The attitude towards mediation is changing in many jurisdictions. Lawyers, arbitrators, the judiciary and professional clients are adopting a more positive and sophisticated attitude towards its benefits. There remains scope for improvement however and it is hoped that some important recent developments will assist in this process.
The first development is the proposed establishment of a Singapore International Mediation Centre1(SIMC). In December 2013, the Singapore Minister of Law welcomed the recommendations made by the International Mediation Working Group to develop Singapore into an international commercial mediation centre. It is understood that the SIMC will be established in November 2014. The mediators will be approved and selected from amongst internationally renowned mediators and initially, the SIAC Registry will administer matters such as appointment, assistance with venues and collection of fees. The working paper for the SIMC anticipates an “Arb – Med – Arb” dispute resolution clause, whereby arbitration is commenced and then immediately the parties go to mediation, only reverting back if they cannot settle. In arbitration, arbitrators will be encouraged to order, or at least consider, “mediation windows” for some if not all disputes. There also will be a change in the law so that a mediation agreement can be converted into an arbitration award by consent, giving the parties the benefit of New York Convention enforcement rights.
The second development is the recently published ICC Mediation Rules (the “new Rules”). These came into force on 1 January 2014, making mediation the default form of alternative dispute resolution (ADR) for the ICC.2
The introduction of the new Rules could be seen as a narrowing of the ICC’s ADR focus, given that the old rules also encompassed other forms of ADR, such as conciliation and neutral evaluation. However, these are still available under the new Rules, albeit that the ICC’s emphasis is now upon mediation as the default ADR tool. In fact, this emphasis only reflects what was already happening in practice: approximately 90% of ICC ADR procedures held under the old rules took the form of mediation. The new Rules constitute explicit recognition by the ICC of the predominance of mediation as an ADR method.
The new Rules are not prescriptive as to how mediations should be conducted. They deliberately provide flexibility, leaving the mediator to determine procedural matters to suit the needs of the parties. The mediator is required to discuss with the parties how the mediation will be conducted and to set this out in written form. The parties are free to withdraw if they do not agree with the mediator’s proposed approach. This reinforces the parties’ control of the mediation process.
The new Rules envisage a hands-on role for the ICC International Centre for ADR. Unless the parties have agreed otherwise, the Centre will select a mediator. It will also help the parties reach agreement on the conduct of the mediation, particularly with practical matters such as venue and timing. The intention is to free up the mediator to focus impartially on the core task.
The new Rules are supplemented by Mediation Guidance Notes, which address commonly encountered issues such as the interplay between private and joint sessions, and the use of case summaries, as well as providing guidance on effective preparation, the need for attendance by a person with settlement authority and, more fundamentally, the differences between mediation and arbitration.
Importantly, the new Rules have been drafted to work in conjunction with the existing ICC Arbitration Rules, providing for a joined-up dispute resolution system. In fact, the Mediation Guidance Notes actively encourage arbitrators to consider the use of “mediation windows”, pausing or staying proceedings to allow mediation to take place.
The new Rules represent a welcome effort by the ICC to place mediation at the forefront of its ADR procedures, in line with current practice. It is encouraging to see mediation being promoted as part of a dispute resolution toolkit alongside arbitration: these methods have too often been employed on a mutually exclusive basis, missing opportunities for efficient settlement. To avoid wasting costs and time, and to encourage good faith in the parties, mediation cannot operate in a vacuum. Either court proceedings or arbitration should be in place, even if not active, so that at an appropriate time the parties can refer some or all of their disputes to mediation, knowing that if they cannot settle, they can revert immediately to the proceedings.
Confidentiality and disclosure
Parties to a mediation usually want to keep both their participation and the details of their negotiations confidential – and confidentiality may make settlement more likely, giving them greater freedom to negotiate. The ICC’s approach to confidentiality under the new Rules is therefore interesting. Previously, all ADR proceedings conducted under ICC rules were confidential, including their outcome. The new Rules still provide for proceedings to be private and confidential but they explicitly exclude from the scope of this confidentiality the fact that such proceedings are taking place, have taken place or will take place.
Briggs J3, as he then was, proposed that a new and special mediator privilege should be created to protect the parties and the mediator against any need to disclose ‘mediator secrets’, things told to the mediator by either party in secret which they do not want the other to know.
Any rules or laws that made disclosure of all documents and statements in mediation open and available for use in subsequent arbitration or court proceedings would be problematic, in particular any admissions, or statements as to compromise or settlement, as well as “mediator secrets”. However, in my view, if evidence of a general nature comes out in a mediation, then it should be disclosable subsequently. For example, If a party’s expert says one thing at mediation and another in court, he should be open to cross examination. This would in my view make parties more transparent and honest in their approach to the mediation process.
There have been a number of interesting and not entirely consistent judgments in the English High Court about the costs consequences for a successful party of refusing to mediate. The general judicial consensus in England is that a party should be penalised on costs where it is shown that it was unreasonable to refuse to consider mediation.4
An arbitrator cannot order mediation. It would be outside their jurisdiction and contrary to the consensual nature of mediation. However, there may be scope to argue that arbitrators should have the power to impose costs penalties on a party for refusing proposals to mediate.
If mediation is to continue to develop, quality and regulation of mediators is essential. It is not unsurprising that bodies like the ICC and SIMC, looking to include mediation as one option in a holistic dispute resolution regime, will wish to govern approval of mediators, and assist in the running and control of mediation. This is to be welcomed, as it can only improve the perception of mediation generally.
For parties involved in mediation, the role and powers of the mediator is a key consideration. A mediator should not focus on settlement at all costs, with no interest in the feelings of the parties. It is my practice to ask the mediator to reserve a few hours the day before the hearing to meet with the individual parties and their solicitors in private. Clients who have never met the mediator find it helpful to explain their case. They are often emotional, feeling hurt or confused. It provides an outlet for this emotion, which can otherwise waste time at the hearing. The lay parties feel that they have had the mediator listen to them and this is therapeutic. In my experience, this often allows the mediation to proceed in a more measured and peaceful manner. It also allows the mediator, who will have seen the position papers by then, to get a feel for the parties and their advisors, establishing whether the lawyers are driving matters in an adversarial way or trying to step back and let the mediation take its course.
Parties have the option to invite the mediator to make a binding or non-binding determination at the end of a mediation if the dispute does not settle. This can have the advantage of making the mediator more focused and conscientious during the mediation, and although some doubt the benefit of non-binding determination, experience shows that mediation tends to have an osmotic effect on the parties. Even if they do not accept the determination immediately, they may do so later – or it may affect their reasoning and will in reaching a settlement subsequently. They stop to consider the cost of continuing their dispute. They have had the opportunity to listen directly to the other side, without having it distilled through lawyers and experts. This can lead them to adopt a more balanced approach.
In my view, the individual appointed as mediator cannot act as arbitrator in the event that mediation does not produce a settlement. However, before close of submissions or any major interlocutory event, an appointed arbitrator could agree to accept appointment as a mediator at the parties’ request. However, they would have to resign their appointment as arbitrator if the mediation was unsuccessful.
Greater engagement, greater intelligence and greater ‘buy in’ from the arbitration community generally is required to establish mediation as a key element of dispute resolution, but the future looks bright for mediation.