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New Jersey Statute Regulates Settlement Agreements

Thu, 2019-03-21 10:47

New Jersey Governor Murphy has signed into law
P.L.2019, c.39, which declares unenforceable any “provision in any… settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.”

Moreover, the new law provides that every settlement agreement addressing such claims “shall include a bold, prominently placed notice that although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable.”

Many New Jersey mediators consider it their responsibility to encourage parties’ counsel, when drafting an MOU memorializing a settlement agreement at the end of a mediation, to include words to the effect that, while further documentation is contemplated, the parties agree to be bound by the terms in the MOU. This is in compliance with the New Jersey Supreme Court’s requirement, in the Willingboro Mall case, that mediated settlement agreements must be in writing to be enforceable.

Is it now best practice in New Jersey for mediators to alert parties settling harassment claims that a non-disclosure provision that was bargained for is in fact illusory? What if they understand that principle but don’t write the acknowledgement into the MOU? What if they write it in, but not in “Bold, prominently placed” language? Should the mediator intervene or would that constitute rendering legal advice? Does a no-disparagement clause fall into the scope of the law, requiring bold, prominent notice that it is unenforceable?

And what if one of the counsel understand perfectly well what they’re doing but purposely omit the language because they intend to enforce it in a state other than New Jersey?

Finally, what if — like most New Jersey mediators — you are completely unaware of this new law?

World Mediation Forum Part 2: Italy, Poland, China, India, France… and Even Texas!

Sat, 2019-03-09 13:02

At the 26th convening of the UIA World Mediation Forum in Zurich on March 5-6, 2019, a panel on whether mediation should be compulsory, among representatives of France, the US, Switzerland, and Italy, wrestled with intriguing philosophical considerations.  Is compulsory court annexed ADR inconsistent with the principle of judicial access?  Should conciliation, rather than mediation, be compulsory with respect to municipal or other citizen concerns?  Is compulsory mediation of parental concerns about children’s education more advisable than compulsory mediation of business-to-business concerns? 

Catherine LeClerq of Armand Avocats in Paris made a strong argument for compulsory mediation of disputes between state employees and administrative agency employers, a plan that has been experimentally introduced in 2016. 

Pasquale Orrico, of Arlenghi Agostini Avvocati in Milan, updated the complex and pervasive (one might say overreaching) compulsory mediation regulations in Italy.  Topics subject to compulsory mediation in Italy include real estate, tenancy, business lease, banking, and insurance. The only thing compulsory, however, is a first meeting; if, after a mediator explains the process, the parties decline to engage in mediation, then they are relieved of any further obligation and may proceed with their lawsuit.  In that sense, it seems to mandate compulsory awareness, consideration, and intentional rejection of mediation, rather than compulsory participation in the process itself.  Clients as well as attorneys must attend this first meeting.  As a result of this regimen, between 160,000 and 190,000 mediations per year are reported by the Italian Ministry and Justice; the number of settlements resulting from these mediations (i.e., sessions held as a result of these first meetings) is between 40-45%.  The mediations are conducted by bar associations, chambers of commerce, and other entities.  Voluntary mediation has risen 14% during this period – an interesting side-effect. 

Katarzyna Przluska-Ciszewska, President of the Polish Bar Council Mediation Center, reported on a confusing current proposal by the Polish Ministry of Justice addressing family law and divorce proceedings.  It requires, before formal filing of a divorce action, an informational conference meant to encourage reconciliation and, if not possible, outlining plans for child custody and financial support.  These matters must be notarized or officiated by a court in order to be enforceable – agreements met as a result of private mediation are not enforceable.  The proposal is that couples be informed of the “social consequences of the breakdown of the marriage” and the availability of “therapy and other means of family support.”  Part of this support is family mediation which, if not mandatory, is strongly brought to the parties’ attention.  If mediation is elected, the mediator presents to the court a “report containing the results of the mediation” as well as confirmation that the parties have been advised of the “social consequences” of the divorce.  Only after this report is delivered may a petition for divorce be initiated.  Thus, the mediator is a vessel to convey the concern of the state, rather than facilitating an autonomous decision by the parties.  Katarzyna added concern that the use of the term “mediation” to describe this process threatens the understanding and acceptance of compulsory commercial mediation, which is also being considered in Poland. 

Jeff Abrams of Houston, Texas, related the rise of compulsory mediation in that state.  Key developments were legislative action to empower judges to require mediation prior to scheduling trials; training respected leaders in the legal community as mediators; presenting judges with the efficacy of using these mediators; maintaining metrics of early use of mediation in the original jurisdictions to measure its effectiveness in reducing dockets; and “scaling” the system to courts across the state.

Cezary Rogula, of Krakow, Poland, and Jennifer Lygren, of Geneva, Switzerland, reported on the application of mediation to administrative and quasi-public contexts.  Jennifer explained an initiative involving regulation of financial institutions – mainly brokerages – with an eye to financial protection.  Investors may use ADR to pursue errors or misfeasance of financial service providers through legislated processes.  It requires a qualified mediator (skilled both in financial instruments and in mediation) to oversee the process.  Private mediation bodies are currently competing to fashion proposals for the government to approve their administration of the process.  A claimant client must first attempt direct negotiation and the request must come before any arbitration or other adjudicative proceeding.  The process is funded by the financial industry participants, and participation is mandatory.   Typical banking activities are not included – the scope is limited to executing securities orders, offering investment advice, managing portfolios, etc.  Cezary discussed mediating disputes involving public authorities, as part of the Polish code of administrative procedure.  The process has a goal, not of coming to a settlement agreement, but an “arrangement” by which the authority will deal with the private party on an ongoing basis.  Proceedings are not public, and the mediator is a potential witness in any ensuing court actions.  An example is the registration of a trademark.  A private publisher of magazines confronted difficulty in registering the titles of those magazines as trademarks – an administrative decision.  The mediation process allowed the presentation of factual, marketing, and expert evidence and informal discussion.  Of 29 proposed trademarks, 12 were successfully registered as a result of this process, to the client’s satisfaction.  The process allowed the airing of both the agency’s and the petitioner’s concerns, and the result was understood rather than resented or coerced.  A second example was made involving construction, with building permit, historical preservation, and zoning issuance.

A panel addressed the application to mediation of concepts of marketing and economics.  Thiruvengadam B.C., of Bangalore, India, reminded the group that demand arises from necessity – if litigation is necessary and arbitration is merely an option (even a luxury), where does mediation lie?  Indian judges dispose of an average of 1,000 cases per year, and 10,000,000 cases are filed in Indian courts each year.  The judicial system is complex, and it takes 10-20 years for litigation to yield a final outcome.  Citizens therefore either give up or use alternatives to litigation – mosques, associations, mafia or other unconventional processes.  Court-annexed mediation was first introduced in 2000; by now, 120 cases, on the average, are referred to mediation each day with a success rate of 69%.  The quality of court-annexed commercial centers has been questioned (court-annexed mediation is free and mediators receive low fees) and there is a move to outsource mediation to private institutions.  Gerard Kuyper of Brussels evoked the classic supply/price/demand curve and suggested that the market of justice has a strict and unmodified supply line, with price determined only by demand.  Yet individual behaviors within this market are wildly different – Belgium has litigation at the amount of 7 to 1,000 but Netherlands less than one per 1,000.  Another related metric is time to resolution – Belgium has clearance of 100 days and far longer for Netherlands.  Gerard suggested that dispute behaviors are seldom rational and instead involve cognitive dissonances such as risk/loss aversion and emotional, rather than economic, choices.  David Lutran of Paris encouraged the presentation of mediation as a product competing with — rather than complementing — others on the market, subject it to marketing analysis such as providing for the economic welfare of the customer.  These considerations may include user assessment of the likelihood of satisfaction at trial or in other processes.  The attraction of disputants to traditional justice is fundamentally irrational, and distinctly branding mediation would seem to hinge on appeal to similarly emotional characteristics.  The mythology of the judge as a cultural figure is unique – mediators cannot hope to compete.  Put otherwise, the image of a blindfolded woman holding a balance and promising fairness through the dispassionate application of social norms is far stronger than the image of a handshake.  David suggested that emphasizing neutrality, expectations, control and the wide scope of potential outcomes are possibly effective branding approaches.  Emphasis should be placed on getting what a party wants, rather than defeating another party – that is, seeking self-interested profit from the conflict rather than a pursuit of Justice.”  The underlying approach is to satisfy the customer by proposing a process better designed to meet the customer’s own goals.  Mediation is not a deviate of institutional justice, but a direct method of obtaining stated economic goals in a rational, self-interested manner that is designed to accurately reflects the stakes involved.

A successful Mediation Forum was made even more successful with a panel on “Users of Mediation,” featuring Jean Marguerat of Froriep Legal SA in Geneva, Torsten Bartsch of Caterpillar Sarl, Laurent DeVille of Froriep, and Franz Wiehler of Siemens AG.  Torsten presented an unscientific survey of Lake Geneva-based general counsel, asking the preferred ways to deal with disputes.  By far the most favored was direct conversations between the parties.  There was little difference between arbitration and litigation, except in terms of certainty of results. Arbitration was preferred only in highly technical matters.  Franz concentrates on conflict identification and management within the enterprise.  He finds that identifying and assisting team members’ conflicts can add strength and value to a team.  He considers the greatest roadblock to corporate use of mediation to be awareness of its attributes and possibilities.  Laurent reports that a GC’s recommendation to a Board to engage in mediation is met with skepticism based on unfamiliarity, placing pressure on the GC that the outcome be favorable.  Cost is less the issue than outcomes.  In particular, a question is raised how an external facilitator can progress negotiation more effectively than an informed internal company representative.   He also noted that, based on his experience of practicing for 10 years in Japan, the cultural expectations of participants must be respected.  Dispute avoidance in Japan is a matter of dignity, reflecting a duty to behave in a certain way.  This is particularly true in family and labor cases.  Mediation is offered through a Mediation Court, and the process is formal, conducted by non-lawyers seeking consensus rather than vindication of rights. 

The final speaker at the Forum was Wang Fang, Deputy Secretary General of the Mediation Center of the China Counsel for Promotion of International Trade in Beijing.  She was introduced by Clarisse von Wunschheim of Altenburger Ltd, who encouraged a realistic view of the ascendency of the economies of Russia, India and China, which have real-world aggressive aims and real-world associated business disputes.  And, when considering China, size matters: Civil and commercial disputes brought to the courts in China in 2018 approximated 8,800,000.  Clarisse believed that the preferred method of commercial dispute resolution is arbitration using administered rules other than CIETAC.  She considers that co-mediation of commercial disputes between Chinese and Western parties to be essential – that it is practically impossible for a single mediator to serve both parties possessing such distinctive cultural predispositions.  Wang Fang reviewed the history of commercial mediation in China, which is intrinsic to the economy of the society and took institutional form in the early years of the Republic, starting in 1902 through Chambers of Commerce such as the one in Shanghai established in 1912.  Current government policies strongly support both domestic and cross-border mediation as part of what Wang Fang terms a policy of “diversified dispute resolution mechanisms.”  The Belt/Road mechanism has created occasions for increased attention to rapid dispute resolution mechanisms, most recently statements emanating from a January 23, 2018 reform committee and a similar notice dates January 12, 2017 concerning intellectual property rights.  She also emphasized the importance of strategic partnerships with non-Chinese commercial mediation centers, and agreed with the idea that co-mediation has an important role in addressing commercial disputes.   Most of CCPIT’s caseload of 2,000 cases per year continue to be internal, but joint centers with Italy, US, South Korea, Malaysia and other markets signify growth in international mediations.  CCPIT also hosts an International Mediation Summit annually since 2016.  The 2019 Summit will be held in October 16-18 in Chongqing.

This event attracted over 100 delegates from 20 countries in five continents.  We worked hard and played hard. The 27th meeting of UIA World Mediation Forum is scheduled for January 17-18, 2020 in Milan.  I have already marked my calendar.

26th UIA Mediation Forum: Developments in Switzerland

Sat, 2019-03-09 03:58

The UIA World Mediation Forum convened its 26th meeting in Zurich on March 8-9, 2019.  As usual, however interesting the many presentations were, the meeting was especially marked by the opportunity to continue friendships with mediators from around the world, and to forge new relationships.

Appropriately, the first session set forth the “Swiss Dispute Resolution Landscape.”  Forum President Fabienne van der Vleugel moderated a panel of regional leaders.  Jean-Christophe Barth is by profession a banker and by inclination Co-President of the Swiss Chamber of Commercial Mediation.  The Chamber was established in 1997 and has 230 commercial mediators.   He notes that 98% of the Swiss economy are SMEs, and it is a formidable task to introduce them to the relatively unconventional method of amicable dispute resolution.  Court rules introduce mediation as an option, but the culturally fragmented nature of Swiss society, as well as the efficiency of business courts, militate against broad up-take of commercial mediation.  He proposed that mediation is an “unrecognized value driver” to businesses.  Andrea Staubli, President of the Swiss Federation of Mediation Associations (SDM-FSM), described the consolidation of various mediation associations under the common umbrella of the Federation and the institution of quality training protocols.  There are now 1,500 mediations among the 22 associations in the Federation.  These include commercial, family, construction and other mediation focuses, in various languages and approaches.  The Federation accredits and certifies both training courses and individual mediators.  Among the metrics she offered were that 70% of mediations settle, and that 80% of mediations extend over 1-5 sessions.  Urs Weber-Stecher, a member of the SCAI Arbitration Court, reported on that organization’s efforts in mediation.  He reviewed the benefits of the SCAI Rules of International Arbitration, including an arbitration-friendly judicial system (resulting in vacatur in only 7% of appeals).  He decried the traditional disconnect among commercial mediators and commercial arbitrators, suggesting that benefits might accrue from more cooperation among these professional communities, including hybrid processes.  SCAI reports 70-80 arbitrations and 7-10 mediation cases per year. Finally, Roman Manser, President of the Mediation Commission of the Swiss Bar Association (SAV-FSA), explained that mediation – regulated in Germany and Austria – is not centrally regulated in Switzerland, placing on professional associations the responsibility to promulgate rules and competency guidelines.  The Swiss Bar Association issues certification to mediators after the completion of certain hours of training.

This year the SCAI releases its new revision of Swiss Rules of Commercial Mediation.  SCAI Executive Director and General Counsel Caroline Ming joined attorney Kirstin Dodge of Hamburger AG to explain these new Rules. Revisions were meant to simplify and abbreviate the document itself; to clarify the system of fees owing to the institution and to the mediators; to address to possibility of hybrid (Arb-Med-Arb) processes; to satisfy international demands for certified mediated agreements; and for other reasons.  The Swiss Rules designate a “seat of mediation,” similar to international arbitration, designating the law that interprets the mediated agreement.  Interestingly, the Rules provide for entry of an agreement as an arbitral award, but only if the arbitration commenced prior to arriving at the agreement (in order that the arbitral award issue at the time a controversy is active).  The new Rules provide for a simplified procedure for matters involving less than CHF 50,000; certificates of mediation and of settlement agreements; and an advisory council to recommend outcomes of costs disputes or future modifications to the Rules.