakers will be asked to consider what lessons can be learned from negotiating efforts that initially sought to attain consensus, yet appear to have resulted over time in increased polarization, positioning, distrust, and erosion of respect among the negotiators.  The question is raised:  Can a president be a political facilitator while at the same time effectively advancing the interests of the political party he is elected to lead?

The absurdly rich list of offerings is posted by Program Track here.  I hope to see you in Washington!

The client is furious.  The lawyer is mortified.  Is she also unethical?

This was one of several enticing hypotheticals discussed on a panel at the ABA Business Law Section’s Annual Meeting this month.  The panel, titled What You Need to Know About Ethics 20/20 and Why You Need to Know It,was scheduled at 8:00 a.m. on a Saturday during a meeting held in Las Vegas, and it was pretty near a sell-out.

Ethics 20/20 is the curiously named initiative that began in 2009 to review the entire Model Rules in light of changes in technology and the practice.  Some of its recommendations will be brought to the ABA House of Delegates at the Annual Meeting in August 2012, and others may be advanced at the ABA Midyear Meeting in February 2013.  This panel offered a glimpse of some of the problems with which the Commission has wrestled.

Our friend with the broken window was referred to Rule 1.6 when her client lodged an ethics grievance arising from the incident.  That rule strictly forbids disclosure of client information.  The complaint was dismissed but the Las Vegas panel suggested that the ethics reviewers may not have appreciated just how negligent the attorney had been — no back-up, no cloud, no encryption, not even a password barrier to prohibit anyone in possession of the laptop to gain all of its information.  A proposed new Rule 1.6(c) would impose an obligation to exercise “reasonable efforts” to prevent unauthorized or inadvertent access to client information.

Another hypothetical was pointed at the Las Vegas meeting: A lawyer receives an email from a client with respect to strategies for an unannounced hostile tender offer, along with a directive that the lawyer respond very promptly.  The lawyer notes that the client’s email was sent from a hotel through its public wi-fi system and is neither secure nor encrypted.  Can the lawyer breach ethical obligations by virtue of the manner in which he responds?  Absolutely yes, says ABA Opinion 11-459.  A lawyer must warn the client of the risks of communications conducted on open, public internet channels.  “This obligation arises, at the very least, when the lawyer knows or reasonably should know that the client is likely to send or receive substantive client-lawyer communications via e-mail or other electronic means, using a business device or system under circumstances where there is a significant risk that the communications will be read by a third party.”

Mobility, as well as technology, raised interesting ethical concerns.  A partner in Firm A expresses interest in joining Firm B.  Among the inquiries posed by the prospective firm is the lawyer’s “portable” client list (to determine whether conflicts would arise with the firm’s existing client base) and the nature and billing amounts of his work for those clients (to determine the economic value of the new prospective partner to the firm).  May the firm ask, and may the lawyer disclose, either or both?  Yes, but only to a point, says the proposed new Rule 1.6(b)(7).  Rule 1.6(a) states the attorney may not disclose client confidences except in circumstances set forth in 1.6(b)(1-6).  The proposed new exception (7) would provide that the information can be disclosed to the extent necessary to determine conflicts of interest, and may be used only for that purpose.  Proposed Comment 13 explains that such disclosure, while important and even necessary in cases of mergers or transfers between firms, nevertheless may not take place if revealing the information could be adverse to the client.

Among the many other examples, this last one confirms what we all learned in law school: That “ethics” doesn’t mean “logic.”  An attorney admitted in England is asked to come to America to render advice on English law to a firm’s New York client.  May she do so?  No, says Rule 5.5, which forbids the practice of law (i.e., rendering legal advice) by a person not admitted to practice in the jurisdiction in which the advice is rendered.  So the English lawyer stays in London and counsels the client using Skype.  Any problem?  None at all.

(The Commission is proposing a “temporary practice” revision of Rule 5.5.  But ain’t life a wonder?)

In Williamson v. Boehringer-Ingelheim Pharmaceuticals (N.J. App. Div. A-6291-10T1, March 12, 2012), plaintiff sought damages from her employer for alleged violations of the New Jersey Law Against Discrimination and other related theories.  The parties participated in voluntary, private mediation that lasted nine hours.  At the conclusion of the mediation, a document was signed by plaintiff, the defendants’ attorney and the mediator(!), reciting that plaintiff would dismiss her complaint with prejudice and receive certain payments and other benefits from defendants.

This post-mediation document contained, among other things, language that “The parties . . . have agreed to a settlement in principle.  The terms of the Settlement Agreement, which will be signed by the parties within one week of the date of this document will provide: [and then listed certain terms]”

Ten days afterwards, defendants forwarded to plaintiff’s counsel an 11-page Agreement and Release, and ten days after that defendants were advised that plaintiff was “declining settlement.”  Defendants moved to enforce the settlement.

Plaintiff had released her counsel and appeared pro se.  She alleged, among other things, that material terms had been agreed to that were not in the post-mediation document, and that certain terms in the Agreement and Release that had not been agreed to.  She also said that she had been misled, and had been told that the document she was signing was a “confidentiality agreement.”

At oral argument on the motion to enforce, defense counsel represented that the mediator had typed the one-page post-mediation document, and that it was signed by the plaintiff, a representative of the defendant, and the mediator.  Plaintiff’s former counsel told the court that “we had an agreement at the mediation.”  The court granted the motion to enforce the Agreement and Release, and plaintiff appealed.

Plaintiff claimed error in the trial court’s failing to hold a hearing and make findings of fact as to what was said at the mediation regarding the nature and contents of the post-mediation document.   The Appellate Division affirmed in relevant part.

The court held that settlement of litigation was so important that, as a matter of public policy, “an agreement to settle a lawsuit will be honored and enforced in the absence of fraud or other compelling circumstances.”  Nevertheless, the proponent of a motion to enforce bears the burden of establishing the existence of a settlement agreement in the first place.  Where, as here, there is no material fact in dispute, fact-finding is not necessary, however.

A bare claim that a one-page document was described as a confidentiality agreement is “woefully inadequate to create a viable defense” where the plain language of the document “renders it implausible that plaintiff was unaware that she was agreeing to an enforceable settlement when she signed the document.”  The court did hold, however, that plaintiff was bound by the terms of the one-page post-mediation document, not the 11-page Agreement and Release, to the extent that the substantive terms differed between the two.

LESSONS LEARNED                                  

What is a mediator to do, to try to prevent, or forestall, or truncate, these post-mediation disputes?  We can’t prevent someone from asserting a claim, but it seems to me we are responsible for (a) providing the parties with the best counsel we can to avert one, and (b) ensure that the mediation process itself is not drawn into, or compromised by, this kind of post-mediation dispute.

I suggest that “best practices” in this regard should include:

1.  The parties’ counsel, not the mediator, should paper the deal.  There is no such thing as a neutral drafter, and the first thing a court wants to know about a disputed document is what was intended by the person who wrote it.  Mediators should stay out of court, which means they should let the lawyers do the lawyering.  Drafting and then negotiating and re-drafting a legally binding document is lawyering.

2.  The mediator doesn’t sign the agreement.  Not as a party, not as a witness, not as anything.  No initials, no nothing.  Your name should not appear even in a “Whereas” clause.  Don’t even allow your stationery to be used.  The agreement imposes no obligations on the mediator, and the mediator does not offer to testify as to the veracity or legal sufficiency of the contents.  Indeed, quite the contrary, we refuse to do so.  So butt out.

3.  The mediator, more “up on” these cases than counsel are, should strongly advise both counsel to include some form of the magic words:  “The parties intend to be bound by the terms set forth in this document.”  Notwithstanding that a more detailed agreement will be forthcoming, and acknowledging that the partioes’ counsel may still need to negotiate the final documents including the release, nevertheless, “the parties intend to be bound” by the terms set forth in the MoU or whatever they want to call the document signed that day.

4.  Insist.  Don’t leave the mediation without seeing the signed paper.  (Don’t take the paper — just see the paper!)  Your service to the parties is incomplete until you have rendered the expertise, advice and counsel that all good mediators should possess about the possible land mines that lurk for those less experienced. They don’t mediate every day; we do.  We don’t care what is in the paper, we don’t care who promises what to whom — but we are being paid to care about whether the parties can agree to an enforceable settlement of the claim, and this is a critical part of it.

In brief, ”best practices” should aim for two goals:  Getting an enforceable agreement settling the dispute; and preserving the integrity, neutrality, confidentiality and independence of the mediator, on which the utility of the process so critically depends.  I hope these four points can take us closer to both goals.

Two recent cases — while they don’t involve mediator testimony (happily) – shed some light on what might constitute “best practices” in documenting a settlement in mediation.  The first case will be discussed here.  A second post will present the other, as well as some tentative “lessons learned.”

In Beim v. Sawyer (N.J. App. Div. A-2816-10T1, February 29, 2012), the defendant, in her 70s, sought divorce from the plaintiff, in his 80s.  After the filing of the complaint and answer, the parties attended an “Early Settlement Panel,” a “Mandatory Economic Mediation,” an “Intensive Settlement Conference,” and a second “Economic Mediation,” which resulted in a settlement agreement signed by defendant, defense counsel, plaintiff, and plaintiff’s counsel.

The document was drafted in part by the mediator, in part by plaintiff’s attorney, and in part was a photocopy of another document.  It also featured handwritten paragraphs , and certain sections were deleted.  Of most interest to us was the following language:

The undersigned agree that they intend to meet with their attorneys and have a property/marital agreement drafted consistent with the terms of this agreement.  Both parties further agree that this document constitutes a binding settlement agreement.

A year later, when plaintiff moved to enter partial judgment enforcing the agreement, defendant cross-moved that the agreement be deemed unenforceable.  The trial court granted plaintiff’s motion and, in addition to granting final judgement of divorce, awarded plaintiff counsel fees.

Defendant’s claims on appeal of interest to us were (1) that her primary counsel was not present at the mediation and she did not intend to commit herself that day; (2) that she relied on the mediator’s retention agreement, which provided in part that, in the event of an agreement, ”I will prepare a memorandum of understanding… This memorandum is not to be signed and not to be regarded as binding….”; and (3) that the mediator exceeded her authority by preparing and asking the parties to sign a binding agreement.

The Appellate Division noted the public policy favoring settlement of litigation, and cited caselaw that “the very purpose of the [mediation] process is to resolve the dispute.”  The court upheld the trial court’s findings that the parties knowingly and voluntarily entered into the settlement negotiations in order to divide the marital property; that they were each represented by counsel and had the opportunity to consult with advisors; and that defendant’s insistence that she did not know the agreement’s binding nature was rendered incredible by the plain and specific language providing that it was.  “A change of heart after accepting a settlement is not a basis to set aside the agreement.”

So far, so good.  But what was the mediator doing telling the parties that she, rather than they, would draft an MoU?  Why did she provide, as a condition of her engagement, that her MoU would not be binding?  And why did the parties’ counsel allow a person who did not represent their clients to assume to all-important task of papering the deal?

The second case will follow, along with some tentative “Lessons Learned.”

Click here for the full article, which proposes an “Arbitration Index.”

Tom Prolific:       

Stipanowich starts by listing his woes: boilerplate contracts with hidden arbitration clauses of which consumers are unaware much less knowingly consenting; state statutes protecting consumer rights being pre-empted; court review of unconscionable agreements curtailed; judicial grounds to vacate unfair awards restricted; unilaterally promulgated and non-negotiable waivers of collective remedies held enforceable.  In such a legal environment it is no wonder that legislators are considering banning pre-dispute employment and consumer arbitration altogether.

And it is no wonder that Prof. Stipanowich and others sense even deeper concern at the prospect of consumers and employees having their only recourse in court.  Trying to recover your $36.50 in arbitration is bad enough — wait til you get served with requests to admit!

Stipanowich has always been concerned about the actual and perceived fairness of arbitration programs.  He took part in devising the Due Process Protocol and the predecessor to the FINRA arbitration program, and has written extensively on the facets of arbitration that must be attended to in order for it to fulfill its social function of providing private justice.  Do the participants know the rules of the process?  Is the program genuinely neutral?  Are the arbitrators competent, unbiased and independent?  Is the same relief available as may be granted by a court?

Stipanowich asks us to consider what at first glance might appear to be unconnected things:  the Underwriter’s Lab emblem on our desk lamp; the Zagat Guide in our briefcase; the Consumer Reports website; the Michelin Guide; the MPAA rating of the movie we’re considering taking our kids to; Moody’s rating of the bonds we’re considering buying; and the Nielsen rankings of last week’s Grammy Award program.

And what connects them?  They all give us, as consumers of products or services, broadly-based, comparative and relevant information on which restaurant to go to, movie to see, lamp to buy, and commercial time to purchase.

Why not a comparative rating of companies’ arbitration programs and policies for consumers and employees?  Why not just put it out there that AT&T Mobility offers X, Hooter’s offers Y, and Rent-a-Center offers Z?  If the ratings data are properly chosen, the information is accurate, and the various considerations properly weighted, would consumers and employees not have a pretty good tool to avoid getting ripped off — legal as the rip-off may be?

This is where it gets fun.  As long as you rate the fairness of actual companies, an Arbitration Fairness Index would not only help arbitration consumers, but also influence on corporate behavior.  It would reward companies who offered real, fair, just, efficient, evenhanded dispute resolution and tarnish the reputation of those who don’t.  Companies that require waiver of class action claims may suffer a bit compared to those that don’t, the Supreme Court notwithstanding.

If the ratings system itself were cleverly constructed, and the product of broad consultation, it might measure not only comparative fairness in terms of contracting behaviors of companies, but also fairness in terms of outcomes.  Stipanowich articulates four requirements for truly fair dispute resolution programs: They should be relied upon to offer compensatory justice (fair compensation for injuries), corrective or retributive justice (punitive or exemplary damages to inhibit bad behavior), social or distributive justice (producing the same fair outcomes regardless of the power or class of the disputant), and procedural justice (the perception that the dispute resolution process itself is fair).  Stipanowich cites empirical reserach tending to demonstrate that these indicia of fairness can in fact be captured, and can in fact take their place in a multi-faceted grid of concerns that combine in a measure of companies’ comparative arbitration fairness.

This article is a lot of fun, and thinking about its proposals is a way better way to spend your time than moaning about the Supremes’ misunderstanding of the FAA and the policies it is meant to serve.  And in keeping with the spirit of ADR, it reminds us that sometimes the best route to a fair outcome is one that goes around the law.

Joe Behan of Dublin, Ireland, reframed the topic as the role that mediation plays in arbitration practice.  ICC Arbitration Rules Appendix iv(h)(ii) allows the arbitral tribunal to facilitate settlement, with the proviso that such efforts not derogate the enforceability of the award.  CIArb Practice Guideline 7 provides for the parties to waive challenges on the basis of settlement efforts, as do the rules of the  HKIAC and SIAC.  JAMS has a “mediator in reserve” policy in international arbitrations.  CPR categorically forbids arbitrators from acting as mediators.  Some courts have held agreements for med-arb, and awards deriving from med-arb, to be enforceable, even where statutes prohibit it, if the parties have intentionally and knowingly waived such objections. 

Mark Appel of ICDR emphasized the need for flexibility in applying dispute resolution processes to particular needs of the matter and the clients - a message consistent with AAA’s longtime insistence that the client’s needs, not the purported professional expectations or standards of the neutral, should drive ADR.  He also described AAA’s Prudential Whole Life process from the late 1990s in which 70,000 claims were subjected to a grid analysis, followed by mediation and arbitration if needed.

Giorgio Grasso of Rome, Italy, provided an overview of benefits and risks of various hybrid processes.  He cited the Italian experience of consumer claims in the communications industry, which is a multi-step process implicating med/arb at the end.

Wang Cheng Jie of the China Center for Promotion of International Trade (CCPIT) described the intricate Chinese system in which both arbitrators and judges are empowered to engaged in settlement efforts.  He grounded the intellectual basis for system on Confucius’ adage that “harmony is a virtue.”  He cited a success rate of about 70% in 12,000 cases involving 50 countries and regions since establishment of the CCPIT Mediation Centers in 1987.  Wang also explained that cases that approach a CCPIT Mediation Center but are not resolved can go to CIETAC and an Arbitration Commission that is distinct from the mediator.  (CCPIT Mediation Procedure Art. 28).  By contrast, cases approaching CIETAC in the first instance are subject to mediation efforts by the arbitration tribunal itself, though consent of the parties is required.  He reported that 30% of CIETAC-filed cases are resolved by mediation. 

Once again one is reminded that, however fierce the debates may take please in the United States, “there is a world elsewhere.”