Can arbitrators mediate? All you need to know about Mid-Arb, Arbitration and Mediation

Mediation and arbitration are the most common alternative dispute resolution mechanisms.

Mediation is an informal, voluntary process where a third person, called a mediator, assists the parties to a dispute in reaching an amicable settlement. Arbitration, on the other hand, is a dispute resolution process in which the parties to a dispute agree to submit the dispute before a single arbitrator, or sometimes a panel of three arbitrators that renders a final decision in favor of one of the parties.

If we were to approach these methods of dispute resolution separately, we would reach the conclusion that an arbitrator’s role is essentially different from that of a mediator, and the arbitrator is not empowered to act as a mediator.

The function of an arbitrator is to examine the case put before him or her. A mediator, on the other hand, acts as a facilitator for the parties to help them reach their own agreement that satisfies, at least to some extent, their core preferences.

So, can an arbitrator meditate too? An arbitrator can mediate, noting that the role of an arbitrator is different than that of a mediator. To be more on-point, the combining of the two processes “Med-arb” is worth exploring.

What is Med-arb? , Med-arb is a hybrid mechanism, which combines the two processes of mediation and arbitration, with the arbitrator also serving as the mediator. In practical terms, parties to a dispute choose a third-party neutral who acts as a mediator and arbitrator.

How does Med-arb work? The parties will attempt to reach a voluntary agreement with the help of the third-party neutral through mediation. If the process is not successful or if the parties still have some unresolved issues in the dispute, the same neutral will act as an arbitrator and settle the remaining issues/dispute.

What are the costs of med-arb? The average expected cost of med-arb is $4,204, noting that it varies drastically depending on the case type, money disputed, complexity and location.

For a more detailed explanation on arbitration, mediation, and even conciliation please read What are the differences between arbitration and mediation? All you need to know about arbitration and mediation and What is Conciliation? What is the difference between conciliation and mediation? and for family disputes in Family Disputes Mediation: Resolving Inheritance, Business, Property Conflicts, and More.

You may also refer to our review on Document Crunch, the AI platform, for reviewing contracts with the intent of reducing risks and disputes.

Historical Background of Med-Arb

Med-Arb is not a new phenomenon. In the early 1940s, some arbitrators were advocating for its use. They argued that the role of arbitrators is to assist the parties in completing their bargaining and the most efficient way of doing so is to resort to mediation first.

But it was only two decades later when Med-Arb was formally resorted to as a dispute resolution mechanism. In 1969, Sam Kagel, a San Francisco lawyer, and arbitrator employed the technique to settle a nurse strike in the Bay area of San Francisco.

As a med-arbiter in the dispute, he persuaded the parties to give up their respective economic weapons — the right to strike and to lockout — in exchange for concessions in scheduling time and weekends off.

By the late 1960s and early 1970s, the mechanism spread to Canada, where the Quebec Department of Labour and the federal Department of Labour embodied it to settle ongoing disputes in the Quebec construction industry and in the creation of Via Rail.

The use of Med-Arb continued to increase during the 1980s, spreading worldwide in settling disputes in diverse fields such as nursing, journalism, public utilities, education, and commerce.

Nowadays, Med-Arb is most commonly used in labor law disputes, and also commercial law.

The Process of Med-Arb

Med-Arb is not necessarily regulated and its format depends on a case-to-case basis. In practice, the suggestion to use the Med-Arb process almost always arises at the initial meeting with the neutral.

However, mediation can also commence after arbitration has been initiated, and if it is unsuccessful, the parties return to the arbitration procedure.

The arbitrator may also choose the appropriate moment in the course of the proceedings to offer meditation services for settlement purposes.

Russell Thirgood explains that arbitrators conduct the mediation in one of the following ways: “the arbitrator consulting with both parties, arbitrators consulting with the parties individually, the parties consulting with each other without the arbitrators present or a combination of these techniques.

A common factor in determining whether Med-Arb is appropriate is the willingness of the parties to settle, and their desire to embody the mechanism within their process.

In addition, in order to create a productive and fair process, the neutral must possess essential skills. First of all, giving the hybrid nature of the proceedings, the neutral must have expertise and skills in both mediation and arbitration, as well as understand the requirements and standards for both roles.

In this sense, the neutral must be able to move from a facilitative role to an evaluative, decision-making one.

Second, the neutral, when acting as an arbitrator, must be able to disregard the information that was shared by the parties during the mediation.

Third, and finally, the neutral must be able to gain and keep the trust of the parties and establish and maintain credibility for the process.

Institutional Recognition of Med-Arb

Throughout time, Med-Arb has been recognized by various jurisdictions as an effective way of dispute settlement. The American Arbitration Association (AAA) recommends Med-Arb in certain circumstances.

At the same time, JAMS administers Med-Arb cases if it is within the contract or the parties have stipulated to it. In 2020, the ADR Institute of Canada adopted the Med-Arb Rules and announced a new Chartered Mediator-Arbitrator (C.Med-Arb) professional designation to enhance the use of med-arb in Canada.

In China, Med-Arb is embodied within the Arbitration Law of China, which came into effect in September 1995, as well as the respective Arbitration Rules of Chinese.

Article 51 of the Arbitration Law of China states that “a written conciliation statement [resulting from mediation] and an arbitration award shall have equal legal effect.”

The provision further enables arbitrators to decide when and how to conduct conciliation (“mediation”) during the arbitration.

Article 39 of the Arbitration Rules of the Beijing Arbitration Commission (“BAC”) adopts a similar approach but clarifies that mediation may be conducted at the arbitral tribunal’s discretion, as long as the tribunal obtains consent from both parties:

Advantages and Disadvantages of Mid-Arb

Advantages of Mid-Arb

The advantages of Mid-Arb can be summarized as:

1. Offers mediation flexibility and arbitration finality.
2. Provides an urgecny and to resolve the diputes, expecially in complex cases as all parties prefer to avoid arbitration procedures.
3. Provides cost saving in comparison to litigation and arbitraiton.
4. Helps preserve the relations between the parties by promoting amicable settelement.

Proponents of Med-Arb claim the mechanism joins mediation’s flexibility with arbitration’s finality.

With med-arb, parties can receive the advantages of both an enforceable award and amicable settlement. Arguing that the benefits outweigh the negatives,’ proponents believe self-determination is embodied within the initial consent agreement.’

The studies related to the process support the notion that Med-Arb reduces costs and increases the efficiency of the dispute resolution process.

In addition, Med-Arb practitioners report that most disputes are resolved within the mediation stage, without the need to resort to arbitration.

However, Med-Arb is most likely to be successful in cases in which there are many complex interrelated issues and the arbitration hearing is expected to be lengthy.

Disadvantages of Mid-Arb

The disadvantages of Mid-Arb include:

1. Neutrality of the arbitrator might be affected during mediation hearings.
2. Mediation can be utilized as stalling technique to gather confidential information on the other party.
3. Confidential information might be inadvertently revealed.

A common critique of Med-Arb is that information shared during confidential mediation caucus sessions will impact the impartiality of the neutral and the arbitration award thereof.

Some arbitrators do not consider this to be a problem; others decline to serve as mediator-arbitrators for just this reason.

Mediation communications in private caucus sessions provide the opportunity for advocates to reveal unfavorable information about the other side, knowing these communications are private and confidential.

However, in Med-Arb, the parties are aware they may reach arbitration, and sharing such confidential information may work against them.

Going Forward

Med-Arb is not merely the merging of separate mediation and arbitration processes, but a unique process designed to meet the needs of parties to a dispute. In the words of Mr. Martin C. Weisman, Med-Arb is ‘The Best of Both Worlds’.

In Med-Arb, arbitrators can mediate, which requires a high level of practitioner competence to do successfully. Whether the advantages of Med-Arb outweigh the disadvantages depends on the case-to-case basis.

Also subjective is the question of how efficient ‘Med-Arb is?’However, it is without a doubt that this procedure does allow arbitrators to mediate.