Hybrid Arbitration Processes - Chapter 14 - College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration - 3rd Edition
Thomas J. Brewer
Richard R. Mainland
Gerald F. Phillips
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Arbitrators undertaking a dual role of arbitrator and mediator should understand the differences between arbitration and mediation and the measures that will ensure the effectiveness of a dispute resolution process that combines elements of both processes.
Parties sometimes request a neutral to serve in two capacities—as arbitrator and mediator—for the same dispute. Such hybrid processes may involve a mediation followed by an arbitration if the mediation is unsuccessful (med-arb) or an arbitration followed by a mediation (arb-med). In one arb-med process, the arbitrator’s award is withheld from the parties pending a mediation before the same neutral. Another hybrid process may involve commencement of an arbitration, followed by a midstream mediation, and then completion of the arbitration if the case does not settle (arb-med-arb). Sometimes the process may go back and forth between the two modalities depending on the needs of the parties and the nature of the dispute.
Some parties may favor certain hybrid processes because the use of a single neutral in a single, combined process may lead to a quicker and less costly resolution of the dispute. Hybrid processes also may have the advantage over pure mediation of ensuring that the dispute will be resolved. Other parties may believe that the prospect of arbitration before the same neutral that conducts the mediation incentivizes the parties to settle and that the knowledge gained by the neutral during the mediation may lead to a more efficient and less costly arbitration if the case does not settle. Hybrid processes also may be attractive when the amount at stake is relatively small or when the parties’ interest in preserving their business relationship outweighs winning the particular dispute.
That said, arbitration and mediation are fundamentally different processes, and there are significant potential pitfalls in having one neutral serve as both arbitrator and mediator. Some neutrals are neither trained nor experienced in both processes. The parties, knowing that their mediator may arbitrate the dispute, may be reluctant to be candid in the mediation or may try to spin the mediator to gain an advantage in the arbitration. Other parties may feel undue pressure to settle in the mediation in order to avoid facing the same neutral in an arbitration setting if the case does not settle. When separate caucuses are held with each party-a common practice in mediation-a party may make assertions or arguments in those caucuses, leaving the other party unaware of what ex parte communications may have been made that may influence the neutral in th ensuring arbitration. It also may be difficult for the neutral to avoid being influenced in the arbitration by what was said in the mediation.
This chapter examines the issues that should be considered by neutrals who are asked to serve in hybrid proceedings. It discusses best practices needed to ensure not only that the process is effective and fair-in fact and in the perception of the parties-but also that any arbitration award resulting from a hybrid process will pass muster by a reviewing court.