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© 2019 by Jerome F. Rock

Med-Arb   &  Arb-Med

Med-Arb combines the best features of voluntary Mediation, along with the best features of binding Arbitration. 

When parties agree to participate in the Med-Arb process, they combine the Mediation and Arbitration processes into a hybrid process for the purpose of compromising, settling or resolving disputed claims:

  • first by use of a voluntary Mediation/Facilitation format to resolve as many issues as possible

  • but if all matters are not resolved by agreement, the parties will proceed promptly into an Arbitration format to deal with those unresolved issues.


The final result of Med-Arb is a binding decision which includes the voluntary agreements achieved during the mediation/facilitation phase and the  decisions made by the Neutral as Arbitrator during the Arbitration phase.


There are substantial differences in the ethical and professional relationships between the Neutral and the parties in a Mediation engagement, and the same parties in an Arbitration engagement.

 

In a Mediation engagement, the parties are encouraged to be open and candid, often sharing confidential information or settlement positions, recognizing that mutual agreement of the parties is required in order to resolve the matter as a formal settlement. Depending on the use of joint or separate caucus sessions with the parties, the Mediator may have discussions with one side that are intentionally not shared with the other. The parties can continue in Mediation as long as they are productive, or either party may unilaterally withdraw or cease discussions at any time and return to their litigation schedule. The Model Standards of Conduct for Mediators recognizes the voluntary nature of Mediation and the necessity of self-determination by each party during all aspects or phases of the process, including satisfaction with the continued neutrality of the Mediator. By definition, Mediation is voluntary and a settlement must be agreed upon by the parties without coercion.


At the other end of the spectrum, Arbitration is compulsory (after the parties agree to arbitrate), the outcome is determined by a third party, and the resulting award is legally binding. During the course of a typical Arbitration engagement, there is a strict code of conduct restricting any ex parte communications between the Arbitrator and any party. This restriction is a matter of due process, assuring each party that they are aware of all information or evidence conveyed to the Arbitrator, and have an opportunity to cross examine or challenge the information during the Arbitration phase. This restriction is also in place to reinforce the impartiality of the  Arbitrator. In Arbitration there are also a number of important, procedural choices that have become accepted as standard components of Commercial Arbitration proceedings, such as choosing the rules to be followed, the amount, or limits on discovery and the form of the award. These are all typical issues that would be addressed if the matter started as an Arbitration case, but often get lost if the matter begins in a Mediation framework, and then transitions into the Arbitration phase.


It is therefore a challenge to combine the Mediation process and the Arbitration process into a single proceeding, while preserving the integrity and expected procedural benefits of each separate process. This challenge is met by making disclosures, requesting consents and offering each party the opportunity to opt-out, or opt-in at key Decision Points.


There are a number of choices or alternatives that are set forth throughout Jerome Rock's standard Med-Arb Agreement, and the parties are requested to review and initial each of these separate elections as they advance through the process. Some of the choices or alternatives should be addressed at the beginning, which form initial basic commitments of the parties to the binding nature of the Arbitration phase of the Med-Arb process. There are other choices that should only be made during the transition from the Mediation phase to the Arbitration phase of the Med-Arb process, as these are the choices that recognize the importance of the concept of self-determination, while providing a structure to finalize the Arbitration phase that produce the binding Award.

Jerome Rock has served as faculty for SCAO approved advanced Mediation Training in Med-Arb, and has prepared a Med-Arb Agreement that satisfies the ethical and procedural challenges discussed above.  This Med-Arb Agreement is available as a download.

Arb-Med.
As the title suggests, the process begins in an Arbitration format, and migrates to a Mediation format.  The decision to change from Arbitration to Mediation can take place at any time.
 
At the beginning of the Arbitration  the parties may desire to explore an early attempt to voluntarily resolve the matter, and if unsuccessful, return to the Arbitration format.  This is often the approach taken with a demand for Arbitration is filed with AAA, for either commercial or construction disputes.   As a routine matter, the AAA Case Managers will suggest that the matter be referred to the Mediation Rules and Procedures under Rule 9 of the Commercial Rules and Rule 10 of the Construction Arbitration Rules.  So, if the matter is initially filed with AAA, you will, as a default, likely end up with one form of an Arb-Med Process (since the Demand for Arbitration is filed first).  
 
Once the Arbitration Process is underway, the parties are free (and encouraged) to engage is settlement discussions.  When these discussions become more formal, you once again are engaged in another form of the Arb-Med Process.  The ongoing Arbitration proceeding can be formally stayed or held in abeyance to undertake the Mediation effort.  The Arbitrator may be selected as the Mediator, or an independent Mediator can be selected.  If the Arbitrator is designated as the Mediator, without serious consideration of ethical issues, the individual will not continue as Arbitrator is the Mediation is unsuccessful in resolving the dispute.   The parties may, or may not still be obligated to continue with a binding Arbitration, with a newly appointed Arbitrator.   
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The ethical issues, and the importance of full disclosure and informed release are important whenever a Med-Arb or an Arb-Med Process transitions, and the same Neutral continues to act in the new role.  The release and disclosure topics are presented in the discussion on the Med-Arb process, above.

To see how Med-Arb can be an effective strategy to resolve your dispute, review Case Study #2 for an example.

Please review the ADR References, organized by the following categories:

  • Auto Supplier Disputes

  • Construction Contract Disputes

  • Business Contract Disputes

  • Business Organization Disputes

  • Non-Compete, Breach of Confidentiality, Unfair Competition