Hybrid ADR

Med-Arb is the merging of two well-established processes for conflict resolution into one hybrid process. Med-Arb, short for “mediation-arbitration,” is a two-step dispute resolution process that borrows from both methods of dispute resolution.

Parties attempt to resolve their dispute in mediation, and, if they fail to resolve some or all of their issues, the remaining issues are automatically submitted to arbitration. Mediation and Arbitration are used in conjunction with one another and, in the truest form of med-arb, the same third-party neutral plays the role of both mediator and arbitrator.

The development of med-arb reflects and parallels the larger societal trend that has increasingly linked judicial procedure with various forms of less formal, more expedient processes for resolving conflict, collectively known as ADR. The Court system has always had an interest in facilitating negotiation to settle a case prior to trial. The rising quantity of disputes in the 1970’s elevated this interest and accelerated the trend in favor of mediation and other mechanisms for promoting settlement. In recent years Court systems reached “a warm endorsement” of facilitated settlement as preferable to litigation not only because of administrative convenience but also in the belief that a freely negotiated settlement will produce a higher quality of justice. With statistics showing that over 95 percent of court cases are settled without a trial, litigators have also come to “embrace the view that settlement is the goal”.

Like court process, arbitration has been subject to the same call for more expedient “alternatives” for resolving disputes. With many of the formalities of court adjudication, arbitration is criticized as “slow, expensive, formalistic, and unnecessarily adversarial”. The growth of mediation in the 1970s and its extension to a wide range of commercial disputes resulted in the “growing interaction” of arbitration and mediation.

An increasing number of commercial industries concluded that “combining mediation and arbitration in sequence can be a fair, efficient, and cost-effective process for resolving disputes”. Throughout the business community it became common practice “to provide a mediation window” available to the parties at any stage of arbitration.

Med-arb is a natural outgrowth of this trend. In a dispute resolution environment where mediation and arbitration often occur in sequential order, it makes sense to have the same neutral perform both functions, if feasible. This is particularly so when, in keeping with the law-centered model of mediation, the parties already expect the mediator to be adept at formulating optimal settlement strategies based on legal and technical norms and industry practice. In this context, the mediator already has tremendous power of persuasion based on his “expert” authority to evaluate the likely-outcome of the case if it went to trial, and his knowledge of how other cases in the same commercial sector have settled. While the neutral in arbitration has the ultimate degree of decision-making power by virtue of his authority to create a final and binding settlement, the evaluative mediator’s power to influence the settlement process may differ only as a matter of degree. This has led some to characterise the differences between mediation and arbitration as “artificial”

From a process design perspective, the advantages and disadvantages of med-arb depend on the goals and values of the parties, as well as the personal goals and values of the third party neutral. What one party may see as a strength of the med-arb process (the power and leverage of the med-arbiter during mediation) may be viewed by another as a flaw (power that too often results in pressure tactics and “coercion” of a mediated settlement) Accordingly, conflict professionals need to follow two essential guides. First, they must give clients sufficient understanding and information to make well-informed decisions about the risks and trade-offs inherent in this choice of process. Second, they must have “the skill and experience necessary to exercise this power appropriately” and avoid ethical dilemmas such as undue pressure or improper use of confidential information.

The central advantages of med-arb are the certitude of a defined outcome, greater efficiency in terms of time and money, and greater flexibility concerning process and timeline.

The most important attribute of med-arb is the certainty of a final decision, which of course is also the essential attribute of arbitration. The med-arbiter has complete authority to create a final and binding settlement, and this power is not available to the mediator. In addition, regardless of whether the final product of a med-arb results entirely from mediation or both mediation and arbitration, it becomes the entire settlement, which is binding and enforceable in law.

Med-arb can save time and money over separate sequential phases of mediation and arbitration in two important respects. First, if the mediation phase does not reach settlement, the parties and their lawyers do not have to hire another neutral unfamiliar with the case and then prepare for a full-blown arbitration. Second, the issues in dispute are frequently narrowed during the mediation phase and this forward progress can carry over directly into the arbitration.

The flexibility inherent in med-arb allows the process to be fashioned to fit the dispute. It has been argued that while med-arb may not be suitable for every dispute, it is a leading example of “adaptive ADR” where the different ADR forms become adaptable, combinable, reversible, and even discardable for the sake of the parties and their dispute. In the same vein,