FACES thoughts

THE LCIA announces new Arbitration Rules by Laura Lozano

Laura Lozano

The LCIA has recently announced the adoption of new rules. The new LCIA Arbitration Rules will come into effect on 1 October 2014 …

Elements of an Apology by Sala Sihombing


There are many reasons why we apologise, it may be to assuage our own guilt, or it may be to maintain social harmony.  Each of these …

Indonesia cancels its bilateral investment treaty with the Netherlands by Laura Lozano

Laura Lozano

The Dutch Ministry of Foreign Affairs announced last March 20 that the Republic of Indonesia had decided to terminate its bilateral …

Not all conflicts are created equal by M. Nycole Hearon


“All Polishing is Done by Friction”

~ Mary Parker Follett 

One of the traits that a mediator learns to cultivate is the ability to “…

Why do bad things happen to good mediations? by Sala Sihombing


Apple and Samsung are embroiled in another patent dispute[1].   Their trial is set for 31 March 2014 and it appears that their attempts …

Development of the Financial Ombuds practice in Russia by Elena Seryapina

Elena Seryapina

Facing the New Year I can't stop thinking of an old famous saying: "Don't take your old debts to the New Year". Unfortunately not …

A Christmas Gift for Mediators by Sala Sihombing


In the spirit of the season, I am offering a Christmas gift to mediators.  Although conflict can debase our humanity and make us incapable …

A slow start for ADR in the Netherlands by Majlie de Puy Kamp

Majlie de Puy Kamp

The Dutch business world is slowly catching on to mediation. Recently two “fast-moving-consumer-goods” companies found themselves …

Abengoa goes to arbitration: CSP Equity Investment Sarl against the Kingdom of Spain by Laura Lozano

Laura Lozano

A subsidiary of the Spanish technology group Abengoa has recently filed a request for arbitration under the SCC Rules at the Permanent …

United States Postal Service (USPS) REDRESS and REDRESS II Programs Employment of mediation intervention: a brief case study of transformative mediaiton in dispute system design by M. Nycole Hearon


It has become common across the United States to create, or utilize, neutral persons who are the first point of contact for disputes …

THE LCIA announces new Arbitration Rules by Laura Lozano

Laura Lozano

The LCIA has recently announced the adoption of new rules. The new LCIA Arbitration Rules will come into effect on 1 October 2014 and may be applied to any arbitration commenced after that date. They will replace the rules that have been in force since 1998.

As a preliminary note, it shall be remarked that the adoption of the new UNCITRAL and ICC rules in 2010 and 2012 respectively, has influenced this update in the LCIA Arbitration Rules.  

Notable changes in the rules are intended to make the arbitration procedure more efficient and effective. For instance, the rules include provisions on the conduct of legal representatives and parties, the joinder  of proceedings, cross claims and an emergency arbitrator provision.

Taking an innovative approach, as previously remarked, the rules include provisions establishing ethical guidelines for counsels. They are included in Art 18 and under an Annex to the main body of the rules titled “General Guidelines for the Parties’ Legal Representatives”. Interestingly, these ethical guidelines will have to be followed by all  counsels that act in arbitrations under the new LCIA rules. Likewise, party representation will be required to “not engage in activities intended unfairly to obstruct the arbitration or to jeopardise the finality of the award”. In particular the rules underline that counsels must disregard repeated jurisdictional challenges that they know to be unfounded. Furthermore, counsels will be forbidden from making false statements, relying upon false evidence and engaging in ex parte contact with arbitrators relating to the arbitration. The rules empower the arbitral tribunal to sanction such behaviors. By this, the LCIA is the first arbitral institution that manifestly punishes certain counsel behaviors during the arbitral proceeding.

On another note, the LCIA Court may revoke arbitrators’ appointments if they fail to undertake their duties in a timely, efficient and expeditious way. Pursuant to Art 10, arbitrators must conduct or participate in the arbitration not only with reasonable diligence, but also with reasonable efficiency and industry.

Under the efficiency sought in terms of saving time, parties and the tribunal shall make contact as soon as possible and no later than 21 days from the notification of the formation of the tribunal. Additionally, another key procedural change intended to improve the speed is that communications shall take place between the tribunal and the parties (copying the Registrar), rather than through the Registrar as under the current rules.

Noteworthy, the rules introduce the cross claim concept, as a counter claim by a respondent against a claimant and between respondents.

The rules include a default law for the governing law of the arbitration agreement. Pursuant to Art 16(4) for cases in which parties have failed to agree on the law applicable to the arbitration agreement, the default rule establishes that the governing law shall be the law applicable at the seat of arbitration. This has led to much debate but it seems that the dispute is finally settled.

Finally, it shall be noted that the rules remain silent on whether the arbitration shall be administered by the LCIA if parties have agreed to the mentioned rules. By contrast, Art 6(2) of the ICC Rules provides that if the disputing parties agree on the ICC Rules the proceeding shall be administered by the ICC.

Overall, the rules seem an interesting move to save costs and increase expediency in the LCIA arbitration proceedings. However, we will have to wait and see how the international arbitration community welcomes them. In the meantime, the rules are now available at the LCIA website at www.lcia.org.


Elements of an Apology by Sala Sihombing


There are many reasons why we apologise, it may be to assuage our own guilt, or it may be to maintain social harmony.  Each of these type of apologies will have different elements.  If you want to tick all the boxes what are some of the elements you need to consider?

Acknowledgement: There are two parts to acknowledgement, a) identification of the wrongful act, and b) identification of the norm that was challenged. This element is critical as the victim or recipient needs to know that the giver of the apology understands what line was crossed.  The line may represent a rule that has been broken, or as is often the case an expectation that has not been met. If the apology misses out this component then the recipient cannot be sure whether the giver understands what went wrong in their interaction from the recipient’s perspective. This may mean that the action could happen again. Part of the importance of an apology is that it is a reaffirmation of the norm, rule or expectation as shared by the giver and the recipient. It may be that the expectation needs to be changed, but at least the recipient will be clear that the giver understands the nature of the breach. For social rules and norms, this part of the apology assures the recipient that the social contract between the parties has been understood.

Explanation: This element needs to be used with care.  Explanations can veer towards excuses or reasons which may then be interpreted as a justification rather than an apology.  With that in mind, it can also be important in some situations to give an explanation of what has happened and why. For example, in situations where the consequences of the action may be clear but the reasons for the action may be hidden.  In medical negligence cases, patients and their families may need an apology but they are also likely to want to understand what happened and why it happened. In such cases the explanation forms a critical part of the overall structure of the apology and may determine it’s acceptance by the recipient.

Remorse: How many self-serving apologies have we seen from public figures in recent history? It seems as if an epidemic is sweeping through the media.  What is often clear from these apologies is the absence of any remorse.  Remorse demonstrates to the recipient that the giver regrets that occurred and that there are consequential feelings of guilt or shame or responsibility for what happened. Accepting responsibility for our actions and their consequences is an important part of an apology.

Assurance: A great apology addresses the concerns of the recipient.  If it is not hollow then an apology should provide an assurance that the wrongful act will not happen again.  Whether that is a personal assurance from the giver, or a change in hospital procedures, the assurance should demonstrate the the giver does not intend to repeat the wrongful action.  In some relationships, the apology is closely followed by a repeat of the wrongful action.  This shows either a lack of understanding or a lack of remorse.  In either case it makes for an ineffective apology, if the recipient knows that this is merely lip service and that the norm, rule or expectation will continue to be breached.

Reparations: This is responsibility and remorse made tangible. Reparations may assist the recipient in a practical way by replacing the broken item or by covering the cost of remediation or treatment.  It may not be possible to pay money and fix the harm in cases where there is emotional, physical or psychological damage, but a monetary settlement may help to alleviate the negative impact of the wrongful act.  In some cultures monetary payments are accepted as a full discharge for an action which in other cultures would be treated as a criminal offence.  It can be difficult for us to structure reparations that are meaningful in all cases, but at the very least they demonstrate to the recipient that the giver is willing to do more than say words to heal the rift.

And then the Holy Grail, does the apology meet the needs of the victim or recipient? There are some who believe that apologising is successful if they provide a cathartic experience for the giver. However if a wrong has been done and an apology is to be given, in my opinion the needs of the recipient must be considered in order for an apology to be viewed as successful.  In particular, if the aim of the apology is to repair the damage done to the relationship then whether the apology meets the recipient’s needs is a critical consideration.  Are there social or cultural forms which should be included? is the relationship very personal will the language need to be tailored? what will be the specific element of the wrongful act which will need a full explanation or assurances about the future?

All of these elements are important but they need to be considered through the filter of what will does the recipient need?  As we have seen apologies have increasingly been used as a cynical means of self-preservation, however, even a deeply felt and honest apology should be carefully worded to take into account the five elements and the needs of the recipient.

This text was previously published on www.conflictchange.com.

Indonesia cancels its bilateral investment treaty with the Netherlands by Laura Lozano

Laura Lozano

The Dutch Ministry of Foreign Affairs announced last March 20 that the Republic of Indonesia had decided to terminate its bilateral investment treaty with the Kingdom of the Netherlands. The effects will come into force from 1 July 2015. Nonetheless, according to the so-called sunset clause, the treaty provisions will be applicable until 2030 [1].

The states entered into their investment treaty back in 1968. Interestingly, it was Netherlands the first country that entered into a BIT with Indonesia [2].  Indeed the current "Agreement between the Government of the Republic Indonesia and the Government of the Kingdom of the Netherlands on Promotion and Protection of Investment" has been in force since 1995.

However, this might not be the only investment treaty cancelled, as the Dutch ministry stated that Indonesia had intentions to terminate all of its 67 bilateral investment treaties. According to experts, the high profile treaty claims against Indonesia might have lead to revisit its investment treaty policy. In this regard, Indonesia is currently facing the Churchill cases and has already faced several shareholders claims related to a bank bailout by the government in 2008.

The Churchill Mining Plc v Indonesia cases (ICSID Cases ARB/12/14 and 12/40) have been brought under the Indonesia’s BITs with the UK and Australia. In two recent jurisdictional decisions, on 24 February 2014, an ICSID tribunal has allowed Churchill Mining and an Australian subsidiary to proceed with claims worth US$ 1 billion against the country.

Regarding the shareholders claims related to a bank bailout by the government, Indonesia was able to succeed against a UK national last year. However, it expressed dissatisfaction with how the tribunal interpreted requirements in the BIT concerning admission of foreign investors. Moreover the UK national has annulled the decision so the dispute is not yet over.

Furthermore, a Saudi national, Hesham al-Warraq, brought a case under the Organisation of Islamic Cooperation (OIC Agreement) related to a bank bailout. By this, an UNCITRAL Tribunal decided in Hesham al-Warraq v Indonesia that the agreement for the promotion, protection and guarantee of investments among member states of the OIC Agreement did allow investors to take host states to arbitration. Apart from the above, Indonesia has recently avoided an ICSID case by paying out US$ 557 million to settle a dispute over ownership of a hydroelectric and aluminium project.

Therefore, despite BITs make a genuine contribution to economic development, it seems that Indonesia's protection to foreign investor is taking a new steps. Nonetheless, the termination of its BITs does not imply that Indonesia is withdrawing from all investment protection obligations and mechanism.  Time will let us know how the investment treaty policy of Indonesia evolves. In the meantime, Indonesia is not the only country expressing concerns about the availability of investor-state dispute settlement. South Africa has issued cancellation notices for its BITs with Germany and Switzerland. Moreover, Germany announced a couple of weeks ago, that it did not want investor-state dispute settlement provisions included in a trade agreement between the United States and the European Union. Consequently, it will be interesting to see the future trends on investment protection.

[1] Under sunset clauses existing investors are still entitled to rely on the protections found in those BITs that have been terminated and remain able to do so for a period after the BIT’s termination.

[2] It should be remarked that Indonesia was a Dutch colony.

Not all conflicts are created equal by M. Nycole Hearon


“All Polishing is Done by Friction”

~ Mary Parker Follett 

One of the traits that a mediator learns to cultivate is the ability to “read” the parties involved in the mediation.  At the start of my career, a mentor told me to ask a general question to the parties, 1) notice who answers first, and 2) notice how the other party answers.  I took the advice with the proverbial grain of salt, but the “General Question Method” has allowed me to gain initial insight into the type of conflict involved.  Yes, it may be divorcing couples having a hard time agreeing on who receives certain property or two business partners separating assets; however, these designations do not reveal the type of conflict I will mediate. While the hope of mediation is to facilitate negotiation between two parties in conflict, once they come to the table I have to identify the type conflict, notwithstanding the parties’ title, to direct me in my approach.

There are generally five types of conflict: veridical conflict, displaced conflict, misattributed conflict, latent conflict, and false conflict. Veridical conflict has an objective basis recognized by both parties. Displaced conflict occurs when the focus of the conflict shifts to other issues. For example, an argument between married couples may escalate from the division of property to the wife accusing the husband of never appreciating how she cared for their home. Misattributed conflict occurs when one party blames other people. Latent conflict occurs when neither party recognizes the issue and false conflict occurs when there is a misunderstanding or error in perception. I determine the type of conflict by incorporating mediation measures like the “General Question” and sometimes allowing the parties to escalate in airing their grievances before de-escalating the conflict to finally discuss terms.

Veridical conflict is the easiest to identify. It is objective conflict, the parties have correctly identified it, and nothing about their personalities or changes in circumstance will alter their conflict.  The easiest example of this type of conflict is the debtor/debt collector scenario.  The parties have arms length dealings and the terms of negotiation involve whether the debtor will pay all or some portion of the bill.  Practitioners generally speak of this type of mediation as “guerilla warfare”. We get in and get out—providing a neutral atmosphere for the parties to negotiate.

When called upon to mediate in a divorce, I frequently encounter displaced conflict. For example, I may mediate a case in which one spouse is refusing to sign over the home to another spouse, despite the refusing spouse having moved out of the home and moved on in another relationship.  After a lot of back and forth, it becomes evident that the home represents the refusing spouse’s belief that s/he never received acknowledgement for being a good provider. To “give away” the marital home is comparable to saying s/he never provided anything of value to the family. As if their place in the family was as significant as a cardboard cutout. Even if I go into a divorce mediation understanding that working through displaced conflict will be part of that mediation, I cannot predict the trigger of the underlying conflict until the parties spend some time airing their grievances. 

Misattributed conflict occurs when parties are fighting the wrong people over the wrong issues.  Again, divorce mediation is a good example because many times I am involved in mediation where the divorcing spouse really seeks to divorce from in-laws.  They have waged a battle for respect in the home only to have it undermined by the mother-in-law or father-in-law. As the mediation progresses, I find the divorcing spouse speaking more and more about the difference it would have made if the husband or wife would have stood against the parents on behalf of the divorcing spouse. Yet, the divorcing spouse lacks any real form of retaliation against the in-laws so they resort to retaliating against the spouse.

Latent conflict is more nuanced than other conflicts because even when it is recognized, it will not or cannot be addressed. For example, when I was a prosecutor in the criminal justice system, I encountered defendants who committed crimes of necessity, such as burglarizing local shopping centers for diapers and milk. In one case a couple pled to the charge of conspiracy to commit theft. The type of stolen items did not negate the fact that a crime was committed.  An underlying factor, however, was that the socio-economic status of the defendants played a major role in the type of crime they committed; however, socio-economic status and lack of resources in underprivileged communities is not a conflict that is addressed in the trenches of criminal law. And arguably, it is not the type of conflict that can ever find resolution.

Finally, false conflict occurs when no objective basis for the conflict is evident.  Unfortunately, this type of conflict can occur in any mediation setting due to the parties’ general dislike of each other.  I have ceased two mediations once it became evident that the parties had no intention of negotiating.  If the parties resolved an issue, one of the parties would return with another issue of first impression. As a practitioner, I had to realize that the only help I could offer was allowing them to go before a judge.

The foregoing only touches the surface of conflict recognition. Conflict is nuanced and can involve issues of value, beliefs, perceptions, and the relationship between the parties. My role as mediator is not to solve every conflict—and many occur in one setting—but facilitate a discussion where the parties can reach an understanding and walk away with some level of satisfaction. I can better aid the parties when I am able to identify the type of conflict in which they are engaged.

Why do bad things happen to good mediations? by Sala Sihombing


Apple and Samsung are embroiled in another patent dispute[1].   Their trial is set for 31 March 2014 and it appears that their attempts at mediation have not succeeded.   Without doubt they are sophisticated parties who no doubt have excellent representation.  Yet mediation did not work for them.

In Kiev, the protestors and President Yanukovich have staggered from a series of mediated settlements and ceasefires, none of which held. The stakes in the Ukraine are high as the political stability of the country hangs in the balance.  And yet the mediation has been unsuccessful.

The Syria mediations have as yet yielded no solution to the ongoing turmoil and suffering. The attention of the world has been focused on these negotiations between the Syrian government and the opposition.

If mediation provides parties with a respectful and constructive way to solve problems, how can it go wrong?

Given that people are involved there are many diverse ways in which a mediation can fail.  Regardless of why the three examples above have failed to result in a solution there are some basic problems, which can prevent even the most talented mediator and the optimal conditions from resulting in a settlement.


As with comedy, the secret is timing.  The mediation needs to occur at the right time in the dispute. At the beginning of a dispute, there can be high emotions, which may prevent the parties from considering a negotiated solution. 

Many people in conflict believe in the ultimate virtue of their position. They are either victims of injustice or heroes defending against a terrible foe, both positions can lead to intransigence.  If an attempt at a negotiated settlement happens too early, people may be comfortable in their positions.  At the beginning of a dispute, it may seem as if the chances of victory are high thus encouraging people to cling to their perspective.

The parties need to be ready to negotiate. This may occur for many reasons, perhaps there has been enough pain inflicted on them, or perhaps the chance of success seems less realistic. It may be because the parties have realised that there is more that binds them than separates them and that resolving their problems is a more productive use of their time. Or it may be a solution borne of exhaustion.  Whatever the reason, selecting the timing for a mediation can be critical.


One complaint often heard by mediators is that although one side is willing to commit to a negotiated settlement, the other side is not acting in good faith.  It is possible that each side will express the same reservation about each other.  

In any negotiation, the requirement for good faith from each party is a pre-requisite.  If parties have been engaged in a conflict for some time, it can be difficult for them to trust the other side sufficiently to make concessions or agree to anything.

Creating ways in which the parties can demonstrate that they are acting in good faith is one way in which mediators can help the parties convince each other of their honourable intentions.  In recent violent state disputes, we have seen this in the use of ceasefires.  In a simple mediation, it can be giving both parties the chance to start making agreements in a small way such as setting dates for mediation, or the agenda.  By making these small agreements and keeping them the parties can help restore their credibility. 

However, it is important to note that trust is a delicate creature and that breaking even small agreements in a mediation can erode all chance for a successful agreement. As we have seen in many of the state disputes recently, each broken ceasefire makes it more difficult to convince the parties back to the negotiating table.


A powerful preventative to negotiating can be the perception that if there is no negotiated solution, the party will get what they want. This may take the form of believing that the other side does not have the resolve to see the conflict through to the end.  Or it may be prompted by a belief that a third party will intervene and create winner.

This can be difficult for mediators to overcome.  In caucus, mediators may attempt to test the reality of a hoped for solution.  Parties can become very wedded to the reality of an outcome and it may difficult to challenge the outcome as unrealistic. Mediators need to be prepared to work with a party to help them understand whether their views are based on logic or delusion.


There are many ways in which a mediation can be derailed but the powerful triumvirate of timing, trust and deluded beliefs can make a mediator’s role as the advocate of the process all but impossible.


[1] Apple Inc. v Samsung Electronics Co. Ltd. et al., C 11-1846 & C 12-0630

Development of the Financial Ombuds practice in Russia by Elena Seryapina

Elena Seryapina

Facing the New Year I can't stop thinking of an old famous saying: "Don't take your old debts to the New Year". Unfortunately not everyone in Russia is blessed to have an opportunity to enter the New Year leaving the yoke of mortgage and consumer loans behind. Sad as it is, Russians are overwhelmed with loans. Strong temptation to live beyond income makes people to ignore ridiculously high interests on loans (up to 900% per year) which are offered by banks and other lenders. At the same time Europeans refuse to purchase goods paying by installments including 5-6% of interest charges considering such deals extortionate. Russians are not familiar with the simplest rules like "do not take the loan if you have to pay back each month more than 30% of your monthly income). RF Central Bank forecasts a vast default of population due to high debt ratio.

In accordance with the data provided by RF National Credit History Bureau the total volume of loans provided to Russian people for the last two years has almost doubled and is equal to USD 272 billion as of July 2013. RF Central Bank reports that currently national banks have USD 13 billion of not-performing loans (banks consider loans as not-performing if the loan payments are late for more than 90 days). And this number is constantly growing. The total number of people having unreturned loans is 34 mln., that is 45% of economically active population in Russia. There are not many people who have never taken loans. According to RF Central Bank 66 mln people have taken loans at least once, provided that the total number of borrowing capable people in the country is 80 mln. As of June 1st, 2013 one in ten loan debtor in Russia managed to take more than five loans, and the proportion of such debtors has increased by 52%. In some regions of the country the proportion of economically active population having debts is close to 100%.

One of not many opportunities to help "prisoners of debts" that exist now in Russia is the Financial Ombudsman service. Such service has been created in Russia three years ago and not many people are familiar with it. Activity of the Financial Ombudsman differs essentially from the activity of other state authorities or organizations. Here we talk about resolution of disputes arising between citizens and financial organizations out of commercial contracts.

RF State Duma has not still adopted the Federal Law on Financial Ombudsman even though it was expected to do so in spring 2013. Currently the Head of RF Banking Association also executes the functions of the Financial Ombudsman. Basically he holds negotiations between the banks agreed to cooperate and the debtors. Any person owing a debt over 500 thousand Rubles who has not submitted any legal claim against the bank is eligible to address to the Financial Ombudsman for the dispute resolution. Services of the Financial Ombudsman are free for all citizens. According to the law banks and other lenders are not obliged to execute decisions of the Financial Ombudsman, so all his efforts are about diplomacy. Since 2010 the Financial Ombudsman in Russia has received almost 12 thousand claims. Majority of these claims are about loan restructuring, cutting the interest rates or annulment of penalties. 80 % of all disputes are usually settled.

The Financial Ombudsman not only resolves the disputes but also mediates it. In a nutshell he does not issue a formal decision but rather brings the parties together and helps them reach a mutually satisfying agreement. According to the experience of those countries where the institute of Financial Ombudsman has been realized (i.e. the Great Britain) only 2-3% of the total amount of financial disputes end up with a formal decision of the Financial Ombudsman. This means that even though the Financial Ombudsman is empowered to issue an official formal decision the largest part of his work relates to mediation. More over the Financial Ombudsman service often acts as a financial and legal consultant for applying citizens helping them to clarify a complicated case, define the person to address the complaint, formulate the demands. This is the core distinction of the Financial Ombudsman service from the judicial institutions.    

The international practice has elaborated the list of the universal principles for the Financial Ombudsman service (see the World Bank report):

1)    Rule of Law

2)    Self Determination

3)    Confidentiality

4)    Impartiality

5)    Independency

6)    Operational efficiency

Besides the Financial Ombudsman service Russia is currently thinking of creating an Insurance Ombudsman service. The draft law on Insurance Ombudsman has been submitted to the RF State Duma.

Also Russia has established the service of the Business Ombudsman. Offices of such service will shortly be opened in each region of the country. This is the first step on the road to making Russia an attractive place for the foreign investors. The Business Ombudsman is also called the Investment Ombudsman due to special functions that he has. 

As you can see the development of the modern Ombudsman institute in Russia is closely connected with its professional specialization.  

Examples covered in this article indicate the significant role that Ombudsman service being a progressive democratic and legal institute plays for RF state and society.



A Christmas Gift for Mediators by Sala Sihombing


In the spirit of the season, I am offering a Christmas gift to mediators.  Although conflict can debase our humanity and make us incapable of making logical decisions, it is possible for people to make decisions, which honour our shared humanity. And we have a Christmas story to prove it.

In a series of trenches across the desolation of the Western Front, individual groups of people decided to celebrate their values over their orders.  How did this happen?

The First World War was known as the Great War, the War to end all wars due to the horror and devastation it wrought.  The use of mechanised weaponry and chemical weapons brought a new level of savagery to war. In particular, the First World War saw the escalation of the separation between the weapon and the effect.  People removed from witnessing the impact of the chlorine gas could drop bombs with abandon.

The First World War poets wrote movingly of the horror of the war.  Made all the more tragic given that many had signed up in an ecstasy of patriotism or jingoism depending on your viewpoint.

But in December of 1914, something special began to happen on the Western Front. In contradiction to their orders, soldiers from Germany and British soldiers began recognising their shared humanity.  They created an informal truce.  They sang their own Christmas songs, they shared greetings and exchanged gifts.  In the midst of the mire and mud they managed to rise above their surroundings. In fact, these truces happened periodically throughout the First World War to allow soldiers to recover the injured and dead or to have a moment of respite from fighting.

In mediation, it can seem as if people are so positional that they will never connect with their interests.  In mediation terms the soldiers on the Western Front managed to go below the line and respond to their interests over their positions.

We often use the imagery of war to describe conflict between people.  However, for most people while their personal or commercial conflict can feel like they are engaged in battle, it is not a matter of life and death. A sense of perspective is often an early casualty of disputes.  The positions of adversaries in conflict can make it difficult to understand that the dispute is a shared misery.

In ‘Strange Meeting’, Wilfred Owen, describes how a soldier falls out of the battle and realises he is now in Hell.  He meets another soldier and they consider their shared fate. The other soldier explains that the reason he is familiar is that he was the enemy who the soldier killed the day before. However, he greets him now without recrimination and calls him friend.

So the gift for mediators is the memory that in the worst of circumstances people are capable of reconnecting with and reasserting their humanity. People are capable of moving beyond their positions to honour their interests and values. The optimism that characterises mediation’s belief in the ability of people to solve their own problems has history on its side.

A slow start for ADR in the Netherlands by Majlie de Puy Kamp

Majlie de Puy Kamp

The Dutch business world is slowly catching on to mediation. Recently two “fast-moving-consumer-goods” companies found themselves at odds once again over similarities between their products. Newspaper articles often don’t tell you everything that is going on – and that is exactly what the companies want. Mediation allows them to address and solve their issues under the radar without either of them suffering from negative publicity and skyrocketing legal costs. Most conflicts in this industry relate to copyright, trademark or intellectual property disputes. These types of disputes are never quite black and white, which is why both parties profit from a discussion out of the public eye. This shift towards mediation in the business world brings ADR the positive attention it needs in the Netherlands to gain its place among the traditional dispute resolution processes. Mediation is all too often being mistaken for a soft and almost hippie-like way of solving problems that has no place in formal business environments. There might be nothing like a mediated conflict between large multinationals to (hopefully) do away with that stigma.

In different areas, Holland is experimenting with ADR as well. Victim-offender mediation pilots for juveniles have been implemented in the larger courts in the country in November 2013. The Amsterdam court kicked-off the nation-wide program and has already had 26 cases in which victim and offender were brought together. If the mediation is successful, a judge can decide to drop the charges or lower the punishment. The Amsterdam pilot has found that offenders are more likely to stick to settlements they have come to in mediation than those laid upon them by a judge. These results are completely in line with the data and research on victim-offender mediation elsewhere.

The different pilots will focus on 400 juvenile misdemeanor cases up until the summer of 2014. The results will be discussed with the Ministry of Justice, after which can be decided how to further expand the use of ADR in criminal cases.

Though it has taken more time than necessary, the Netherlands is slowly opening up to ADR and getting used to the process being used in the different areas of life. Stay tuned for further developments…

Abengoa goes to arbitration: CSP Equity Investment Sarl against the Kingdom of Spain by Laura Lozano

Laura Lozano

A subsidiary of the Spanish technology group Abengoa has recently filed a request for arbitration under the SCC Rules at the Permanent Court of Arbitration in The Hague.


CSP Equity Investment is a Luxembourg entity which owns six thermo solar power plants in Spain and based on that subsidiary Abengoa is bringing its case to arbitration. The claim filed on June was disclosed after the listing of the company on the NASDAQ exchange last October.

The dispute is based on the recent energy reforms of the Spanish government. The government initiated a reform on the energy sector last year. Under the reform, a 7 per cent tax on the revenue of power generation and a reduction in the subsidies that previous governments had granted to renewable energy providers were included. Therefore, Abengoa claims that the reforms have broken the legimite expectations and do constitute an expropriation.

It has not been disclosed how much Abengoa is claiming. Nonetheless, the Spanish newspaper “El Pais” reported that a 60 million for each year until the settlement of the dispute was being claimed. Given the fact that concessions of solar thermal plants can be up to 40 years, the figure in dispute might be billionaire.

The arbitration

The arbitration has been filed under the SCC rules and under the Energy Chapter Treaty. The arbitration will be run by 3 arbitrators and the seat will be The Hague. Rumors suggest that the Spanish group has already appointed the well known Professor Brigitte Stern as their arbitrator.

This would be the third request for arbitration to which the Spanish Government faces after the energy reforms that apparently constitute a violation of the Energy Chapter Treaty. The other two have been driven by international investment funds and include claims up to 600 million Euros. Some experts believe that the Spanish government will face more arbitration. Time will let us know…

United States Postal Service (USPS) REDRESS and REDRESS II Programs Employment of mediation intervention: a brief case study of transformative mediaiton in dispute system design by M. Nycole Hearon


It has become common across the United States to create, or utilize, neutral persons who are the first point of contact for disputes arising in the workplace.  Commonly referred to as “ombudsman”, these people may also have the title of “counselor, mediator, informal fact-finder, upward feedback mechanism, change agent, consultant, or problem prevention advisor.”[1] In essence, they act as mediators within a company system dispute plan. The exact function of each ombudsman may be defined differently for each organization; however, their purpose is to “minimize retaliation against those who complain; provide consultation on options; review how conflicts have been handled in the past; are alert for new problems, as well as available for bizarre, delicate, distasteful or frightening problems; provide individualized coaching on negotiation skills, and (where appropriate) keep disputants focused on interests and on cost-effective modes of disputing.”[2] Confidentiality and cost-effectiveness of the ombudsman office are the main factors that decide how whether a neutral has a positive impact on the organization in which he or she works. These persons are generally the first step in any organizational dispute system design (DSD) and usually act as mediators; thus, there are several goals that must be accomplished in order for the system to be effective: “offer a chance to deal with feelings, learn appropriate information and seek counseling on a confidential basis; have redundant channels and options so people have a chance to choose among multiple modes and access points; encourage responsible concerns by appropriate protection of the rights of complainants, the managers involved, and of all others involved in a complaint; and be seen to produce some change in the treatment of individuals and with respect to policies and procedures and structures in the organization.”[3] 


In 1970 the USPS (formerly the Post Office Department), implemented the Postal Reorganization Act.[4] The reorganization efforts created a new management coalition from experts in monopoly business and private mass production. “The restructuring process involved a reorganization of the USPS hierarchy, an infusion of new personnel, and the automation of work tasks.”[5]  The new structure was extremely hierarchal with top-down management with barely any employee input.[6] Within the structure, supervisors had decisional authority regarding reassignment, pay increases and disciplinary actions.[7] Additionally, the workforce became more diverse with lower level employees coming from the private sector, some without high school diplomas, and upper level management comprised of private sector management and former military personnel.[8] The resulting division created an atmosphere where conflict became the norm.[9] “In the late 1990s, the U.S. Governmental Accountability Office […] vocally criticized the USPS, citing ‘autocratic management style . . . adversarial relationships between postal management and union leadership . . . and an inappropriate and inadequate performance management system’ as evidence of ‘the persistent labor-management problems in the Postal Service.’”[10] The situation was dire. Barring union complaints, which were subject to collective bargaining agreements, discrimination complaints to the Equal Employment Opportunity (“EEO”) board from lower level workers were between 25,000 and 28,000 in the mid-1990s.[11] At the time, approximately 40 percent of federal informal EEO complaints came from USPS.[12] Thus, a dispute systems design (“DSD”) team from the law department was implemented to address the “endemic conflict” in USPS. The team presented results from a pilot program being used in a Florida USPS facility and based on the positive results, recommended implementation of the program on a national level.  

In 1994, the USPS began a pilot program designed specifically to address concerns that arose from EEO complaints arising under federal law.[13] The program was part of a settlement of a class action lawsuit that arose from charges of race discrimination in facilities in the Florida panhandle.[14] “After a period of experimentation with inside and outside neutral mediation, the USPS completed its national implementation of an outside-neutral mediation program in July of 1999.”[15] When employee/employer disputes arise, the mediation portion is voluntary for the complainant, but mandatory for the supervisor respondent.[16] Both complainant and respondent may choose any representative to bring to the mediation table and the supervisor respondent must have settlement authority or phone contact with settlement authority.[17] Once the request is made to mediate, the process occurs within two to three weeks and takes place during work hours.[18] Notably, this program does not do away with federally mandated EEO provisions; however, it is designed to works in conjunction with an EEO complainant to more quickly resolve the dispute. The program states the following as promises to those who choose to use it: Mediation is fast; Mediation is informal; Mediation allows representatives; Mediators do not make decisions or force decisions on you; Mediators are impartial; Mediators are Free; and Mediation is confidential.[19]

In designing the program, the DSD team realized that it needed to create incentives for workers and supervisors to make use of mediation as opposed to relying on formal complaints that potentially lead to litigation. Supervisors preferred litigation for the following reasons:

First, in 95 [percent] of EEO litigation cases, management either ‘wins’ on the merits of the case or the employee abandons the complaint because of the length of time needed to get to a hearing. Second, the length of time required for litigation works in favor of the supervisors, who are not held accountable for their actions for years. Third, supervisors did not have a stake in the cost of litigation or the potential loss because all expenses and damages were borne solely by USPS.[20]

The aforementioned factors made it plain that supervisors would never voluntarily choose mediation over litigation.  The same sentiment, however, was felt by the workers because of the distrust of management and thus, any program designed by USPS.[21] Because of the source of the new program, workers devalued the potential of mediation to actually work. 

The DSD team’s first line of attack was to make mediation mandatory for supervisors. As mentioned above, the supervisors had more incentive to litigate than to actually mediate. Though generally mandatory mediation is the not the best approach because it does not allow the participant to come to the table voluntarily (re be in the mind frame to truly discuss issues), it was the only way that supervisors would actually come to the table.[22] On the other hand, complainants could not be compelled to participate because the Equal Employment Opportunity Commission (“EEOC”) required voluntary participation and if they were required to participate, then it would exacerbate the distrust of the program, especially since the workers filed the “overwhelming majority” of complaints.[23]  The REDRESS program was thus designed to be mandatory for supervisors, but voluntary for workers. Furthermore, if mediation did not resolve the dispute, complainants continued with traditional EEO litigation.[24] Notably, mediation was the only intervention technique adopted into REDRESS.[25] As an incentive for employees to choose mediation before filing an informal complaint, the DSD team shortened the length of time between a request for mediation and the time mediation took place. “In REDRESS, if the complainant opts to mediate, then the mediation is scheduled within [four] weeks of the complaint filing date, and usually takes place within [two] to [three] weeks.[26] This time frame was the complete antithesis to usual EEO litigation, which could take years to get a decision.[27] Another incentive for complainants to choose mediation concerned the type of mediation employed within the REDRESS program.

From the beginning of the program in 1994 until the present[28], USPS worked in conjunction with Indiana University to monitor the progress and results of the program.[29] USPS broke the program up in two different ways: for the national program, USPS chose outside neutral mediation using a transformative model of mediation, which seeks to give the parties control over how to address the conflict.[30] “Under the transformative model, settlement is not the mediator’s goal […], [i]nstead mediators practice in such a way as to foster empowerment of the parties.”[31] A successful result of transformative mediation will lead to the parties understanding the underlying motivations of the other side and allow for a more open, honest, attentive, and sympathetic response, which may or may not lead to settlement.[32] “All choices regarding the process, ideas for settlement, and the outcome of mediation are in the hands of the parties. Under this model, the mediator does not assess the case, but creates an atmosphere that empowers the parties to express their concerns and recognize the other participant’s position.[33] The USPS goal for this system is to afford the maximum participant self-determination at the case level.”[34] The most traditional and popular form of mediation was direct and evaluative, where the mediator appraised the case and made suggestions as to a solution.[35] The DSD team noticed that EEO cases tended to be evaluative in favor of supervisors as opposed to the complainant.[36] Based on this, the decision was to use transformative mediation. Under this model, the mediator did not advocate for settlement, but left all decisions, including settlement, up to the parties. The use of transformative mediation increased the legitimacy of REDRESS.  This model also reduced any animosity supervisors had due to the mandatory requirements that they must take part in mediation.[37] Additionally, because the mediations were scheduled during work hours, participants were paid as if they were “on the clock” when taking part of the mediation.[38] In addition to the other previously mentioned measures (choice of representatives (legal counsel or union rep) power to settle or access to someone with power to settle), the transformative model “fostered the capacity of the parties to solve problems and determine immediately whether the resolution was permissible by USPS officials.”[39]

As mentioned, the national program used outside neutrals in all offices; however, one postal district in New York used an in-house neutral to resolve conflict prior to converting to outside mediators.[40] Participants were not given a choice as whether they preferred an outside neutral or an in-house neutral.[41] The in-house neutral was used for a specific period of time before he or she was replaced by an outside neutral.[42] The researchers compared satisfaction of the participants who used an outside neutral versus participants who used an inside neutral.[43]

Among participants using the inside model, 87 percent were satisfied with the process, while 90.8 percent of participants using the outside model were satisfied. The inside model group reported a satisfaction rate of 91.92 percent in regard to the mediator, while the outside group reported 96.92 percent satisfaction. Finally, 73.56 percent of the inside model participants were satisfied with the outcome, while 79.92 percent of outside model participants reported satisfaction. All of these differences were statistically significant […]. Seventy-five percent of participants in the outside model reported that their case was fully or partially settled, while only 56 percent of the inside model group reported at least partial settlement. Again, these differences were statistically significant.[44]

The researchers used a procedural justice framework to create a hypothesis as to participant satisfaction. Essentially, if the participant perceives the process to be fair, then they will likely be satisfied with the outcome. Factors that determine procedural fairness include “participants’ perception of control over the process, ability to participate meaningfully, belief that the mediator is truly neutral, treated with respect by other parties, and perceptions of mediator impartiality.”[45] Researchers of the USPS REDRESS program were not surprised to find that satisfaction was higher with outside neutrals than with in-house neutrals. There existed a six percent difference between “satisfied or highly satisfied” between the inside model and the outside model.[46]  A five percent gap existed between inside and outside neutral models regarding satisfaction with the actual neutral.[47] Furthermore, a sixteen percent different existed concerning overall outcome satisfaction and an 11 percent difference existed regarding long-term overall satisfaction.[48]  Based on the research, USPS decided only to employ outside neutrals. REDRESS developed a “rigorous training program for mediators and a screening process for quality control to help ensure that mediators were proficient and consistent in their practice of transformative mediation.”[49]

Despite the differences in satisfaction outcome, the USPS program proved to be more beneficial than not when compared to earlier informal EEO complaints. Half of the complaints usually proceeded to the next level, which consisted of filing a formal charge and requesting an investigation. The use of mediation in the REDRESS program significantly cut that percentage down.[50]

While REDRESS is the step taken prior to, if done at all, to filing an EEO complaint, USPS has developed REDRESS II. REDRESS II is triggered once a formal EEO complaint is filed by an employee.[51] Under this program, USPS contracts with outside neutrals that specialize in the transformative method and do not have a connection to USPS.  Again, the mediation takes place during working hours, and notably, all costs of the mediation is absorbed by USPS.

Viability of REDRESS

The REDRESS program employed by USPS has proven to be very successful. By 2004, national participation in the program was 88.1 percent.[52] Further, settlement and closure rates were 54.4 percent and 72.3 percent, respectively.[53] Research shows that the REDRESS program has improved how supervisors and workers address conflict and changed the perception of cooperation.  Research also showed that supervisors listened to their workers more effectively with continuous training in REDRESS.[54]

My review of the literature concerning REDRESS shows that the program was well thought out at its pilot stage and the deliberate involvement of Indiana University for continuous monitoring of results served an incentive to make the program successful.  The results of REDRESS are simply impressive. Of note, however, is the fact that the USPS is the largest civilian employer in the United States. Moreover, because it is a “quasi-private” federal agency, it is subject to continuous (apparently if not always effective) oversight. Thos factors indicate that REDRESS was a program that could not be allowed to fail.  REDRESS, however, lacked several factors that are generally implemented in DSD, especially in the private sector, that act as fail-safes against litigation. 

For instance, REDRESS only used mediation as intervention against litigation. It did not employ any type of “loop-back” system that would allow the participants to return to “interest-based procedures” should mediation fail, such as management review.  Moreover, if mediation failed, litigation was the only other option.  Other DSD programs have incorporated steps that begin with mediation, but also have the intermediate step of arbitration prior to litigation.   For example, in his article “The Relationship Between Employment Arbitration and Workplace Dispute Resolution Procedures”, author Alexander J.S. Colvin writes of the DSD in the company TRW.[55] TRW’s program procedure first allowed for the complainant employee to first attempt to resolve the dispute with his or her supervisor.[56] The employee is allowed to bring a human resources representative with him or her, should the employee choose to discuss the dispute with the employer.  If the first step does not resolve the dispute, the employee may then appeal to a more senior manager, again with a representative present.[57] If the first two steps prove fruitless, the employee appeals to the review board and presents his or her dispute before a peer review panel.[58] Notably, the employee may skip this stage of the procedure and proceed directly to mediation, which is the penultimate step before arbitration.[59] The TRW model may not work in every case, but it does demonstrate an intensive process that employs more than one dispute method. 

 Moreover, private companies do not always bear the sole burden of mediation costs.  A due process concern, not applicable to REDRESS, concerns payment of mediators. Employees have had to bear partial cost of trying to resolve their disputes with management and such disparity has resulted in employees dropping their cases.  Even with DSDs in place, employees suffer from due process disparity.  “Operationally, principles of due process are translated into criteria of fairness, convenience, consistency, timeliness, and protection from recrimination.”[60] Even with a DSD in place, there is no guarantee the employees with grievances will be heard in a prompt manner or that the outcome will benefit the employee or change the organizational structure.


The study of the REDRESS program is a study of a great DSD program. This brief discussion is only the tip of the iceberg involving the continued research on its progress. In terms of a detailed oriented system incorporating mediation, this author finds no better example. Nevertheless, the REDRESS program is limited in that it works in vacuum due to the large singular corporate culture of USPS.  For the private sector, there remain the questions of due process and creating interest-based methods for resolving employee/employer conflicts. There is also the question of loop-back alternatives should mediation fail. And concerning mediation, this author feels research is needed to determine if transformative mediation is the best method for organizational dispute resolution, or whether the company culture is the determining factor.

[1] Mary P. Rowe, The Ombudsman’s Role in a Dispute Resolution System, 7(4) Negotiation Journal 353 (1987).

[2] Id.

[3] Id. at 355.

[4] Tina Nabatchi and Lisa Blomgren Bingham, From Postal to Peaceful: Dispute Systems Design in the USPS REDRESS Program, 30(2) Review of Public Personnel Administration 211, 219 (2010).

[5] Id.

[6] Id.

[7] Id.

[8] Id. at 220.

[9] Id.

[10] Id.

[11] Id.  at 221.

[12] Id.

[13] Lisa B. Bingham & David W. Pitts, Research Report: Highlights of Mediation at work: Studies of the National REDRESS Evaluation Project,  18(2) Negotiation Journal 135, 135 (2002).

[14] Id. at 136.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] USPS, REDRESS: Conflict Resolution That Works, Publication 94, September 2008. (An internal USPS publication that explains how REDRESS works).

[20] Nabatchi & Bingham, supra note 4, at 222.

[21] Id.

[22] Id. at 225.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] USPS, supra note 19.

[29] Bingham & Pitts, supra note 13, at 136.

[30] Id. at 137.

[31] Id.

[32] Id.

[33] Nabatchi & Bingham, supra note 4, at 226.

[34] Bingham & Pitts, supra note 13, at 137.

[35] Nabatchi & Bingham, supra note 4, at 225.

[36] Id. at 226.

[37] Id.

[38] Id.

[39] Id.

[40] Bingham & Pitts, supra note 13, at 137. For further in-depth research on this topic, see also Lisa B. Bingham, Gregory Chesmore, Yuseok Moon & Lisa Marie Napoli, Mediating Employment Disputes at the United Postal Service: A Comparison of In-house and Outside Neutral Mediator Models, 20 Review of Public Personnel Administration 5 (2000).

[41] Id. at 137.

[42] Id. at 138.

[43] Id.

[44] Id.

[45] Id.

[46] Id. at 139.

[47] Id.

[48] Id.

[49] Nabatchi & Bingham, supra note 4, at 227.

[50] Lisa B. Bingham & Mikaela Cristina Novac, Mediation’s Impact on Formal Discrimination Complaint Filing: Before and After the REDRESS Program at the U.S. Postal Service, 21 Review of Public Personnel Administration 308 (2001).

[51] USPS, Mediating A Formal Complaint With the USPS REDRESS II, Publication 902 (2002), http://about.usps.com/publications/pub902/welcome.htm

[52] Nabatchi & Bingham, supra note 4, at 228.

[53] Id.

[54] Id.

[55] 16 Ohio St. J. on Disp. Resol. 643, 651 (2001).

[56] Id.

[57] Id.  at 652.

[58] Id.

[59] Id.

[60] Deborah M. Kolb, Corporate Ombudsman and Organization Conflict Resolution, 31(4) J. of Conflict Resol. 673, 687 (1987).

© Conflict Change Consulting Ltd.  2014