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Mediating and Arbitrating the Same Dispute - What are your thoughts?

After a failed mediation, should the parties use the same neutral to then arbitrate the matter? Under what circumstances, given mutual party request and consent? Conversely, when should a neutral decline to serve as arbitrator?

Please provide your thoughts/comments below.

Comments (24)

Norman H Rosen:

My understanding of the reason a mediator should not serve as an arbitrator is that he or she may have been given confidential information that a party or parties would not want the arbitrator to know. However, this objection would seem to be dealt with if both parties wish the mediator to be their arbitrator and consent thereto.

Norm Rosen

steve conover:

The parties should not use their mediator to later serve as the neutral arbitrator. I think it is equally true that the mediator should not accept appointment as as the neutral arbitrator. I recall a 2013 decision from the NJ Appellate Court held that serving as a mediator is inherently incompatible with subsequently serving as a neutral arbitrator.(Minkowitz v. Israeli Mediators "who may become privy to party confidences in guiding disputants to a mediated resolution cannot thereafter retain the appearance of a neutral fact-finder necessary to conduct a binding arbitration proceeding."

Howard Edelman:

I am surprised at the number of arbitrators who refuse to mediate a case which they may be required to decide. Our job is to solve labor relations problems and both processes are designed to do that. I suppose in a rare instance mediation results in confidential, relevant information which, nonetheless, would likely have not been produced in arbitration, but that is the exception, not the rule. Only in those cases would recusal be warranted, my view. Howard Edelman

Absolutely not. Mediation depends on the parties and their counsel sharing in confidence their concerns as well as their strengths. Knowing the mediator will later serve as arbitrator ruins the process.

Ronald A. Kienlen:

It is very difficult. I have done only one mediation followed by a single judge decision (essentially an arbitration). It was very difficult to be an effective mediator, as I found myself reaching the final judgment or award as we progressed through the mediation. But I felt that I couldn't really advise the parties of the strength of their positions without appearing to prejudge the final outcome if the mediation failed.

The AAA's Guide for Commercial Arbitrators (Guide) provides guidance for arbitrators who consider assuming the dual role of arbitrator and mediator. Where parties in an arbitration wish to mediate the case, the arbitrator may serve as the mediator if requested. The Guide warns that if the mediation fails then the arbitrator more than likely cannot resume service as the arbitrator (Guide at 3). The Guide also cautions arbitrators not to participate in the parties' settlement discussions because if the case does not settle, one party may challenge the arbitrator's continued service as arbitrator based on a claim of partiality (Guide at 12).

For example:

* Where an arbitrator agrees to preside over a dispute that he previously mediated, his prior service as mediator arguably constitutes an interest or relationship that could create an appearance of partiality (Canon II).

* If the arbitrator accepts the dual engagement of mediator and arbitrator before the mediation takes place, his communications with the parties in mediation caucus arguably creates an appearance of impropriety (Canon III). The fact that an arbitrator previously mediated the case may also constitute entering into a professional relationship with the parties (Canon I.C).

* If the arbitrator, even subconsciously, relies on evidence learned during private mediation caucuses in rendering the arbitral award, the procedure can deny the losing party the due process right to confront evidence against it.

David Blair:

Just say no.

Mediation and arbitration are Venus and Mars. The mediator who has used every stratagem for voluntary resolution of a dispute will almost always have signaled or implied bias or prejudice that should but may not have put all the parties on full notice of that mediator's predispositions that may arise in the arbitration. Even with full and necessary full written waivers and consent for the mediator to act as an arbitrator, it will not be difficult for the losing party in the arbitration to claim a 9 USC 10(a)vacatur. Even if the vacatur claim doesn't work all arbitration parties will be put to unnecessary post-award time, effort, and expense. It is not worth the risk! Mediate or arbitrator but not both!

I think this all boils down to informed consent. To begin with, if confidential thoughts are going to be an intimate part of a mediation that either side feels have no place in an arbitration, then they probably should not go this route. However, this is not always the case and both sides may feel that each can benefit from an arbitrator's getting an informal view of the case ahead of time, rather than the first and only shot at an arbitration. I think it can be appropriate as long as all sides understand that the outcome could be influenced one way or another from the mediation and be prepared to take that risk, and, the neutral does her best to decide the case based on the facts and the law and not be influenced externally.

If the mediator is a licensed attorney, (S)he might want to check applicable state bar rules on professional conduct to determine if this situation falls within the ambit of a conflict that cannot be waived by the parties.

The whole idea of having the same person be both an arbitrator and mediator on the same case doesn't seem fair to the parties to me. If the mediation comes first, then the arbitrator will be exposed to the weaknesses of the arguments that can't help but be used in the arbitration.

A solution I have heard is to hold the arbitration first and hold the award in secret until/if the parties can't successfully mediate.

But whatever sequence they are held in, it seems to me it's a recipe for problems.

andrew Gerber:

Not if we really believe in the ex parte rule (and we should). And this is one instance where consent of the parties really doesn't compensate for the potential evils. The practice seems seductively practical, with its prospective efficiencies of time and money. But they're not worth the potential introduction of injustice and unfairness to the parties and corruption of the arbitration system. Sorry if this sounds paternalistic, but the fairness of the proceedings is integral to the arbitration system, and the respectability of the system is more important than the tempting expedience to be gained from compromising that integrity.

andrew Gerber:

A supplemental comment: Another reason why "informed" consent doesn't work is that no party knows what the others have said to the Mediator in caucus, so nobody can be truly "informed".

I don't think it is a good idea. Knowing that the mediator will not be the arbitrator, encourages frank discussions of case weaknesses which may not otherwise occur.

I do not feel it is proper for the mediator to switch hats and become the arbitrator, under any circumstance. The mediator can make a mediator's proposal if there is a a true impasse which is almost the equivalent of an arbitrator's decision but it is non-binding and is usually an attempt by the mediator to find a window that the adversaries will accept to resolve the matter. I have seen some instances where parties ask for a binding mediator's proposal. It is rare, but that gets much closer to an arbitrator's ruling. There is nothing wrong with that provided both sides request it (in writing).

Dani Schwartz:

If the mediator was provided confidential information to foster settlement, ignoring that information to subsequently arbitrate the dispute impartially seems quite challenging. If the mediator is not being provided with confidential information to preserve his or her ability to impartially arbitrate the dispute, then the mediation might be undermined. Not an easy situation to handle.

David Anderson:

As a litigator, I want a correct decision. I believe the more information a decision maker possesses the more likely the decision will be correct (which is my primary concern). A mediator who later serves as an arbitrator has more information. For this reason, as a litigant, I am usually comfortable with the mediator, later arbitrating the dispute.

My clients demand timeliness. They need to put the litigation behind them. Having a separate mediator and arbitrator frequently lengthens the dispute process. My clients are also deeply concerned about litigation costs. Having a separate mediator and arbitrator almost always increases cost.

As an aside, in my experience, many judges conduct an informal mediation, in chambers, immediately prior to trial.

Switching hats, as a mediator, I would be very reluctant to arbitrate the dispute. Not because I think my decision would differ (or be biased), but because so many of my peers believe it can't be done ethically. As a mediator, I respect my peers' views.

As a litigant, however, I struggle with their position. Arbitration is a dispute process created by party consent. Absent a compelling interest to the contrary, informed parties, represented by experienced counsel,should be able to select the dispute resolution process that "the parties" believe best suits their interests.

Anonymous:

In the past year alone, I have gotten 3 emails from experienced colleagues/arbitrators asking me how they should proceed when being selected as a party- designated neutral. Questions include “am I a partisan or a neutral”? “If I am a neutral, may I nonetheless have ex parte conversations with my designating party about the individual I should select as the umpire”? “If so, may I sit down with the party which designated me and learn about the dispute before I am sworn to neutrality”? “Who collects the fees”? “Who will pay my fees, the party selecting me”? The list goes on.

My own practice is to not accept such assignments. Nothing improper about it. It’s just my preference.

However, I think that the much misunderstood role of the party-designated neutral is a subject that’s appropriate for your Resolution Roundtable Discussion.

I would not accept the role of mediating and arbitrating the same case. Even putting aside the issue of confidential information or biased information coming in caucus, it would be difficult to retain full neutrality in arbitration after having participated in mediation with the parties. I do not think it is impossible, but it would be difficult. In theory, the parties could consent. . I do I not think the parties can really provide informed consent unless they are very sophisticated stakeholders who fully understand both processes. Before accepting this kind of appointment, I would want to have a frank conversation with the parties.

Patrick Westerkamp:

The question asks, "After a failed mediation, should the parties use the same neutral to then arbitrate the matter?" Let's change a few words, and ask After a failed judicial settlement conference, should the parties use the same judge to hold a bench trial? In litigation the answer to the second question is invariably "yes." In arbitration the answer to the first question if often "no."

In my capacity as arbitrator, I would only agree to become a decision maker following a failed mediation if: A. The parties signed a submission granting jurisdiction; B. The submission was countersigned by counsel; C. I knew and trusted the attorneys; and D. the parties acknowledged that my Award would be based on facts proven at hearing.

Clarance J Jones:

I believe that being involved in mediating the case gives the neutral unforgettable knowledge about the inherent weaknesses and strengths of the parties' respective interests in the contested matter, such that it lays a foundation for a claim of, if not actual, bias in arbitration.

As such I do not recommend arbitrating a failed mediation.

Edwin H. Stern:

Mr. Conover states N.J. law and the notes Appellate Division precedent in Minkowitz v. Israeli. I cannot conceive of a case in which I would serve as one and then the other (or, as in Minkowitz, one (arbitrator), mediator, and then arbitrator again). But there are cases in which discrete issues can come up and the parties to a mediation could agree to save time and expense by putting the issue before an individual who generally knows the case through mediation and then can decide the issue based on what is presented in an arbitration, PROVIDED that the parties and their counsel acknowledge what is being requested and that it is being done knowingly and voluntarily. A decision on one claim or another may also (by agreement or otherwise) lead to a resolution of a the balance of the matter, and while it is, in my view, far better to have a separate and independent arbitrator, it also seems to me that saving time and expense could be beneficial to the parties if they ask and want a mediator to arbitrate a discrete claim or issue.

Judges who hear and deny motions to suppress or who exclude evidence at a preliminary hearing can try cases even non-jury. What is wrong with arbitrators and mediators doing the same when asked and all parties agree and execute knowing and voluntary waivers.

Michael S Wilk:

As a general rule a mediator should not serve as a arbitrator in matters that are the subject of the mediation. An exception to the general rule is in a rare situation where after an impasse has been declared, and the mediation is over and the parties and their counsel request that the mediator serve as the arbitrator in a binding arbitration of the dispute. The mediator may serve as the arbitrator as long as the mediator believes nothing heard or learned during the mediation will bias the mediator or otherwise adversely influence the independence and impartiality of the mediator.

Micalyn S. Harris:

My first thought was that Norm is right. But what if one party has given the arbitrator information it is happy to have the arbitrator know but the other party would prefer the arbitrator not know? The other party would have no way of knowing what the opposing party or parties have disclosed that might have been objected to and stricken from evidence. That still leaves the problem of once disclosed, it's known, but at least there would be an opportunity to ask the arbitrator to ignore that evidence. P. Westerkamp's comment deals with this problem. I can imagine a situation where it might be appropriate, and the described submission agreement handles a lot of the issues. Maybe some "gut reaction" would guide in a particular case. I'd have to feel comfortable; if in doubt, probably wise to decline.

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