Med-Arb
1. What is Med-Arb?
Med-Arb is a hybrid process where the parties try to mediate their dispute first, then agree to arbitrate those issues which they cannot resolve at mediation.
2. Why is this process attractive?
Most parties/counsel who choose this method want to be certain that the dispute is completely resolved by a certain time. If they used only mediation, the parties would risk not settling everything.
3. Are there problems with Med-Arb?
Yes. The most significant one is that the mediator will confer privately with all sides during the mediation, and be privy to things that those not in the conference may not know. Ultimately, those things may influence the neutral if he/she has to become an arbitrator. In addition, the motivation of the parties to settle may be diminished because they know that someone (the mediator turned arbitrator) will quickly decide the dispute if the mediation fails.
4. Can the problems be solved?
Yes. I recommend that the parties not commit in advance to using the same person as their arbitrator if the mediation fails. This way, all parties can assess their situation after the mediation session(s) and decide then whether they want a new arbitrator or will agree to have the (former) mediator serve. Regarding the motivation reduction factor, parties may consider agreeing that the costs of the arbitration segment will be borne by the losing party.
5. What about cost?
This process could become costly. Most that I have handled resolved entirely during the mediation portion. If they do not, however, the parties essentially experience all the costs of having a mediation and an arbitration -- except that, if they use the same neutral in both roles, he/she may be able to reduce the length of the arbitration part because of accumulated expertise. |
