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Arbitration/Mediation


As the costs of litigation continues to increase dramatically, and the traditional legal system has become overloaded leading to long delays in bringing matters to conclusion, individuals and businesses have looked for other, quicker and less expensive ways to solve their disputes. Alternative Dispute Resolution, often called ADR, really means a number of ways by which disputes are dealt with outside the court process. The most common forms of ADR are negotiation, mediation and arbitration. ​

So what is Arbitration?

Arbitration is a private dispute resolution process where disputing parties agree that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments. Arbitration is different than mediation because the neutral arbitrator has the authority to make a decision about the dispute. The arbitration process is similar to a trial in that the parties make opening statements and present evidence to the arbitrator. Compared to traditional trials, arbitration can usually be completed more quickly and is less formal. For example, often the parties do not have to follow the strict rules of evidence.

After the hearing, the arbitrator issues an award. Some awards simply announce the decision (a declaration award) in all awards a reasoned decision is provided to the parties. The arbitration process may be either binding or non-binding. Where arbitration is binding, the decision is final, can be enforced by a court, and can only be appealed on very narrow grounds. Where arbitration is non-binding, the arbitrator's award is advisory and can be final only if accepted by the parties.

So what is Mediation?

Mediation is a voluntary process of cooperative problem solving in which a neutral third party, with special training and skills, helps individuals to work out mutually acceptable, agreements. The mediator is selected by agreement between the parties.

It is important to remember that the mediator does not reach the solution, the parties do, with the mediator's help.

Although conflict is difficult to deal with, and emotions often run high, you should come to mediation with an honest desire to reach a settlement that is fair to both parties and workable in practice. Participants in mediation must be prepared to be flexible in moving away from their initial positions to seek solutions which meet as many of their mutual interests as possible.

Mediation is voluntary, and either party is free to withdraw from mediation any time during the process. In fact, unless there is an existing contract between the parties which requires mediation if a dispute arises, or if required as part of a mandated court procedure, a party need not participate in mediation.

In some circumstances, the mediator may also end the process, if he or she believes that mediation is not appropriate or useful for the parties.

Although the process is voluntary, agreements reached through mediation are as binding and valid as any other contract.


Arbitration should be considered if:

  • The court setting lacks specific expert knowledge of the subject area.
  • It is an inter-jurisdictional dispute.
    You require rules of procedure.
    Expert, knowledgeable arbitrators can be selected.
  • You require finality or a full substitute for litigation.

Mediation should be considered if:

  • The parties want to settle.
  • The parties have an on-going relationship and/or the possibility of future dealings.
  • Confidentiality is important.
  • You want the opportunity to consider the issues outside the traditional legal framework.
  • The parties need a commercial solution which could not be obtained through litigation or arbitration.
  • The parties are only considering litigation or arbitration because they have reached an impasse in negotiations.


You should not consider Arbitration if:

  • Rights of non-parties are affected by the outcome.
  • The dispute needs to be confidential as arbitration cannot be kept confidential if there is an appeal.

Mediation should not be considered if:

  • There is a significant power imbalance between parties.
  • The other party or counsel has an abusive personality.
  • It could be a fishing expedition or disguised examination for discovery.
  • The other side just wants to delay.
  • There are third party rights affected.

Mediation Process

The Mediation Process

After the five step process is complete, the mediator will meet with both parties in joint sessions. Each side explains their view of the dispute and provides background to the information. In commercial and most business mediations, the parties' lawyers can be present during mediation sessions, and will advise the parties throughout the mediation process. The lawyers, while not delivering argument, co-operate with the mediator and help their clients work through the issues.

Occasionally, the mediator may wish to meet individually with each party and either party may also request an individual meeting with the mediator.

Sometimes, to resolve the dispute, it may be necessary to have the participation of experts or others who have a stake in the outcome. The involvement of any non-parties should be discussed and agreed to in advance of the actual mediation session and can be dealt with in the c-justice system using requests.

When the parties reach a tentative agreement, the mediator will write up a memorandum of understanding that each party and, if represented, their counsel will review. The parties are not bound to any proposed agreement arising out of the mediation process until the agreement has been fully reviewed by their legal counsel and signed by the parties.

The Mediator's Role

The mediator is an impartial third party neutral who is not on either party's side and has no personal interest in the outcome of the dispute. The mediator is a facilitator who helps the parties to negotiate their own terms of settlement. Although the mediator may be a lawyer, he or she will not act as legal counsel for either party to the dispute. At most, the lawyer/mediator may provide neutral legal information to the parties and may flag issues for them to discuss with their independent lawyers and between each other. The mediator is not an Arbitrator or Judge. He or she will not decide for the parties how the issues brought to mediation should be resolved, or what is fair. Arbitration is the appropriate forum for this. The mediator's role is to help the parties to reach their own decisions based on their own individual sense of fairness.

Confidentiality and Mediation

It is generally up to the parties to decide whether their mediation process is confidential or not. The default rule in our mediation contract is that all mediations are confidential. This helps to facilitate complete disclosure since they seek to reach a settlement based on all relevant information about the dispute. Because of this, it is important that all discussions take place in mediation on an "off the record" or "without prejudice" basis.

The mediator, unless otherwise agreed in writing by the parties, will not voluntarily disclose the substance of any of the discussions which take place in mediation, nor the content of any documents prepared or exchanged during the mediation process. For mediation to be a confidential process, each party must sign an agreement not to call the mediator to testify in any subsequent legal proceeding between them.

Although the mediation process is intended by all parties to be confidential, the mediator cannot absolutely guarantee such confidentiality. The mediator may, under limited circumstances, be required by law to disclose information.

Sometimes the parties to a mediation may jointly choose to waive the confidentiality of the mediation sessions. If the parties are unable to reach agreement on all issues brought to mediation, the mediator may, if part of the mediation agreement, give his or her non-binding opinion on the terms of a possible settlement. The mediator's suggestions and recommendations for settlement can take the form of a written report to the parties and their lawyers which may be used in any subsequent legal proceedings. The mediator may be called as a neutral to testify at court and be cross-examined upon his or her written report, but will not be a witness for either party.

The Benefits of Mediation

Mediation has a high rate of success which some studies place at over 80%. Although not for every dispute, participants find that mediation identifies the real issues in a dispute in a more efficient way than court proceedings. Mediation is also less damaging to on-going personal and business relationships and the process is usually, but not always, faster and less expensive than traditional litigation.

Mediation will not always result in a settlement and in that case, you are still free to seek other remedies through arbitration or court. Even in these cases, final costs are often reduced as the parties may have agreed on solutions to some of the issues involved in their dispute.

Of those individuals who reach agreement through mediation, over two-thirds agree that the settlement was fair and that they were satisfied with both the process and the results. By minimizing the atmosphere of conflict and providing a safe and more reasonable environment, people are able to focus their energy in reaching creative and reasonable solutions to their disputes.


The Lawyer's Role in mediation

Each party is expected have had independent legal advice about their legal rights and obligations so that they can make informed choices in mediation. Although you may choose to depart from the a strict legal position, for commercial considerations or because of the facts and circumstances of your own case, this should only be done with full knowledge of your legal rights.

The role of counsel is to advise the client of his or her legal rights and obligations and to act as "coach" for that party during mediation process. Counsel also advises on various issues as they arise during mediation, reviews the memorandum of understanding and approves/writes any draft or other formal agreements or documents required to carry out the terms of the settlement.

It is up to the parties to make their own decisions, using information from counsel as one of many factors in the decision making process.

If you are a lawyer and your client is facing mediation, read he guide below on how you assist the process.

INTRODUCTION

Clients going into the ADR process need, and expect, their lawyer to understand the dynamics of conflict and the process itself. With the constant pace of change in the legislative environment, and in common law, it is hardly surprising that many lawyers do not have a great deal of knowledge in the areas of conflict resolution and ADR. Despite the increasing use of mediation as the most popular form of ADR process, many lawyers are not prepared for what actually happens in a mediation session. They often appear to have no overall plan of their case, have not prepared their client properly and have no understanding of the other party's point of view. This impacts in a negative way on the mediation process to reduce and deescalate the conflict.

Some lawyers see their role in mediation as quite limited. They explain the process to the client, may make the opening statement, provide legal advice and then throw their client into the process without any lifeline.

Others try to dominate the process. They behave in an adversarial manner, as if they were at trial, and often limit or prevent their client's participation in the process.

This is unfortunate as the lawyer has a central role, and, in some jurisdictions, a court bound responsibility, in making mediation work for their client in a constructive, creative and productive way. Below are some tips from experience and from other mediators that can help counsel become a more effective lawyer in mediation:

CLIENT PREPARATION AND PARTICIPATION

As in litigation, preparing your client is the most important step you can take. Your client is central to the process of mediation and should be ready to fully participate in an open sharing manner. If you have a client who can speak well then let him or her interact with the mediator and the other side directly. A well prepared client does not need to be protected from themselves and in the mediation system has full confidentiality to protect them from statements that may hinder litigation, but are helpful in working towards resolution in the mediation process.

INTERESTS AND POSITIONS

A mediation session is not a trial based on legal and factual positions. It is facilitated negotiation. The use of active listening skills and communication techniques allows mediators to focus parties on the issues, while releasing hurts and problem solving.1 If you ask questions, make them open ended, it is not an examination for discovery or cross-examination at trial. Pay attention to body language. Pick up on what others are saying and use that information to assist your client. Highlight the positive, but do not ignore the negative. Encourage the clients to speak directly to each other in the session. If possible, separate the people from the problem. Clients need to see you as a problem solver.

BATNA & WATNA

Working with your client be before the mediation helps you identify your client's best alternative to a negotiated agreement (BATNA). Further, your client will be able to understand the worst alternative to a negotiated agreement (WATNA) which will help your client to better work towards problem solving the issue. This allows you to work with your client to better decide what the parameters of a negotiated agreement should be. Having these fully understood by you and your client helps you better decide if you must fallback or if your client should continue on with mediation. This allows your client to protect their interests while approaching the mediation with an open hands approach to problem solving the issue.

PREPARE YOUR CASE

Explain the process to your client in detail including the "stages" of mediation.2 Mediation is not the "touchy/feely" process some litigators believe it is. Decide who will attend the session, what their roles will be, and prepare the client for his or her participation in the mediation process. Talk about possible settlement options before the mediation and discuss BATNA and WATNA.

Know your file well and reality test your client to be sure of its accuracy. Be honest in your assessment of the strengths and weaknesses of your clients case. The mediator will, at some time, likely ask what your client really wants/needs to reach a resolution. Your credibility will suffer if you do not have an answer.

PLAN YOUR STRATEGY

Devise a strategy about what your client desires to achieve and how you are going to do it. Consider your options and review your theory of the case. Do this as you would for litigation. Remember that effective advocates are brief, well-prepared, organised, know the law and the facts of the case.

THE OPENING STATEMENT IS IMPORTANT

You may want to open your client's case in the mediation. Only do so if it advances your clients position. If it will only inflame the parties then let your client lead with their understanding. Do not give in to the temptation to grandstand. This is not court. Show that you understand the practice and dynamics of negotiation and use every opportunity to promote resolution. Be firm but not inflexible.

Put the clients case forward while at the same time, demonstrating that you recognize both sides will have to move if there is to be resolution. Do not threaten or bluster. Do not talk about money in your opening statement. Make sure your opening is to the other party, not the mediator. Your rhetoric is for the benefit of the other party not the mediator, since he or she has no decision making power. Make the opening clear and focus on key issues.

USE PRIVATE SESSIONS EFFECTIVELY

Work with the mediator and be as frank as possible. Make sure that there has been an agreement on whether private sessions are confidential before beginning the discussion. Trust the mediator. He or she has the skills to help and can do much of your work for you if used correctly.

BE PART OF THE SOLUTION NOT PART OF THE PROBLEM

Often forgotten, is that in mediation, the lawyer is truly "counsel" to the client. He or she helps the client present their side of the dispute and the clients interests to the other party.

The lawyer as problem-solver has the ability to analyse situations through a lens that sees both the clients and opposing parties interests. By translating client positions into interests, generating and assessing conventional and novel options to address the problem, counsel performs a valuable service to the client who often cannot step back from the conflict to see the light at the end of the tunnel. Perhaps most importantly, counsel can work to build consensus around an option which best addresses the goals and interests of a client or the parties involved.

Research studies have demonstrated that even when not as quick or inexpensive as expected, clients prefer the mediation option over litigation in 80%+ of cases. Participating in a mediation is hard work but a satisfied client is the best source of new business and revenue.

References:

1 Spiller, P., “Dispute Resolution in New Zealand, 2nd ed.” (Oxford, 2007).

2 Ibid, at 93.

Further reading:

Galton, Eric, Representing Clients In Mediation, Dallas, American Lawyer Media/Texas Lawyer Press, 1994.

Lawrence, James K. L., "Mediation Advocacy: Partnering With The Mediator,"

(2000) 15 Ohio Journal on Dispute Resolution, 425.

Noble, Cinnie, L. Leslie Dizgun and D. Paul Emond, MEDIATION ADVOCACY: Effective Client Representation in Mediation Proceedings, Toronto, Emond Montgomery Publications, 1998.

Noble, Cinnie, Family Mediation: A Guide for Lawyers, Aurora, Ontario, Canada Law Book, 1999.