The Alternative Dispute Resolution Institute of Canada (ADRIC) has recently announced its intention to launch new Med-Arb rules, Med-Arb designation and accreditation criteria and Med-Arb templates at its Annual National Conference in Victoria, BC on November 20-22, 2019. This article discusses Med-Arb as a process and comments on the proposed reforms.
The Mediation Process
In mediation, parties attempt to negotiate an acceptable solution to a dispute with the assistance of an independent person. The mediation is confidential between the parties and the mediator. Crucially, it is for the parties involved in the dispute to decide the terms of any agreement. The mediator is impartial and is there to assist them, not to take decisions in respect of their dispute. The parties control the process and can walk away if they want to. Only if agreement is reached, is a binding result achieved.
The Arbitration Process
An arbitration is similar to litigation where a third party is appointed to decide the dispute, often an individual with specialist expertise or knowledge. Although they are independent of the parties, they will determine how the dispute is to be resolved. The arbitration process is usually confidential. The outcome of arbitration is legally binding upon the parties.
According to the ADRIC, Med-Arb is a “hybrid approach that combines the benefits of both mediation and arbitration”. Parties attempt to reach a settlement through mediation with the assistance of the mediator. However, if the mediation is unsuccessful, the mediator will switch roles and take on the role of an arbitrator. Thereafter, the arbitrator will make a binding determination.
The proposed format and procedure for Med-Arb raises some concerns. Firstly, it is a common principle of mediation that parties are open and forthright with the mediator, disclosing sensitive information to him or her relative to their dispute and negotiating position. This is in contrast to a more guarded approach that parties might adopt in an arbitration. However, if the parties know that the mediator could become the arbitrator, this may change their attitude and approach towards the mediation. Parties could, for example, adopt a more tactical approach to the mediation with one eye on the possible arbitration. They could also be concerned at sharing something with the mediator for fear that this could be a reason for issuing a judgment against their interests in an arbitration.
As we have commented on before, to properly understand mediation, parties need to understand the importance of positions and interests; emotion and heuristics; psychology and reality. No matter how independent or impartial the mediator is, they will remain susceptible to the same cognitive biases as the parties. Despite their best efforts, some may carry over subconscious bias from the mediation into the arbitration process.
As with other forms of ADR, the uptake of Med-Arb will be shaped by many factors such as cost, commercial practicalities, client demand and awareness in the legal profession. Although Med-Arb may combine the benefits of both processes, this does not make it the panacea of the ADR world.