“MED – ARB”: A Novel ADR Approach

“MED – ARB”: A Novel ADR Approach

SHARE

ADR: Dissatisfaction with court-centred resolution of disputes has long been articulated by critics who regard it as, amongst other things, unfair, unduly formal, and exclusive.[1] There are five traditional methods of disputes resolution in the ADR arena, these are: negotiation, mediation, arbitration, conciliation and judicial settlement. An alternate dispute resolution process includes any process/procedure, other than adjudication by a presiding judge, in which a neutral third party participates to assist in the resolution of issues in dispute.[2]Negotiation” is usually defined as communication for the purpose of persuasion; “mediation” is an act of a third person in intermediating between two contending parties with a view to persuade them to adjust and settle their dispute; “arbitration” is reference of a dispute to an impartial third person chosen by the parties to the dispute who agree in advance to abide by the arbitrator’s award issued after a hearing at which both parties have an opportunity to be heard; “conciliation” like other ADR processes is settling of disputes without litigation- there can be a valid reference to conciliation only if both parties to dispute agree to have negotiations with the help of a third party or third parties either by agreements or by the process of invitation and acceptance- if both parties do not agree for conciliation, there can be no conciliation; and “judicial settlement” refers to settlement of a civil case with help of a judge, not assigned to adjudicate upon the dispute.

In the United States, ADR under the umbrella of humanism, communitarian philosophy, and social welfare concerns, is often objected to, for the depersonalization, objectification and absenteeism of courtroom formality, and for too great a dependency on legal professionals. The United States patrons more user-friendly and less adversarial procedures; arbitration is the most resorted ADR process in the United States. In India, so far as ADR processes are concerned Section 89 of the Code of Civil Procedure, 1908 holds the field.[3] Section 89 of the Code of Civil Procedure, 1908, speaks of the following methods of resolution of disputes: arbitration, conciliation, judicial settlement (including settlement through Lok-Adalat) and mediation. Arbitration and conciliation as the methods of dispute resolution are governed by the Arbitration and Conciliation Act, 1996; however, settlement through Lok-Adalat is governed by the provisions of the Legal Services Authority Act, 1987. Section 74 of the Arbitration and Conciliation Act, 1996 provides that, settlements recorded by a conciliator would statutorily morph into awards, and there-upon decree, which if necessary, could be executed via a court. Similarly, Section 21 of the Legal Services Authority Act, 1987, accords status of a decree to a settlement recorded under the provisions of the said Act. There is no specific statute as such which governs the settlement which takes place through mediation; although Section 30 of the Arbitration and Conciliation Act, 1996 makes a specific reference to mediation as a mode of settlement of disputes in the ADR realm in the following words:

Section 30(1): “It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of the dispute and, with the agreement of the parties the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement.

Section 30(2): “If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.

Observations made by the Law Commission of India in its 246th Report, testifies the fact that the 1996 Act has achieved much less than what was expected of it.[4] Lately, substantial amendments were brought to the 1996 Act by virtue of the Arbitration and Conciliation (Amendment) Act, 2015. The 2015 Act attempts to make the arbitration mechanism more transparent and time-effective; however the 2015 Act neither touches upon Part III (i.e. Conciliation) of the 1996 Act, nor does it suggests incorporation of specific provisions pertaining to mediation.

Mediation: Mediation refers to a method of non-binding dispute resolution with the assistance of a neutral third-party who tries to help the disputing parties to arrive at a negotiated settlement. It is also synonym of the term “conciliation”.[5] Confidentiality is a cornerstone of the mediation process; in mediation, the mediator is allowed, more so encouraged, to hear but not to share private information and to use the information to assist in resolving the disputes. Thus, in mediation, the parties go through a negotiating process where the parties themselves decide what can be the possible solution. Whilst the mediator has no power to impose a binding agreement, mediation as an effective ADR process helps in resolving disputes by: establishing a constructive ambience for negotiation; collecting and judiciously communicating selected confidential material; seeking joint gains; keeping the negotiations live; and articulating the rationale for agreement.[6] The key advantages of mediation are that, it is an interest based negotiation, where the parties to the dispute make final decisions, and apart from being confidential, it is time-effective and cost-effective method of dispute-resolution with parties to the dispute drawing long-term, mutually satisfying agreements.

Mediation is one of the most resorted ADR process because of the following reasons: (a) Self- Determination; (b) Impartiality; and (c) Confidentiality.

  • Self Determination: Self determination means the right of the parties to make independent decisions; self determination standard privileges the parties with ‘joint authority’ to determine the format, content, contours of dispute and conduct of mediation, and particularly the terms of the resolution agreement, without undue influence by the mediator. The freedom of the disputing parties to engage in the process but also to walk away from it is critical to effective mediation.
  • Impartiality: Mediators are often watchful of behavioural/emotional inequity on their end, which could possibly have an appearance of partiality. In spite of increased risk of bias arising out of private communication that the mediators establish with the disputing parties, they are to act in a manner that is neutral, equidistant and impartial; they are to balance the privilege with procedural steps such as meeting the disputing parties equitably and allowing equivalent exchanges during plenary meetings.
  • Confidentiality: Mediation is the least formal method of ADR. Mediators engage in and establish private communication with the disputing parties for amicable resolution of disputes, more often than less, there is exchange of personal information unilaterally, that is, from each of the disputing party to the mediator; mediators draw clues from the information received (keeping the same as ‘private and confidential’) and keep the merits of the case in sight to chart out a resolution/reconciliation plan so that not just there is redressal of the dispute, but also the parties to the dispute don’t leave the mediation dais with a pinch of salt or in bad taste; efforts are made to save the relationship (whether family or business) as was subsisting between the disputing parties before the discord visited the parties. Mediators pledge confidentiality qua the information they receive from each of the disputing party so that there is full and fair disclosure of the grievances that the parties suffer and the reliefs that the parties to the dispute aim for, this enables the mediator to chart out the possibilities apropos amicable resolution of the dispute with least friction.

Arbitration: Arbitration is determination of a matter in dispute by the judgment of one or more persons, called arbitrators, who in case of difference usually call in for an ‘umpire’ to resolve the difference of opinion subsisting between them. Arbitration is the resolution of a dispute between two contracting parties by persons chosen by them to be arbitrators.[7] According to the Black’s Law Dictionary (Seventh Edition, p.100), an arbitrator is a neutral person who resolves disputes between parties, especially by means of formal arbitration; and an arbitration clause is a contractual provision mandating arbitration and thereby avoiding litigation of disputes about the contracting parties’ rights, duties, and liabilities.

Med-Arb: Med-Arb is a hybrid of mediation and arbitration and can be used where mediated negotiations do not lead to a settlement. In those circumstances the parties can agree for the mediator to become an arbitrator and issue a final and binding award on the outstanding matter(s). Thus, a critical pre-requisite to a Med-Arb is an advance agreement under which the parties agree to arbitrate any of the issues which cannot be mediated successfully.

Sam Kagel[8] was the first to coin this alternate dispute resolution mechanism; it was he who first hybridized the two-methods (mediation and arbitration) into one (Med-Arb) for settling a controversial San Francisco nurses’ strike in the 1970s. The highlighting benefit of this methodology to resolve the disputes is that, this combined process eliminates the need to start all over again with a new arbitrator- who is wholly uneducated about the nature of the dispute- after and when the mediation process fails. Med-Arb has often been termed as “mediation with muscle”, for the final product of Med-Arb, whether resulting entirely from mediation, or from both mediation and arbitration, becomes the entire settlement which is binding, and enforceable at law. Med-Arb, thus, effectively eliminates major weaknesses associated with the mediation process.

“Med-Arb” process has been supported by various countries and institutions, including Singapore, Japan and China, but has not been so greatly used in the Europe. It has at least theoretical advantages but among its downsides is the risk that an aggrieved party could seize on the arbitrator’s involvement as mediator to allege “apparent bias” or “loss of neutrality”. This could lead to the removal of the arbitrator or, conceivably invalidation of an arbitral award. In addition the prospect of a mediator becoming an arbitrator can be perceived as inhibiting full and frank discussions in the mediation.[9] To address these ethical concerns, a Med-Arb agreement can have an “opt-out clause”. To understand it more comprehensively, we need to draw an intelligible differentia between: Med-Arb (Pure) and Med-Arb-Opt-Out.

Med-Arb (Pure): In a Med-Arb (Pure), one person is both, the mediator and the arbitrator; firstly, the mediation takes place and if all issues are not resolved, then the dispute is put before the arbitrator, that is, the initial mediator now acting as an arbitrator, to decide the remaining issues via arbitration.

Med-Arb-Opt-Out: A Med-Arb-Opt-Out is managed by a mediator and possibly a new arbitrator. Here, after the mediation stage, either party can call for a new arbitrator. The key benefit here is that, Med-Arb-Opt-Out gives control to parties for better neutrality and confidentiality. The major disadvantage is that, extra-time is needed for the new-neutral to brace up with the case details, and thus, Med-Arb-Opt-Out can be time consuming and expensive.

Due Process Challenge to Med-Arb: Whether the parties to a statutorily mandated Med-Arb are assured of their constitutional rights to due process, was, the question that came up for adjudication before the Wisconsin Court of Appeals in the case of, Milwaukee County v. Milwaukee District Council[10]. In this case the argument against the statute, the Wisconsin Municipal Employment Relations Act, was that it statutorily mandated the Med-Arb method for resolution of the disputes between the parties, with no provision for meaningful judicial review. Answering the challenge to the statutorily mandated Med-Arb on equal protection and due process grounds albeit unconstitutional delegation of authority, the court held that the appointed arbitrator performs an administrative rather than a legislative function, and merely carries out a legislatively outlined administrative function; because of the strong presumption of constitutionality of all legislative acts, only those challenges which are proved beyond reasonable doubt can render a statute un-constitutional. In regards to the judicial review argument, it was held that, there are procedural safeguards in the Wisconsin Municipal Employment Relations Act, and the plaintiff (Milwaukee County) failed to prove beyond reasonable doubt that the procedural safeguards were inadequate. The court ultimately rejecting the challenge to the constitutionality of the Wisconsin Municipal Employment Relations Act held that the argument challenging the constitutionality of Med-Arb statute is a constitutional challenge to the arbitration method of resolution of disputes, which is bound to fail. Thus, the statute mandating necessarily the Med-Arb method for resolution of disputes, withstood the judicial scrutiny.

Arb-Med: The reverse of Med-Arb is Arb-Med, that is, Arbitration followed by Mediation. Arb-Med is a process whereby a neutral and impartial third-party receives evidence and testimony from the disputants in the arbitration (that is, statement of claim and statement of defence respectively). Post receiving the evidence and testimony, the neutral third party writes the decision qua the dispute, on merits, and the same is with-held from the parties to the dispute; thereafter the neutral communicates with the parties in mediation, to enable them to reconcile their respective disputes and reach a mutually satisfying agreement; in case the parties fail to mediate their disputes, the arbitration decision as was initially prepared by the neutral on merits, is issued as a binding resolution.

Thus, Arb-Med begins with an arbitration phase whereby the neutral prepares a binding award, but instead of revealing the decision, he keeps it confidential, and disputing parties are made to proceed to the mediation phase with the same neutral. If the parties reach a voluntary agreement in mediation, the neutral never discloses the arbitral award; however, if the parties are unable to reach a decision in mediation, the award is revealed and the same becomes binding albeit the parties.

Different Forms of Med-Arb Processes[11]:

  1. Overlapping Med-Arb: This Med-Arb variant involves use of separate neutrals, each responsible for one phase of the process. Arbitrator in this Med-Arb method attends the mediation as observer during plenary exchanges, where only the mediator engages privately with the parties. The arbitrator although witnesses joint exchanges and reviews shared documents throughout the mediation phase, but without access to private communication. If dispute gets settled vide mediation then the agreement is drawn and the arbitration phase is abandoned. If the parties don’t reach an amicable resolution then, the mediator steps out and the arbitrator, already familiar with much of the dispute, takes the charge. The only drawback qua this method of ADR is that, the mediation takes place under the attentive eye of the arbitrator, thus the mediating parties tend to act vigilantly, not indulging themselves with private/confidential exchange of information with the mediator, out of the fear of award contamination.
  2. Plenary Med-Arb: This Med-Arb variant involves engagement of a single neutral following the accepted Med-Arb procedures, with prohibition on the neutral to engage in private communication with any party; thus, the neutral is to rely exclusively on plenary/formal communication and document exchange. This format of disallowing ex parte communications effectively eliminates the concerns of award contamination. The major drawback qua this method of ADR is that, it adversely strikes at the very root of the mediation jurisprudence, which ideates that, candid and honest private communication with the mediator is essential for successful mediation.
  3. Braided Med-Arb: This Med-Arb variant involves use of a single neutral following the accepted mediation and arbitration procedures, with the additional elbow-room for interrupting the arbitration phase with subsequent mediation efforts, asking or allowing parties to pursue voluntary agreement. In Braided Med-Arb, parties are allowed to mediate their dispute throughout the arbitration phase. The only drawback qua this method of ADR is the perceived ‘settlement pressure’ that the parties might face from the neutral.
  4. Optional Withdrawal Med-Arb: This Med-Arb variant involves use of a single neutral with the disputing parties having the autonomy to withdraw themselves from the dispute resolution process post the mediation phase. The allowance of an opt-out provision protects the notion of voluntary participation of the disputing parties. However, this Optional Withdrawal Med-Arb undermines the practical benefit that Med-Arb provides, that is, finality qua the resolution of disputes between the parties.

Curious case of “mutual discussions” followed by “arbitration”: Precedent from India

In the case of Ravindra Kumar Verma v. M/s. BPTP Ltd. & Anr[12], Hon’ble Mr. Justice Valmiki J. Mehta took a view which was contrary to the view taken in the case of M/s. Haldiram Manufacturing Company (P) Ltd. v. M/s. DLF Commercial Complexes Limited[13]. In M/s. Haldiram Manufacturing Company (P) Ltd. v. M/s. DLF Commercial Complexes Limited, it was held that, in case the arbitration clause albeit an agreement provides for a prior-condition in the form of mutual discussion as between the disputing parties, before invocation of arbitration, then, the same must be honoured, and invocation of arbitration before holding mutual discussions will be bad in law.

In Ravindra Kumar Verma v. M/s. BPTP Ltd. & Anr., Justice Valmiki J. Mehta relying upon, Saraswati Construction Co. v. Co-operative Group Housing Society[14], held that, the prior requirement albeit invocation of arbitration, is merely directory in nature and is not mandatory; and prior requirements such as that of “mutual discussion” incorporated in an arbitration clause cannot prevent reference to arbitration. Justice Valmiki J. Mehta centred his reasoning on Section 77[15] of the Arbitration and Conciliation Act, 1996, viewing the term “mutual discussion” in the light of conciliation.

Justice Valmiki J. Mehta centred his opinion albeit this judgment on the following two reasons:

(1) The first reason being that, if the arbitration clause is read in a mandatory manner with respect to prior requirement to be complied with before invoking arbitration, the same can result in serious and grave prejudice to a party who is seeking to invoke arbitration because the time consumed in conciliation proceedings before seeking invocation of arbitration is not exempted from limitation under any of the provisions of the Limitation Act, 1963 including Section 14.

Once there is no provision to exclude the period spent in conciliation proceedings, it is perfectly possible that if conciliation proceedings continue when the limitation period expires the same will result in nullifying the arbitration clause on account of the same not capable of being invoked on account of bar of limitation i.e. when proceedings for reference to arbitration are filed in court, the right to seek arbitration may end up being beyond three years of arising of the disputes and hence the petition for reference may be barred by limitation.

(2) Another example would be that, if suppose on the last date of limitation period of three years, a party wants to invoke an arbitration clause but the arbitration clause contains the requirement of invoking the pre-condition of “mutual discussion”. Surely, on the last date if a notice has to be given for invoking mutual discussion, no mutual discussion or conciliation can take place on the same date of the notice itself i.e. no mutual discussion can take place before expiry of the period of limitation which expires on that very day on which the notice for mutual discussion is given.

Therefore, if the pre-condition of mutual discussion is treated as mandatory, valuable rights of getting disputes decided by arbitration will get extinguished and which is not a position acceptable in law.

Remarks: Med-Arb is an ADR approach in which a single neutral switches over his role from that of a mediator to that of an arbitrator, in case the mediation fails to produce the desired results. This process has its own advantages and demerits. The chief advantage of this ADR approach is that, the resolution of dispute is certain, if not by mediation, then by arbitration. This method of ADR is cost-effective and less time consuming. The chief demerit is that of “award contamination”, coupled with the fear that the information supplied by the disputants during separate sessions with the mediator may be used unfairly, in case, parties eventually end up in litigation. This disadvantage can however be diluted by adopting the New South Wales Model. In New South Wales, the Commercial Arbitration Act, 2010, by virtue of Section 27 D (4) provides an opportunity to the disputing parties to step-out of the Med-Arb process, i.e. once the mediation phase is over, and for some reason or the other, resolution of dispute doesn’t take place, then either of the disputing party is entitled to opt-out of the Med-Arb process. Pursuant to the failure of the Med-Arb process any of the disputing party can have the option of proceeding with the arbitral mechanism with engagement of a person other than the one who acted as the mediator in the first place.    

 

ANNEXURE: “MED-ARB” CLAUSES: Illustrations

Illustration 1: Med-Arb Clause- American Arbitration Association[16]

If a dispute arises from or relates to this contract or the breach thereof, and if the dispute cannot be settled through direct discussions, the parties agree to endeavour first to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to arbitration. Any unresolved controversy or claim arising from or relating to this contract or breach thereof shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. If all parties to the dispute agree, a mediator involved in the parties’ mediation may be asked to serve as the arbitrator.

Illustration 2: Med-Arb Clause- ACB Foundation (Netherlands)[17]

The parties agree that any disputes arising from this agreement or subsequent agreements concluded as a result of this agreement shall be settled in accordance with the ACB mediation regulations.

Should it prove impossible to arrive at a settlement during the negotiations (as required: within [number] of days after the receipt of notification that negotiations are to commence) then the party taking the initiative shall request that this dispute be settled in accordance with the Arbitration Regulations of the [select Arbitration Institute].

Illustration 3: Med-Arb Clause- Arbitrators’ and Mediators’ Institute of New Zealand Inc.[18]

Any dispute arising out of or relating to this contract may be referred to mediation, a non-binding dispute resolution process in which an independent mediator facilitates negotiation between the parties. Mediation may be initiated by either party writing to the other party; and, identifying the dispute which is being suggested for mediation. The other party will either agree to proceed with mediation or agree to attend a preliminary meeting with the mediator to discuss whether mediation would be helpful in the circumstances. The parties will agree on a suitable person to act as mediator or will ask the Arbitrators’ and Mediators’ Institute of New Zealand Inc. to appoint a mediator. The mediation will be in accordance with the Mediation Protocol of the Arbitrators’ and Mediators’ Institute of New Zealand Inc.

 

The mediation shall be terminated by – 
(a) The signing of a settlement agreement by the parties; or
(b) Notice to the parties by the mediator, after consultation with the parties, to the effect that further efforts at mediation are no longer justified; or
(c) Notice by one or more of the parties to the mediator to the effect that further efforts at mediation are no longer justified; or
(d) The expiry of sixty (60) working days from the mediator’s appointment, unless the parties expressly consent to an extension of this period.

 
If no mediation is agreed to or if the mediation should be terminated as provided in (b), (c) or (d), any dispute or difference arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in New Zealand in accordance with New Zealand law and the current Arbitration Protocol of the Arbitrators’ and Mediators’ Institute of New Zealand Inc. The arbitration shall be by one arbitrator to be agreed upon by the parties and if they should fail to agree within twenty-one (21) days, then to be appointed by the President of the Arbitrators’ and Mediators’ Institute of New Zealand Inc.

Illustration 4: Med-Arb Clause- The Chartered Institute of Arbitrators[19]

Any dispute arising out of or in connection with this contract shall, at first instance, be referred to a mediator for resolution. The parties shall attempt to agree upon the appointment of a mediator, upon receipt, by either of them, of a written notice to concur in such appointment. Should the parties fail to agree within fourteen days, either party, upon giving written notice, may apply to the President or the Vice President, for the time being, of the Chartered Institute of Arbitrators, for the appointment of a mediator; should the mediation fail, in whole or in part, either party may, upon giving written notice, and within twenty eight days thereof, apply to the President or the Vice President, for the time being, of the Chartered Institute of Arbitrators, for the appointment of a single arbitrator, for final resolution. The arbitrator shall have no connection with the mediator or the mediation proceedings, unless both parties have consented in writing. The arbitration shall be governed by both the Arbitration Act 1996 and the Controlled Cost Rules of the Chartered Institute of Arbitrators (2014 Edition), or any amendments thereof, which Rules are deemed to be incorporated by reference into this clause. The seat of the arbitration shall be England and Wales.

Illustration 5: Med-Arb Clause- Chicago International Dispute Resolution Association[20]

The parties agree that they will endeavour to settle any dispute, controversy, or claim arising out of or relating to this contract, which they are unable to settle through direct negotiations, by mediation administered by the Chicago International Dispute Resolution Association (“CIDRA”), One South Wacker Drive, Suite 2800, Chicago, Illinois 60654, USA, under its Mediation Rules before resorting to arbitration, litigation, or other dispute resolution procedure. If mediation is unsuccessful, the parties agree that they will submit such dispute, controversy, or claim to arbitration administered by CIDRA under its Arbitration Rules and that a judgment on the award may be filed and enforced in accordance with those Rules and the rules and laws of the applicable jurisdiction. Any contractual requirement of filing a notice of claim with respect to the dispute submitted to mediation — including a contractual requirement to file a notice of arbitration claim with CIDRA — shall be suspended by mutual agreement until the conclusion of the CIDRA mediation proceedings.

Illustration 6: Med-Arb Clause- Sport Disputes Resolution Centre of Canada[21]

Any dispute arising from or related to the present contract will be submitted exclusively to [name of the organisation or the Med/Arb neutral before which the Med/Arb process will take place, for example: the dispute resolution secretariat of the Sport Dispute Resolution Centre of Canada or its successor] and resolved definitively in accordance with [rules or law applicable to the Med/Arb, for example: the Canadian Sport Dispute Resolution Code, as amended from time to time].

Optional Specifications:

  • The language in which the Med/Arb must be conducted:

“The Med/Arb will be conducted in [French, English, Spanish, other].”

  • The location where the Med/Arb would take place:

“The Med/Arb will be held in [city or country, or any location determined by the contracting parties].”

Illustration 7: Med-Arb Clause- New York City Bar Association[22]

If a dispute arises from or relates to this contract or the alleged breach thereof, and if the dispute cannot be settled through negotiations within 30 days, the parties agree to endeavour first to settle the dispute by mediation administered by the (name administrative provider) under its Commercial Mediation Procedures before resorting to arbitration. Any dispute arising from or relating to this contract or alleged breach thereof shall be resolved by arbitration administered by the (name administrative provider) in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. If all parties to the dispute agree, a mediator involved in the parties’ mediation may be asked to serve as the arbitrator.

Illustration 8: Med-Arb Clause- Washington Arbitration & Mediation Service[23]

In the event a dispute shall arise between the parties to this [contract, lease, etc.], the parties agree to participate in at least four hours of mediation in accordance with the mediation procedures of Washington Arbitration & Mediation Service. The parties agree to share equally in the costs of the mediation and cooperate fully in the effort to schedule a mediation session within 30 days of a mediation request by either party to this [contract, lease, etc.]

In the event the dispute is not resolved through mediation, the parties agree to immediately proceed to arbitration, either on the same day or within [ ] days of the mediation date, by agreement of the parties. The parties agree to share equally in the costs of the arbitration and cooperate fully in the effort to schedule the arbitration hearing. The arbitrator shall have the authority to award all mediation and arbitration costs to the prevailing party, at the discretion of the arbitrator. The award of the arbitrator shall be considered final and binding on the parties.

Illustration 9: Med-Arb Clause- Arbitration Foundation of Southern Africa[24]

Should any dispute, disagreement or claim arise between the parties (called hereafter “the dispute”) concerning this agreement, the parties shall try to resolve the dispute by negotiation. This entails that the one party invites the other in writing to a meeting and to attempt to resolve the dispute within 7 (seven) days from date of the written invitation. If the dispute has not been resolved by such negotiation, the parties shall submit the dispute to AFSA administered mediation, upon the terms set by the AFSA Secretariat. Failing such a resolution, the dispute, if arbitrable in law, shall be finally resolved in accordance with the Rules of the Arbitration Foundation of Southern Africa by an arbitrator or arbitrators appointed by the Foundation.

Illustration 10: Med-Arb Clause- LCIA Arbitration and ADR[25]

In the event of a dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, the parties shall first seek settlement of that dispute by mediation in accordance with the LCIA Mediation Rules, which Rules are deemed to be incorporated by reference into this clause.
If the dispute is not settled by mediation within […………] days of the commencement of the mediation, or such further period as the parties shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause.


The language to be used in the mediation and in the arbitration shall be […………].
The governing law of the contract shall be the substantive law of […………].
In any arbitration commenced pursuant to this clause-
(i) the number of arbitrators shall be [one/three];
(ii) the seat, or legal place, of arbitration shall be [City and/or Country].

 

Bibliography:

Primary Sources:

  1. The Alternate Dispute Resolution (ADR) Act, 28 USC 651
  2. The Code of Civil Procedure, 1908
  3. The Legal Services Authority Act, 1987
  4. The Limitation Act, 1963
  5. The Arbitration and Conciliation Act, 1996
  6. The Arbitration and Conciliation (Amendment) Act, 2015
  7. The Wisconsin Municipal Employment Relations Act
  8. The Commercial Arbitration Act, 2010
  9. The Law Commission of India (246th Report)

 

Secondary Sources:

  1. Black’s Law Dictionary, Seventh Edition, p. 996, 1377
  2. Raymond Wacks, Law: A Very Short Introduction, Oxford University Press, 2008, p.105-107
  3. Karen L. Henry, Med-Arb: An Alternative to Interest Arbitration in the Resolution of Contract Negotiation Disputes, Journal on Dispute Resolution, Volume 3:2 (1988)
  4. Sam Kagel, Combining Mediation and Arbitration, 96 MONTHLY LAB. REV. 62, September 1973
  5. Richard Fullerton, The Ethics of Mediation-Arbitration, The Colorado Lawyer, Volume 38, Issue No. 5, May 2009
  6. Tiered Dispute Resolution Clauses, file:///C:/Users/advoc_000/Downloads/9093973.pdf, Last viewed on: 30.05.2016
  7. Drafting Dispute Resolution Clauses, file:///C:/Users/advoc_000/Downloads/Drafting_dispute_resolution_clauses__a_practical_guide.pdf, Last viewed on: 30.05.2016
  8. ACB Mediation, https://imimediation.org/private/downloads/RM3OPYjD1Ia2rg1ttVz8kw/ACB%20MEDIATION%20CLAUSES.2009.2013doc.pdf, Last viewed on: 30.05.2016
  9. Arbitrators’ and Mediators’ Institute of New Zealand Inc., http://www.aminz.org.nz/Category?Action=View&Category_id=511, Last viewed on: 30.05.2016
  10. The Chartered Institute of Arbitrators, http://www.ciarb.org/docs/default-source/das/contract-clause.pdf?sfvrsn=4, Last viewed on: 30.05.2016
  11. The Chicago International Dispute Resolution Association, http://www.cidra.org/printpdf/mediate-then-arbitrate, Last viewed on: 30.05.2016
  12. The Sport Disputes Resolution Centre of Canada, http://www.crdsc-sdrcc.ca/eng/documents/TemplateMed-arbClause_e.pdf, Last viewed on: 30.05.2016
  13. New York City Bar Association, http://www2.nycbar.org/pdf/report/uploads/20073042-CompilationofSampleMediationClausesALTDIS442016.pdf, Last viewed on: 30.05.2016
  14. Washington Arbitration & Mediation Service, https://usamwa.com/our-services/mediation/mediation-clauses/, Last viewed on: 30.05.2016
  15. Arbitration Foundation of Southern Africa, http://www.arbitration.co.za/downloads/Clauses.pdf, Last viewed: 30.05.2016
  16. LCIA, http://www.lcia.org/LCIA/introduction.aspx, Last viewed: 30.05.2016

 

[1] See: Raymond Wacks, Law: A Very Short Introduction, Oxford University Press, 2008, p.105-107

[2] The Alternate Dispute Resolution (ADR) Act, 28 USC §651

[3] That Section 89 of the Code of Civil Procedure, 1908 is poorly drafted is clearly articulated in the judgment of the Supreme Court of India, in the case of, Afcons Infrastructure Ltd. & Anr. v. Cherian Varkey Construction (P) Ltd. & Ors. [2010 (8) SCC 24]; the Apex Court in this case issued several directions in respect of the procedure to be adopted by the courts while taking recourse to the provision of Section 89 of the 1908 Code.

[4] The Law Commission of India in its 246th Report on “Amendments to the Arbitration and Conciliation Act, 1996”, August 2014, recommended various amendments to the 1996 Act, to facilitate and encourage alternate dispute mechanism, especially arbitration for settlement of disputes in a more amicable, cost effective and time effective manner.

[5] See: Black’s Law Dictionary, Seventh Edition, p. 996, 1377

[6] See: Karen L. Henry, Med-Arb: An Alternative to Interest Arbitration in the Resolution of Contract Negotiation Disputes, Journal on Dispute Resolution, Volume 3:2 (1988)

[7] See: Paramjeet Singh Patheja v. ICDS Ltd., JT 2006 (10) SC 41: (2006) 11 SCALE 459

[8] Sam Kagel, a San Francisco attorney/arbitrator, is credited as the first to develop Med-Arb. He employed it initially to settle a 1970 San Francisco nurses’ strike. See: Sam Kagel, Combining Mediation and Arbitration, 96 MONTHLY LAB. REV. 62, September 1973

[9] See: Tiered Dispute Resolution Clauses, file:///C:/Users/advoc_000/Downloads/9093973.pdf, Last viewed on: 30.05.2016

[10] 109 Wis. 2d 14, 325 N.W. 2d 350 (1982)

[11] See: Richard Fullerton, The Ethics of Mediation-Arbitration, The Colorado Lawyer, Volume 38, Issue No. 5, May 2009

[12] CM(M) No. 1021/2014, Delhi High Court, Decided on: 18.11.2014

[13] 193 (2012) DLT 410

[14] 1995 (57) DLT 343

[15] Section 77: Resort to arbitral or judicial proceedings- The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject matter of the conciliation proceedings except that a party may initiate arbitral or judicial proceedings where, in his opinion, such proceedings are necessary for preserving his rights.

[16] See: Drafting Dispute Resolution Clauses, file:///C:/Users/advoc_000/Downloads/Drafting_dispute_resolution_clauses__a_practical_guide.pdf, Last viewed on: 30.05.2016

[17] See: ACB Mediation, https://imimediation.org/private/downloads/RM3OPYjD1Ia2rg1ttVz8kw/ACB%20MEDIATION%20CLAUSES.2009.2013doc.pdf, Last viewed on: 30.05.2016

[18] See: Arbitrators’ and Mediators’ Institute of New Zealand Inc., http://www.aminz.org.nz/Category?Action=View&Category_id=511, Last viewed on: 30.05.2016

[19] See: The Chartered Institute of Arbitrators, http://www.ciarb.org/docs/default-source/das/contract-clause.pdf?sfvrsn=4, Last viewed on: 30.05.2016

[20] See: The Chicago International Dispute Resolution Association, http://www.cidra.org/printpdf/mediate-then-arbitrate, Last viewed on: 30.05.2016

[21] See: The Sport Disputes Resolution Centre of Canada,  http://www.crdsc-sdrcc.ca/eng/documents/TemplateMed-arbClause_e.pdf, Last viewed on: 30.05.2016

[22] See: New York City Bar Association, http://www2.nycbar.org/pdf/report/uploads/20073042-CompilationofSampleMediationClausesALTDIS442016.pdf, Last viewed on: 30.05.2016

[23] See: Washington Arbitration & Mediation Service, https://usamwa.com/our-services/mediation/mediation-clauses/, Last viewed on: 30.05.2016

[24] See: Arbitration Foundation of Southern Africa, http://www.arbitration.co.za/downloads/Clauses.pdf, Last viewed: 30.05.2016

[25] See: LCIA, http://www.lcia.org/LCIA/introduction.aspx, Last viewed: 30.05.2016

Facebook Comments

Powered by TG Facebook Comments