MED/ARB - THE PRIMARY DISPUTE RESOLUTION SUPERHIGHWAY

Barely a week goes by now without receiving some enquiry about arbitration. The momentum toward this form of dispute resolution is now in full swing with the benefits this forum provides now being realised by both clients and lawyers.

DISRUPTION is the current urban hipster term that gets thrown around…usually when there is an iSomething involved….for some new development that changes the way we have traditionally approached something.

Arbitration 2.0 is definitely creating disruption in the family law system.

It is not surprising then that in an era of exponential disruption, that the next form of dispute resolution is being discussed – MED/ARB.

Although the concept of mediation-arbitration (MED/ARB) is not new, the leap toward utilising the one mediator-then-arbitrator in family law matters causes much disquiet. “What about being exposed to without prejudice offers?” or “But you’ve been privy to confidential discussions?” are all raised as potential road-blocks to this next phase of primary dispute resolution.

It is time to remove those road-blocks and start constructing our primary dispute resolution super highway.

Mediation is the Traditional Two-Laned Highway  

Although not mandated by legislation, it would be difficult to stand before a judicial officer on a first return date and justify why no dispute resolution steps have been undertaken nor are anticipated…at least in a property matter. Most lawyers are now universally prepared to recommend mediation as the first port of call along the litigation highway. It is seen as a tried and true off-ramp!

However not all, and perhaps many, matters still don’t resolve – even when the mediator (perhaps inappropriately) crosses the line and provides a view upon outcomes. The off-ramp was just a temporary diversion that inevitably brings the parties back to the congestion of peak-hour traffic.

We then observe the parties retreat into their trenches and dig in for the litigation ahead – usually it is a wait that lasts more than two years. And we all know that the costs continue to tick over; discovery is continuing, grassfires erupt and interim applications occur. Some litigants run out of petrol while waiting whilst others are overcome by road-rage.

Med/Arb 1.0 – The Four-Lane Motorway

Why wouldn’t then, a dispute resolution pathway that first attempts mediation then moves immediately into an arbitration phase be a sensible way around this congestion ?

Wouldn’t it make sense to immediately hold a preliminary arbitration conference with the mediator-now-arbitrator upon the conclusion of the failed mediation at a time when all of the real issues and facts are fresh in everyone’s mind? The cost savings are obvious! The time savings are obvious!

Surely a MED/ARB process gets the matter out of a court system with all of its associated flaws, delays, procedural barriers, and incompetencies.  That is not directed at judicial officers but the reality is a decision-maker that is placed under a caseload of in excess of 500 matters must be impacted in some way.

Moreover, it engages the clients directly in definitive legal proceedings that they know will resolve their case if it is not otherwise settled.  As we know too well, clients often just want their “day in court.” That really means “they just want to be heard”. In our court system that comes at a high price. 

Committing the parties to MED/ARB is AVAILABLE NOW and I have already had one mediation where this form of order was agreed upon by the parties AND the court.

Yes, like most new highways there is a toll to pay….but you get there quicker.

Med/Arb 2.0

The next logical phase along the development of the dispute resolution super-highway is to commit to the super highway right from the start with the arbitration commencing immediately after the conclusion of the unsuccessful mediation.

There are many upsides to this super-highway;

·      Parties would be attending the mediation with their cases better prepared.

Counsel would be properly briefed with final settled affidavits. Witnesses would be ready to be called to give evidence. Valuations would have been conducted and discovery finalised. Preparing to run an arbitration increases the likelihood of a mediated outcome!

·      You have all the benefits of an arbitration.

In case you are not already sold on the benefits of arbitration I have authored a few articles already – “Arbitration” and “Arbitration – Why It’s Right for Your Client

·      The end is just around the corner.

This levels the playing-field significantly. No more settlements because an oppressed party just can’t go on or a party is abusing the system to their advantage.  Once again, this has to increase the likelihood of a mediated outcome!

·      The costs – whilst upfront – are known.

Most firms would be able to better predict the likely costs because the entire legal costs will have been realised. It is much more helpful for a client to know “You have spent $20,000.00 so far but that is all you will pay” as opposed to “Your costs from here to a final hearing could be between $50,000 to 100,000 depending upon a number of variables.”

Removing the Roadblocks

Mediation is confidential and offers made during a mediation are protected pursuant to sect. 131 of the Evidence Act (Cth).

Over and above that, most financial mediations involve at some stage or for the entirety of the mediation, private sessions with each party where the mediator has undertaken to keep those private sessions secret from the other party.

Mediators are usually exposed to a range of discussions in private sessions that are confidential or privileged. Obviously also, a mediator hears all of the offers that are exchanged – matters that cannot be adduced to a judge in evidence.

The roadblock is - How does the arbitrator “un-hear” all of the parties’ dirty laundry, confidential or privileged communications?

The most challenging aspect of primary dispute resolution for lawyers to understand is that MEDIATION AND ARBITRATION ARE FUNDAMENTALLY AN AGREED AND CONSENSUAL PROCESS.  There are laws, rules, regulations and codes of conduct established around these forums but ultimately, how the parties wish to conduct their dispute resolution is a matter for them to agree upon. It is the lawyers job to advise upon the benefits and detriments toward any given course.

If it is firmly advocated on the one hand that MED/ARB brings with it a significant benefit in terms of costs, time savings and certainty, then the perceived detriment of this roadblock can be ameliorated by any or all of the following;

·      The arbitrator specifically agrees to ignore mediation communications!

Particularly if, as part of the Arbitration Agreement, the arbitrator specifically agrees to ignore everything that was communicated in the mediation, commencing the arbitration with a clean slate. In this way, only the evidence that is adduced in the proper way can be considered. Remember, an arbitrator’s award must be according to law. Taking into account an irrelevant fact or a fact not in evidence is potentially an error of law.

·      The parties agree to just get over it …!

The question is “Does it really matter to the client?”. The parties agree in writing to waive the confidentiality and inadmissibility protection normally afforded to mediation communications and other information disclosed in the mediation entirely. Mediations don’t fail because a party withholds critical evidence that would assist them in succeeding in their position – if anything the reverse is true. In the scenario where I was engaged – by order – as Mediator/Arbitrator I counselled the lawyers and their clients to perhaps exclude me from their private discussions being “bottom line” or “most I could borrow” discussions to prevent any perception of bias if it came to an arbitration…which did not occur because the matter settled at mediation.

·      Understand that nearly all arbitrators are highly skilled.

To qualify as an arbitrator of family law financial disputes requires a high degree of skill and qualifications. (See reg. 67B). It is also likely that they will be a lawyer of significant repute or is well known to you because you have either briefed them or been exposed to their body of work. An experienced mediator/arbitrator as a skilled family law practitioner, in reality is usually impressed with honest case evaluations by lawyers, understands the need for posturing or positioning in settlement, and is very well trained in appreciating the importance of ignoring inadmissible material.  After all, is it not part of our daily training to routinely ignore that which is inadmissible in any event?

Closing Word

Having their case heard is why parties want to enter the congested litigation highway.

Med/Arb means that the ultimate decision-maker has usually spent considerably more time with the client listening to a great deal more (in the role of mediator) than a judicial officer is likely to either permit or tolerate.

In every sense of the word, Med/Arb allows a party to be heard.

Are you going to help construct the super-highway for your clients to be heard ?

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