National Med-Arb Rules Offer New Options For Technology Disputes
The ADR Institute of Canada (ADRIC) has adopted Med-Arb Rules and announced a new Chartered Mediator-Arbitrator (C.Med-Arb) professional designation in recognition that med-arb is a distinct process that is different from either mediation or arbitration on their own.
Med-arb is widely used in areas such as employment and family disputes and is now gaining acceptance in the commercial disputes. It promises both flexibility and finality, saving time and money by having a single mediator-arbitrator conduct the entire process. This makes it an attractive option for resolving many technology disputes.
But there are traps for the unwary. There must be clear procedures to ensure fairness and an enforceable agreement or award at the end of the day. The Med-Arb Rules, which incorporate ADRIC’s existing Mediation Rules and Arbitration Rules, provide a complete procedure for both the mediation and arbitration phases of the med-ab process.
The Rules can be incorporated in a contract or stand-alone dispute resolution agreement. They can be modified by agreement of the parties, providing a high degree of flexibility.
The Rules require that the mediator-arbitrator remain independent and impartial at all times. There must be full initial and ongoing disclosure of any potential conflicts. But the Rules also make it clear that merely acting as a mediator, meeting separately with parties or questioning the merits of a party’s position during the mediation phase, will not amount to procedural unfairness.
Those seeking the Chartered Mediator-Arbitrator designation must have training and practical experience to avoid the potential traps that can lead to unfairness and bias claims. The goal is to ensure that there is a valid and enforceable agreement or award at the end of the med-arb.
The transition from the mediation phase – when everyone is at least trying to get along and come up with a settlement – to the arbitration phase – when everyone suits up to fight over the remaining issues – is the most difficult part of any med-arb.
The Rules deals with these crucial transition issues:
- The mediation phase ends when an agreed time limit expires, the parties have settled all issues in dispute, the parties agree in writing, or the mediator decides to end it.
- When the mediation phase ends, the parties must confirm which issues have been resolved (to be documented in a settlement or consent award).
- The parties must also identify the unresolved issues to go to arbitration. If they can’t agree, the mediator-arbitrator will identify those issues.
- At the beginning of the arbitration phase, the mediator-arbitrator will decide any challenge arising from the mediation before continuing with the arbitration. Any party that does not object is deemed to have waived any such challenge.
- Any other objection to the mediator-arbitrator, such as impartiality or qualifications, must be resolved under the ADRIC Arbitration Rules.
- During the arbitration phase the mediator-arbitrator must not use information from the mediation phase unless it becomes evidence in the arbitration or the parties consent to its use.
These points expressly address many common concerns about the med-arb process.
With technology or project disputes, when time is critical, there may be a temptation to move quickly to a final settlement or award, but the Rules recognize that there are dangers in moving too fast.
There must be a clear, bright-line transition from mediation to arbitration.
The parties and the mediator-arbitrator must document the issues that have been resolved and those that have not. This may be tricky in some cases. For example, agreement on one issue may be dependent on resolution of another.
If a party has an objection to the mediator continuing as arbitrator for any reason, they must raise it right away. They can’t wait to see how things go and object later, if the award goes against them.
The rule against using information from the mediation unless it becomes evidence in the arbitration puts a responsibility firmly on the arbitrator, and on each of the parties, to be very clear about what information is in evidence and what is not.
As noted in McClintock v. Karam, 2015 ONSC 1024 (CanLII), an often-cited family med-arb case, the mediator-arbitrator “cannot be expected [to] entirely cleanse the mind of everything learned during the mediation phase, and of every tentative conclusion considered, or even reached, during the mediation phase. However, at a bare minimum the parties are entitled to expect that the mediator/arbitrator will be open to persuasion, and will not have reached firm views or conclusions.”
The ADRIC Med-Arb Rules and evolving best practices should help meet that goal.