That is the question. The answer is really more about how to mediate, rather than whether to mediate. It’s also about when to mediate.
If you talk to litigators, you get a wide range of opinions on mediation. You’ll hear everything from “If I want to settle, I’ll settle; I don’t need mediation,” to “Many, if not most of my cases settle at mediation.” You’ll also hear everything in between those two viewpoints. It’s worthwhile, whether you are a lawyer or a hotel owner/operator, to examine the details of mediation in reaching your own conclusion. All mediation processes are not equal, and the differences may explain the wide range of views of mediation.
Look at the Mediation Provisions in Your Agreements
In the hospitality industry, mediation is commonly found in the dispute resolution provisions of hotel management agreements, as well as the associated license and technical services agreements. Often, those provisions provide only that as a condition to a party being permitted to demand arbitration or file a lawsuit, the parties will mediate under the mediation rules of a body like the American Arbitration Association, International Chamber of Commerce, JAMS, or CPR. Those rules will govern the parties and their counsel because they were designated in the boilerplate of the agreement - not because either side seriously considered how they would factor into different types of disputes that might arise between the owner and the operator. Different circumstances may require different approaches to mediation. Compare, for example, a dispute over marketing expenses with one that seeks a termination of the management agreement.
Two Types of Mediation
A look at the two main types of mediation will illustrate the point. The traditional form of mediation is referred to as facilitative. Here, the mediator assists the two sides in reaching a voluntary settlement by meeting with the parties both together and in separate, private sessions. The mediator expresses no opinion about the merits of either side’s case or positions, but facilitates the parties’ self-determined resolution of their differences and the documentation of the settlement.
Contrast this with evaluative mediation, where the mediator is expected to evaluate the strengths and weaknesses of each side and suggest a likely outcome if the dispute winds up in court or before an arbitration tribunal. Which form of mediation is better? That’s up to the parties involved. Each party should think about this issue as they negotiate the dispute resolution provision of their contracts, and make it clear which mediation style will be employed.
Surprisingly, the rules of the organizations that sponsor and control the mediation process, and the hospitality industry contracts are silent on the type of mediation that will be conducted. The most definite stricture found in the various rules governing the mediation is a prohibition against the mediator imposing a settlement on the parties. The style of mediation is left by both the sponsoring organizations and the parties to the discretion of the mediator. Is this a prescription for mediation failure, since the expectations of the two sides may be vastly different?
What happens when no mediation format is specified? This depends on who the mediator is and where the mediator is from, to a considerable extent.
Geography Is a Factor
Let’s start with geographic considerations. In many states, including Florida, which became the mediation model for several other states, facilitative mediation was the only one permitted in court-ordered mediations. Florida is considering hybrid mediation and arbitration, but that is beyond the scope of this article. Other states, including New York, treat mediation as inherently evaluative.
So, if the mediation is conducted by a Florida mediator, the odds suggest a facilitative process. If the mediator is from New York, the mediation is likely to be evaluative. In the real world, the selection of the mediator will - to an extent beyond the confines of the mediation rules of the American Arbitration Association or other sponsor and beyond the language of the hospitality contract - influence the style of the mediation.
When and How: Two Important Questions
In most commercial disputes, mediation takes place in the context of litigation. Once a lawsuit is filed, the “when” and “how” of the mediation will be determined by a judge. In many jurisdictions, every case is sent to mediation before trial. The stage of the case at which the mediation will take place is up to the court. Hospitality industry disputes are often handled under contract provisions negotiated at the beginning of the relationship.
Nothing suggests that a dispute cannot be mediated both before suit is filed and then again at an appropriate point in the litigation process. Depending on the nature and complexity of the dispute, it may be valuable for discovery to be completed before mediation. In other matters, the special nature of the hospitality industry and the owner/operator relationship may make it best to mediate as early in the process as possible, in order to not only resolve the dispute, but also to preserve the intended long-term relationship between the parties.
Can the Marriage Be Saved?
Some have suggested that the relationship of owner and operator is not unlike a marriage. In the domestic relations context, some jurisdictions have created what is known as early interventional mediation, where the attempt is made to save the marriage before the relationship is irretrievably damaged. It is fair to look at pre-suit mediation of hospitality industry disputes in the same way.
Selection of the mediator has been left for last, certainly not because it is the least important. It is more correct to suggest that picking the “right” mediator is the most important factor in determining whether or not the dispute will be settled. Certainly, the dispute resolution provision of the contract should speak to the mediator selection process.
Knowledge of the Industry Is Key
Keep in mind that a good mediator is part psychologist, part teacher, part trust builder, an effective communicator and is calm, patient and tenacious in the face of uncooperative, adversarial and closed-minded parties. Being seen as neutral and non-judgmental (unless, of course, the mediation is evaluative) by the parties and their counsel is also critical. In the hospitality industry context, it is particularly important for the mediator to bring one more element to the process in order to gain the trust and confidence of the parties: knowledge of the industry.
Should owner/operator disputes be mediated? Absolutely. When should they be mediated? As early and often as is necessary to settle the dispute and preserve the relationship of the parties. The type of mediation and the type of mediator should be agreed upon before there is any dispute, and if the parties later agree, both facilitative and evaluative mediation can be utilized. The right mediator - a knowledgeable neutral - is a key to achieving success.