Business Conflict Blog
My admiration for Walt Kelly has recently developed into an obsession, and over the past few years I have been gobbling up each volume of The Complete Pogo as it has trundled off the presses. Churchy, Mam’selle Hepzibah, Albert and Pup Dog not being that far from my mind, the hot days of summer have kicked in to prompt a lemonade reflection.
The fruits of mediating are many, by no means restricted to whether disputes settle. Working with indignant people as they wrestle with their sense of injustice or betrayal, or try to assess what is best for their business, or to determine how to manage the expectations of their colleagues, is a fascinating thing. I value being around smarter folks than I am, and when I mediate everybody in the room knows more about the dispute than I do.
What’s fascinating is coaching the process of remove — of distance, assessment, judgment, risk, opportunity, and face-saving. Observing who is willing to go forward and who needs to stay where they are for a bit. Who defines themselves by solutions and who by problems. And, of course, to have the luxury of doing this when it’s not your money on the table.
On the hot summer afternoon when I write this post, I am struck by the worthiness of it all. Not the virtue of my skills, or even of the facilitative process itself, but rather of the way people tend to behave — sooner or later — when confronting such challenges. Just about everyone I’ve worked with finds a way to reframe the event from an affront, or a wrong, to a challenge, or a problem. Not everyone figures out how to fix it, right there in front of your eyes. But almost all of them get to a point where fixing it becomes more attractive than punishing someone about it, or blaming someone for it.
Walt Kelly knew this, of course, years before I did. And in case any of you mediators catch yourselves in an Okefenokee mood, I offer Pogo and Porky, leaning on a log, from October 17, 1953:
The death of Colin J. Wall on July 16, 2015, is a crushing blow to our profession and a personal loss to me.
Colin was not a lawyer. He was trained as a quantity surveyor, which (as he explained it to me) meant that he was good a figuring out what a construction change order would cost. Raised in Birmingham, he found himself posted in Hong Kong by an early employer and was consulted by Queen Mary’s Hospital, which was undergoing an extensive revision. The Hospital was receiving bids for the construction work that far exceeded its expectations. Colin noted that the building had an asbestos condition of unknown scope and expense, and he suggested that the Hospital assume the asbestos removal itself, at its own direct cost, and bid out the job on a post-removal basis. It did so, and the project went forward without a stumble.
Rebuilding a working hospital “without a stumble” turned out to be just the assignment for a person of Colin Wall’s persistent, collaborative, problem-solving, disciplined frame of mind. He established a rapport with each stakeholder, from the physicians through the administrators to the vendors, to ensure that the work progresses in a sequence and at a rate that everyone had agreed upon, expected, and knew how to accommodate. Working on building the Hong Kong airport, while it was fully operational, was a similarly revelatory example. Colin was not a blamer, but rather a fixer, and his approach to conflicts on a construction project was less that of a lawyer than a life coach, or a midwife.
He worked closely with Eric Green and became a mediator and arbitrator in global demand. He spent three weeks in Hong Kong and one at home in England, and accepted disputes in the hundreds of millions — even billions — of dollars in Asia and the Middle East. So clear was his insight, and so easygoing was his manner, that he eased into the role of a leader among us. Over the years he served as president of the Chartered Institute of Arbitrators (CIArb), co-president of the UIA’s world forum of mediation centers, and honorary professor at the University of Hong Kong. He was a pioneer of Dispute Advisory Boards. He chaired the Hong Kong Mediation Council, and was on the panel of distinguished neutrals of CPR, the ICDR mediation panel, the CEDR-Solve panel of mediators and numerous other panels.
I first became aware of Colin through the St. Mary’s achievement, then got to know him at the UIA Forum (where we were set up to debate a provision of the Code of Ethics in 2003 or so), at the ICC Mediation Competition, and eventually simply as a friend. When he came to the States for treatment of his cancer in the Spring, we took trips to the seaside, to the Shawangunk Mountains, and (when AMTRAK service was suspended the day before a preparatory procedure at Johns Hopkins) to Baltimore. We sang Gilbert & Sullivan. He lectured me about my practice of not contacting mediation parties except through their lawyers. We talked about our children and our plans.
His devotion to learning was unremitting, and he was an enthusiastic teacher of young and old. With Alan Linbury and Greg Bond, Colin was responsible for the recent publication of a book collecting past scenarios for the ICC International Commercial Mediation Competition, many of which he had drafted. He was a stalwart of the VIS East Arbitration Competition, known for buying time for the judges while relating the story of the maritime arbitration involving the CSS Alabama and getting the students to sing the shanty “Roll, Alabama, Roll.” A highlight of his trip to the States was the chance to view the sternpost of the USS Kearsarge, still bearing an unexploded shell from the Alabama during the Battle of Cherbourg.
In one of our last conversations, during the recent UIA Forum meeting in Amsterdam, Colin and I traded lines from Act One of The Mikado:
Katisha. (who is reading certificate of death) Ha!
Mikado. What’s the matter?
Katisha. See here — his name — Nanki-Poo — beheaded this morning. Oh, where shall I find another? Where shall I find another?
Colin Wall, Spring Lake, New Jersey
Unmarketed, unheralded, and therefore largely unknown are the Model Standards of Conduct for Mediators, promulgated in 2005 by the ABA Dispute Resolution Section, the AAA and ACR. Even less well-known, one suspects, are the opinions of the Committee on Mediator Ethical Guidance that issue periodically interpreting those Standards. Two recent opinions (available at the same link as the Committee, above) announced on June 22 are worthy of note.
The first addresses the inquiry: “Must a mediator disclose to prospective parties that she has conducted a number of previous mediations for one of the parties (or its attorney)? What needs to be disclosed?”
The opinion determines that a mediator is obligated to conduct a reasonable inquiry to determine whether she has conducted a prior mediation involving a present participant, and disclose the prior mediation and the name of the person(s) for whom the mediator worked in the past. The opinion notes a concern that, where a substantial part of a mediator’s compensation comes from a single source, that relationship would reasonably raise a question of the mediator’s impartiality. This obligation includes disclosing prior work involving an insurance carrier.
If, however, the mediator is asked what happened in the prior mediation, or whether the matter settled — and, by implication, whether the relationship does in fact form a substantial part of the mediator’s compensation — the mediator should refer the inquiry to counsel in the prior mediation. This is because the Standards of Conduct apply to the mediator but not to the parties or counsel. And here is where we come a cropper.
I frequently (well, maybe sometimes) get work because a party or counsel from a previous matter seeks to work with me again. And I have no doubt that the prior party suggested me to the other side and vouched for my bona fides. I nevertheless disclose at the outset that I have previously worked with so-and-so, and no one has ever objected or even expressed surprise to learn it.
But under the Uniform Mediation Act (enacted in my jurisdiction) and the terms of my own engagement agreement — and pursuant to broadly held best practices — no party or counsel may disclose any mediation communications for any purpose (other than narrow exceptions to prevent harm and so forth). And urging them to do what I myself am barred from doing seems like an unacceptable way to maintain professional integrity or process reliability. The proposed solution seems at odds with some fundamental principles.
The second opinion is noted just for the fun of it. The inquiry was: “Is it appropriate for a mediator to advertise that he mediated ‘the largest settlement in the history of [the] county’?”
The opinion spends a good deal of analysis to conclude that the advertisement violates Standard VII (B), barring solicitations that give an appearance of partiality, as well as Standard V (A), requiring confidentiality of all information obtained in the course of a mediation.
It seems like overkill. Boasting that you got a plaintiff a big settlement will surely drive every defendant away from your door. The ad may or may not be ethical — but it sure is stupid!
In the final report from the June 2015 convening of the UIA World Mediation Forum, Elena Koltsaki of Thessalonia, Greece, led a panel addressing online dispute resolution (ODR) from an EU perspective. She noted two principles at the outset: First, a central goal of EU regulation is consumer protection and the provision of consumer redress. Second, ODR is not merely the provision of conventional dispute resolution services via alternative technology, but rather technologically-modified methods of dispute resolution in areas that were otherwise impossible to accomplish.
Two directives are implicated: Directive 2013/11/EU, on consumer ADR, requiring that consumer claims can be settled out of court. Regulation 524/2013 charges the Commission with creating an ODR platform through which consumers can seek resolution of disputes. Dr. Koltsaki argued that this scheme addresses certain concerns such as gaps in coverage and low quality of ODR services (through imposition of due process standards). However, she questions whether these provisions alone assure effective dispute mechanisms for e-commerce transactions.
Aleš Zalar of the European Centre for Dispute Resolution criticized the EU approach as “top down.” It is one thing to articulate a vision of a kind and gentle ODR world; it is another to execute that vision in a responsible way that results in improvement rather than confusion. Already, by virtue mainly of market forces, there is online arbitration (ICANN), online consumer negotiation and mediation (Ebay, PayPal), online blind bidding in B2B contexts, and online bargaining (email deal-making). He noted entrepreneurial enterprises such as Modria and Cybersettle who remain active in the field. And many courts around the world use online technology both to accept and to direct complaints involving small-value claims. He emphasized that ODR will not replace conventional ADR services, but rather supplement dispute resolution activity by enfranchising claimants who currently are barred from effective dispute resolution because their claims are too small to warrant the transaction costs of settlement.
Giorgio Grasso of Simmons & Simmons’ Rome office focused on the duties of sellers upon the effective date of the EU regulation (January 9, 2016). Sellers must provide links on their websites to the required ODR platforms, and also an email address by which a purchaser can contact the seller. They must also commit to using ADR entities to resolve consumer disputes, and advise consumers of the identity and terms of that entity. These duties are without prejudice to any other redress procedures available to consumers. These requirements also apply to financial institutions who serve as intermediaries on online consumer transactions (even though it may be strongly argued that they bear no legal duty to the consumer). Dr. Grasso voiced some concerns about the legitimacy and integrity of dispute resolution processes where the very identity of the parties cannot be verified, nor can their purported agreements be enforced (even taking aside traditional jurisdictional concerns that ADR was meant to moot). The circularity of the problem is emphasized by the Regulation’s provision that these responsibilities of buyers shall be enforceable by (guess who?) the courts.
Thomas Gaultier of Lisbon’s Abreu Advogados was the last speaker, and noted that Portugal has a grossly underdeveloped mediation environment, much less fulfillment of the ODR Directive. Consumer claims in Portugal are subject to mandatory arbitration, with an eye to providing conclusive finality in a small-claims context. He described three ADR centers. Arbitrare focuses on domain name disputes and focuses sessions by Skype, document exchanges by email, and other technological solutions devised at the behest of the users. These were eventually developed into a basket of online solutions for resolution of a variety of claims. Citius is an operation of the Ministry of Justice, an online submission platform for court documents including decisions. Consultations by judges, lawyers and court clerks can also take place online. The goal is a “paperless justice system.” The third example, E-Justice Centre, was a virtual courthouse established in 2007 addressing virtual disputes arising from a game in which players are involved through avatars. That is to say, rather than Pacman eating you, or Call of Duty blowing off your head, players are able to mediate conflicts in the virtual world of the game. One of the first virtual e-justice center involved a claim of ripping off a feature of the game itself.
In the United States, market forces have prompted companies like AT&T Mobility to offer dispute resolution schemes that are highly attractive to consumers, in an effort to de-incentivize lawsuits. Most companies perceive that it makes more economic sense to refund a purchase quickly and yield a satisfied customer than to dispute a claim and engage in needless expense. One wonders why those same market forces are not engaged in Europe, and why it was necessary for the central legislature to impose outcomes that the market would otherwise provide.
Also at the UIA Forum in Amsterdam, a panel on “Med/Arb: Myth or Reality!” was offered, complete with exclamation mark. The panelists were from the US and the UK, which seemed odd inasmuch as I had understood that the practice of med/arb — that is, of wearing more than one hat — is more broadly accepted in every region of the world other than those two.
After an introduction of the topic by Rahim Shamii, of the ADR Group in London, his American colleague Tom Valenti suggested that the original model (whereby a mediator is asked to make a final and binding decision) has morphed into a more nuanced set of practices. For example, sometimes the parties select a different arbitrator rather than the mediator. Sometimes that appointment can be accompanied by a recommendation of the mediator. Sometimes the mediator works at the same time as the arbitrator. Sometimes these processes are planned and sometimes adopted on the spot (or planned with an opt-out). And there is arbitration where the award is sealed pending immediately ensuing mediation. Sometimes mediation takes place during periodic “windows” of the arbitration process, focusing either on the whole dispute or on a discrete part of it. Valenti posed both advantages and risks to the same neutral’s serving in processes that rely on (in the one instance) confidential ex parte communications and (on the other) open presentation of evidence with opportunity for rebuttal and challenge.
Colin Wall, who until recently practiced as a mediator and arbitrator in Hong Kong, noted the Chinese historical practice of conciliating problems within villages in order to keep everyone in the same communities. He argued that litigation was considered shameful from the time of Confucius through Mao. That is why CIETAC arbitrations always had conciliation provisions. Similar Arb-Med-Arb provisions are found in Hong Kong, Singapore and Australia. UNCITRAL, IBA and other acknowledged rules permit arbitrators who have acted as mediators to resign if they are uncomfortable returning to their role as arbitrator. Wall also noted that Article 5 of the New York Convention can be read to require the initiation of arbitration prior to coming to a mediated settlement in order for an enforceable award to be issued. Wall concluded that Arb-Med-Arb has no practical viability, both because of its structural flaws and because of the sufficiency of more orthodox processes.
Ana Virginia Bauder of CEDR noted that the acceptability of hybrid practices is a function of cultural predispositions. Few cases filed with CEDR (based in the UK) go to a Med-Arb route, and those that do tend to be IP disputes and cases below a million pounds value. This dual process rarely is triggered by a contractual clause. The parties can’t agree in mediation; they value finality, however, as well as efficiency, and they share a desire to continue commercial dealings with each other. So as a matter of practicality they decide to give the mediator authority to determine an outcome within whatever boundaries they agree upon. Thus, sophisticated parties can design processes that address their particular concerns, such as “binding mediation” in which caucuses take place but the mediator is authorized to render a final decision after the consultations are ended.
Dr. Debbie De Girolamo, Senior Lecturer in Law at the Centre for Commercial Studies at Queen Mary University in London, presented data on how mediators behave in the circumstances of switching to the role of arbitrator – that is, in the original meaning of the term, where the same individual acts in both capacities. The mediators in her study saw themselves as facilitators who assisted parties to come to a resolution, but expressing no view as to the comparative merits implicated in the dispute. Involved in this “facilitative” role, however, are the skills of empathizing with each party, challenging each party, assisting each party in formulating strategies, and making demands of each party – behavior that would seem to be inconsistent with a mere facilitator. For this mediator, having taken on these roles, to assume the ultimate authority of a decision maker of a claim of legal entitlement is improper, Dr. Girolamo argued, inasmuch as such a process opens the arbitration stage to extraordinary challenges. These may include frustrated due process expectations, and inadequate disclosure of arbitral predispositions. Informed consent by the parties is, by definition, impossible in such a circumstance, because no one party can possibly know the nature and extent of the neutral’s behavior or knowledge base with respect to dealings with the other side during private and confidential caucus.
One is left with that familiar but unpleasant taste of lawyer/mediators correcting their clients. A business person can agree to an imperfect process. Indeed, they do so every day. One might argue that American litigation itself (including notions of due process) is, to say the least, imperfect. Who are we to express ethical discomfort because the parties fail to adhere to our understanding of what process they ought not to choose?
The 21st meeting of the UIA’s World Forum of Mediation Centers took place in beautiful Amsterdam on June 5 and 6, 2015. Co-Presidents Fabienne van der Vleugel and Colin Wall welcomed delegates mainly from Europe and the United States. The first topic discussed was the use of mediation in public and administrative matters as practiced in Netherlands – that is, conflicts arising from challenges to governmental decision making.
One structural obstacle to public conflict resolution is the frequent requirement that parties at the table are not ultimately authorized to commit to an agreement – that they must revert to authorities or officials not at the table in order to effectuate the proposed deal. Examples were cited of project in Belgium that did not involve critical stakeholders and were driven by policies of resources allocation rather than public need. George Hanot of Con-Sent ADR noted that such outcomes reflect dispute avoidance rather than conflict resolution. Pre-mediation and mediation were used in the planning and construction of a bridge in Netherlands that opened four years after it was proposed; by contrast, a proposed bridge in Antwerp has not been begun 20 years after it was proposed.
Hanot proposed that Dutch practices of consensus-building were not easily exercised in Belgium. He postulated that business mediation in Belgium lags behind the rest of Europe. Indeed, the reluctance of Belgian leadership to engage in collaborative practices is linked, Hanot believed, to the reluctance of Belgians to engage in such behavior in private disputes. A current garbage strike in Ghent continues into its third week after city officials refused an invitation to mediate on its second day.
Alex Brenninkmeijer, former Ombudsman of Netherlands, noted the mercantile traditions of Netherlands, which he argued yielded an almost intuitive instinct to resolve disputes early. The construction of dikes, he argued, was an act of collaboration that constituted not just problem-solving, but existential consensus. To the Dutch, the traditional mixture of mercantile interests, and the jointly acknowledged value of the city’s growth, reflected personal commitment to the whole, and required mediation of conflicts rather than vindication of individual concerns. It is an attribute of the Dutch, he argued, that solutions should be found to problems – and the sooner, the better.
Thus, Dutch policymaking is fundamentally a problem-solving process and an integrative method, rather than a means of ensuring that the concerns of the majority or the more powerful prevail. And the office of Ombudsman is increasingly important in protecting this tradition, as public administration becomes increasingly complex. He noted certain critical elements of effective interface: personal contact; respectful listening; and taking seriously the interest of the party seriously.
Dick Allewijn, Senior Judge of The Hague District Court, engages in mediations between public authorities and citizens, and voiced a concern that such communications are perceived and experienced as procedurally fair. He gave the example of a dispute between neighbors arising from the issuance of a permit to one of them to construct a shed in her back yard. One threshold question is who is involved in the dispute – is the objecting neighbor angry with the administrative body or with the neighbor? The administrative body has no interest and no emotions – it simply issues permits upon satisfaction of certain conditions. The relationship between the objecting neighbor and the government is in part cold (distant, objective, rule-driven, little mutual trust) and in part warm (mutual dependence, no option of cutting each other off). Usually they manage to understand each other, accommodate each other. Reliance on postulates like “It’s not fair” and “It’s legal” do not prompt this kind of accommodation. Real resolution – involving accommodation – requires informal and personal contact and exchange. Formal procedures must give way to accountability and cooperation, in order to yield outcomes that have civil value. He particularly emphasized the citizen’s responsibility to acknowledge the authority of the public body, and the respect that authority representative must have for individuals with legitimate concerns. One understands why Allewijn’s book is called “Fair play on both sides.”
Allewijn related an example of the owner of a house facing a canal, who had anchored a vessel in purported violation of local regulations. The vessel had been impounded. Three times he went to court and three times he prevailed; yet his vessel was not returned. This process took ten years, before the ombuds office was brought in. While negotiating a resolution, the neutral managed to get a promise to restore the vessel. Yet, when pressed, the homeowner revealed that he actually did not want the vessel there. He had understood that a plan was in the works to locate a floating whorehouse in that space, and he had anchored the boat there in an effort to prevent it. Now, ten years later, such plans had been abandoned and the citizen was persuaded to cease the legal proceedings and to give up on having the boat there. This was a reasonable — and even ideal — outcome, and one that the courts were incapable of even discovering, much less awarding.
Hearing this discourse with American ears, one is struck by the European sense of “civil authority” and the American understanding of “authoritarianism.” We were addressing conflicts between those charged with public “law enforcement” and citizens who experience unfair and unjust treatment. The question boils down to whether the citizen trusts that her concerns can be heard, or that an “interface” exists that will attend to her concerns with respect and a mutual desire to find accommodation.
The International Mediation Institute has been bouncing around an intriguing idea – a replication of the fabled 1976 Pound Conference, but on a global scale and an internet-enabled synchronous platform. I’m unclear whether this event will actually come to fruition, and the IMI organizers, true to form, have already “Pounded” the event with acronyms such as GPC, LOC and COG — but the concept is so neat that we should certainly be aware of it and monitor its development.
CORRECTION: IMI Board member Michael McIlwrath writes to say:
Peter, YBIWCTF! (You Betcha It Will Come To Fruition!) Anchor funding is already in place, and we have more than the minimum number of cities expressing serious interest, and several have already committed. The idea was initially 15 cities, but so many are already committing or expressing interest that our focus is shifting to ensuring all of the conferences will achieve high levels of quality and broad stakeholder participation.
Sorry, Michael. Sorry, IMI. Onwards and Upwards….
The recent issue of The Business Lawyer, a publication of the ABA Business Law Section, addresses a topic of particular interest: “the hard choices that face a general counsel when weighing the pros and cons of whether and when a particular complex business dispute is better suited for litigation in the public courtroom or through a carefully constructed alternative dispute resolution process, including mediation and/or arbitration.”
The article, of interest on its face, gains authority by virtue of its authors: former Delaware Supreme Court Chief Justice Norman Veasey and former Chancellor of the Delaware Court of Chancery Grover C. Brown. It gains even more credibility because it reflects not merely the observations of these expert observers of business disputes, but also extensive interviews with 19 General Counsels or their principal in-house colleagues — including companies not often heard from on this topic, such as Walt Disney, Fluor, Oracle, Walgreens, Proctor & Gamble and General Dynamics.
The “variables” that must be considered in avoiding or managing contractual disputes include whether it will be foreign or domestic; the subject of the deal; the identity of the counterparty; the likely jurisdiction; the importance of confidentiality; and the need for subject-expert neutrals. Moreover, these concerns must be weighed, and a decision made, at the drafting stage — well before there is a dispute — and negotiated with the counterparty who is the potential adversary.
The authors note that cross-border deals tend to involve international arbitration as the final stage of a stepped or tiered, process. But many general counsel are leery of domestic arbitration, complaining of problems that, “when viewed in hindsight, could have been avoided” by controlling or customizing the arbitration process at the contract stage. In addition to their own informal interviews, the authors focus on certain recent studies, including the CCA 2010 Protocols, the 2011 RAND Report, and the 2014 Stipanowich/Lamare article. They conclude:
- A preference for mediation is almost universal;
- Mediation provokes commercially rational thinking and decision making;
- International arbitration is strongly preferred to litigation in foreign jurisdictions;
- International arbitration has features that domestic arbitration does not, including restrictions on pre-hearing information exchange and proven experts in both the arbitral process and the subject matter of the dispute;
- Confidentiality is highly valued;
- Not all transactional lawyers perceive that they have the ability to negotiate arbitration structures that safeguard against the flaws they fear in the process
- Dispute resolution provisions are too often addressed too late in the deal negotiations, either by attorneys who know the deal but are insufficiently familiar with dispute resolution processes, or (ironically) by attorneys familiar with ADR but insufficiently knowledgeable of the deal at hand.
Many of the postulates reported in the article are, gratifyingly, reflections of what ADR teachers and trainers have espoused for years, for instance that mediation “not only may avoid arbitration or litigation but also… tends to introduce rationality and right-sizing into the thinking of both sides of the dispute.” And the list of concerns about domestic arbitration are also familiar, if less gratifyingly so: cost, delay, controlling discovery, time-consuming and expensive ancillary court proceedings in compelling arbitration or challenging/enforcing an arbitrator’s award.
The article concludes with a summary that is quite familiar: “mediation with a good mediator is ordinarily a low-risk/high-reward promising scenario; international arbitration is usually preferable to relegating a transnational dispute to be resolved in some foreign court systems; and domestic arbitration is where most pro-con issues arise.” Some of us, however, continue to await the practical impact upon businesses of the lessons of this article and of the studies upon which it relies: The day when practitioners recognize that arbitration is not some feral animal living in a cave, ready to pounce on the unwary, but rather an agreed-upon process whose very existence and contours are a function of the parties’ own agreement. And, taking it a step further, that agreeing upon a method to resolve problems and disagreements is not, fundamentally, a question of law, but of commercial value-preservation.
Its first attempt having been stricken by the Third Circuit, the Delaware General Assembly recently enacted the Delaware Rapid Arbitration Act that seems ideally suited to a broad range of business disputes, and is a welcome contribution to rational, reasonable and responsive arbitration law.
Among its features, the Act requires that the entire proceeding be completed within 120 days of the appointment of the arbitrator (upon pain of a reduction of the arbitrator’s fee) and limitations on judicial appeal both prior to and after issuance of an award. It applies only to disputes in which at least one party is a business formed in Delaware, and specifically excludes from its provisions disputes involving consumers.
A threshold feature of the law is its delegation of questions of arbitrability to the arbitrator and away from the courts. Parties agreeing to the Rapid Arbitration Act are deemed to have waived objection and consented to “the submission exclusively to an arbitrator of issues of substantive and procedural arbitrability,” as well as the arbitrator’s power and authority to determine the scope of his own authority and to grant appropriate relief. Even more specifically, parties are deemed to have waived the right to seek to enjoin the arbitration; to remove any action to a federal court; to appeal any interim ruling of the arbitrator; or to challenge any final award, except pursuant to the provisions of the Act.
In the absence of party agreement, the Court of Chancery appoints the arbitrator, who must issue a final award within the time fixed by the parties or, if not so fixed, within 120 days of appointment. No extension, even consensual, may exceed 60 additional days. Irrespective of the location of hearings, the seat of any arbitration is the State of Delaware. Challenges to the final award must be taken within 15 days of issuance directly to the Supreme Court of Delaware, which “may only vacate, modify, or correct the final award in conformity with the Federal Arbitration Act.” Other appellate review may occur pursuant to agreement. Unless objected to, an award is deemed confirmed by the Court of Chancery 5 days after the 15-day challenge period.
In AT&T v. Concepcion, the Supreme Court grafted on to the purposes of the Federal Arbitration Act not only the stated language that arbitration agreements be enforced, but also that the Act be interpreted to facilitate arbitrations as “informal, streamlined proceedings,” and struck down a California law that was applicable to contracts generally, but that, in the view of the Court, rendered arbitration cumbersome. Delaware’s state law seems to be consistent with those objectives, and it would be curious to see whether it will be challenged as its predecessor was.
Prof. Sharon Press joined Prof. Lela Love, Prof. Michael Colatrella and Prof. Ellen Waldman at the ABA Dispute Resolution Section Spring Meeting in Seattle for a discussion of a phenomenon raising highly-charged challenges for practitioners: What are a mediator’s ethical duties to a party to a mediation who is unrepresented and, in at least some respects, disadvantaged in conducting legal negotiations with parties who have the benefit of counsel? The speakers have personal experience mediating directly or through clinics in EEOC, landlord/tenant, small claims court, or other contexts with varying populations that include self-represented litigants.
Prof. Colatrella noted that litigants may be unaware of legal standards, rights, and remedies that are applicable to their claims, and conflate “fair” with “legal” in their pursuit of a resolution of a perceived wrong. They may not understand what a court can or cannot award, or the procedural hurdles to judicial relief. They may not understand the mediation process itself – how to prepare for it, the roles of the participants, or the risk/benefits of proposed offers. They may be inexperienced and uninformed negotiators. There may have language barriers in speaking, listening and reading, and may be financially unsophisticated or inept.
In such a context, how can mediators promote just results while fulfilling their duties of neutrality? The broad definition of informed consent when an attorney counsels a client or a doctor serves a patient may not apply with an unrepresented claimant. And informed consent to participate is different from consent to an outcome. The first is a clear and attainable duty of the mediator. The second may not be. A mediator may have a duty to explain a proposed outcome, but not to counsel a party as to (for example) the rights they are waiving by settlement – even if the mediator acknowledges that the party is uninformed of those rights. Implicated in this duty, were the mediator to assume it, is yet more advice as to the likelihood of the outcome were the claimant to assert those rights. Prof. Colatrella finds this a step too far. This assistance is detrimental to the other, represented, party.
Informed consent can be promoted without treading on partiality, he urged. Investigating uncovered interests, providing information, directing parties to outside resources, and even providing an evaluation can be of assistance in prompting informed consent while staying within the confines of mediator neutrality.
Prof. Love suggested that an increase in pro se litigants may not be a “problem” but rather a reflection of the nature of disputes. It may be a good decision for them to choose not to be represented, and their status in mediation may be beneficial to them. Why do we lawyers assume that an unrepresented party is burdened by not having information or guidance that a lawyer could provide? And is the mediator the best, or the only, source of legal information for parties?
Mediation can help pro se litigants in many ways: They are given the chance to tell their story to the other side and to hear the other side’s story. They can learn the other side’s legal arguments. With this information they can decide whether to pursue or settle the claim with more information than they had before the mediation took place. All of these are attributable to the process, not the lawyer.
Mediators, then, can emphasize these beneficial aspects of mediation. Mediators should explain the context and the process of the mediation and point out opportunities to learn though the process. They can clarify their limitations with respect to offering legal advice. Prof. Love says these are duties, not just opportunities. While not pressuring parties to settle, a mediator can (and should) point out logical or legal errors, just to the border of offering legal advice. If a party has no evidence to support her claim, she should be warned of the likely consequences. Prof. Love would go so far as to ask “What if you learned that your claim was barred by the statute of limitations?” but not go further and give the legal conclusion itself. Where there is no settlement, the parties can go to court better aware of their options and what is expected of them. Where they settle, they do so knowing they chose not to get legal advice first and that they chose to do so given more information than they had going into the process.
Prof. Waldman took a different view. To her, pro se litigants simply do not have the information they need to make serious decisions, and the growth of pro se litigants is to be regretted. Legal norms exist to protect vulnerable segments of society, and these are the very folks who come to court without the lawyers who can help them. They are unaware of consumer protection, anti-discrimination and other protective statutes whose benefits they might seek. A mediator should not simply stand by to watch an uninformed party enter into a settlement at variance with state usury law, for example. But what does a mediator do in such an instance? Suspend the process? Urge that the party seek advice and information from another source? Or does the mediator actually recite the law prohibiting usurious loans paid out of welfare income? Prof. Waldman would advise the usurious party, but admits that they have undoubtedly already done the risk assessment and are prepared to go forward with the risk of being found out. There are other techniques of course; Prof. Love would ask the lawyer for the usurious party, in the presence of the litigant, whether the terms of the agreement are enforceable. Experienced small claims court mediators know about consumer protections – should they not bring those provisions to the attention of both parties? Put otherwise, does a mediator have an obligation to ensure that the provisions of settlement agreements comply with consumer protection laws? And is the answer different if the mediation takes place by order of the court? Is there any way that the mediator can ensure that the process has both attributes of informed decision-making and impartiality?
Prof. Press took up a further question: Are the mediator’s duties different in mediations with unrepresented litigants (such as court-connected civil claims) or pro se disputants (non-court processes such as peer mediation in schools, or community center conflicts)? Mediation was independent and had its own rules and virtues until it was pulled into the court, at which time things changed. People who dispute want a resolution; by contrast, litigants who file a case in court seek a legal determination of their rights and remedies. Mediating the former implicates different duties, perhaps, from mediating the latter. Parties’ expectations may differ as well. Do parties entering into a transformative process value the mediator’s legal expertise as much as parties to an evaluative mediation? She suggested that mediation had objectives of procedural justice, respect, and restoring relationships that participants find preferential to court adjudication, independent of legal concerns with respect to the participants. If courts no longer directed self-represented litigants to mediation, would this problem no longer be an ethical one?
There was a time when mediators were seen as alternatives to judges. Mediators had skills of client-led interest-based consensual resolution; judges had skills in law-led, positional adjudication. Now, however, many judges seek mediator training and practice mediation, both on and off the bench. At an intriguing panel at the ABA Dispute Resolution Section Spring Meeting, James Alfini, Nancy Welsh and Sharon Press investigated some implications of this phenomenon.
First, may a judge preside over a case that she has mediated? Judges are presumably well-versed in likely outcomes of disputes and increasingly can conduct nuanced mediation processes. But are they then disqualified from adjudicating that same dispute once they have acted as a mediator? Prof. Alfini noted the gradations between settlement conferences and full-blown confidential mediation processes. The risk is not only that the judge may learn confidential or inadmissible information — it is also that the parties may feel coerced by behaviors and statements from judges that they would not feel from private mediators. He cited a Kentucky case, Home Depot v. Saul Subsidiary, in which the court held that there was no basis to recuse a trial judge who had conducted a mediation in a case over which the judge later presided.
Prof. Alfini pointed out that during mediation a judge can learn inadmissible or confidential facts, and develop attitudes toward parties and counsel. Is this inconsistent with a judge’s duty of impartiality? Is it distinguishable from facts a judge learns in considering a motion to quash, or attitudes a judge develops during motions and trial? Prof. Alfini suggested the addition to the Code of Judicial Conduct a provision disqualifying a judge who has acted as a mediator from thereafter acting as a judge.
Prof. Welsh focused on the lawyer rather than the judge – what are the ethical duties of an attorney representing a client in a mediation in which a judge is the neutral? The duty of candor to a mediator is different from the duty of candor to a court. See Comment 5 of Rule 2.4, stating that, except if appearing before an arbitrator, a lawyer’s statements are governed by 4.1 (statements made to third parties). Rule 3.3 requires a higher standard before a “tribunal.” Is this a different standard depending on whether the mediator is a sitting judge? A presiding judge? And ALJ? A retired judge? Note Comment 1 to Rule 3.3, covering an “ancillary proceeding.” Is mediation one of these? See also Rule 1.0(m) – a “tribunal” is something that renders a binding legal judgment.
Prof. Welsh posits the problem that arises if the judge/mediator were to ask what undisclosed documents would show. Must an attorney respond truthfully? What experienced mediator would take counsel’s assertions as true, and reliable? Is the duty owed to the judge’s office or to the judge? Or to the mediation process? Or to the court’s process? She suggests that the objective of the Model Rules is to protect the integrity of the court, and that the duty of candor applies to any court-connected proceeding, including mediation. This obligation would also apply to court-appointed mediators, in order to protect the integrity of the court and, by extension, the justice system.
Prof. Press previously served as Director of the Florida state court’s dispute resolution program. The Florida Code of Judicial Conduct has been revised to address the practice of Senior judges and retired judges as private mediations, and in court-ordered mediations. Requirements of increased mediator disclosure were imposed, including whether a judge has previously presided in a case involving not only counsel, but also their firms. Last year, further amendments were proposed to go farther in prohibiting senior judges from acting as mediators. Though the proposal was not accepted, it nevertheless prohibited service as mediator in any district where the senior judge was a presiding judge, and the organizations offering their services. Restrictions were also placed on advertising that suggest that service as a judge makes a person a better mediator. Judges may not lend the prestige of the court to their private practice as mediators. For example, use of the word “judge” may fall afoul of the rule unless it is clearly used not to suggest that the title lends expertise to the individual’s mediator skills.
Prof. Press notes, however, that these rules do not reach former (retired, rather than Senior) judges at all, and questions whether the market for former judges as mediators – or the notion that judges make better mediators than non-judges – will be affected.
One open question: When a sitting judge “proposes” mediation, what kind of disclosures would be necessary to obtain informed consent, in light of the nuances that regulations impose?