Mixed role of the neutrals in international med-arb process by Elena Seryapina

Elena Seryapina

There are four basic ADR stages which are represented by four different processes: negotiation, mediation, arbitration, and litigation. No-one argues with this statement nowadays. However, there is one process with a mixed nature, which catches the attention of scholars, practicing attorneys, mediators and arbitrators. It is “Med-Arb.” Under Med-Arb proceedings, a neutral initially acts as a mediator, but if the parties cannot reach the agreement, he/she switches the role to an arbitrator, holds arbitration hearings and issues a mutually binding award.[1] It is a unique process which allows the neutral to combine effective techniques of mediators with rules of arbitrators in order to settle the case. On the other hand, many commentators have expressed their doubts about an unreasonable mixture of two processes and raised confidentiality and ethical concerns associated with the neutral playing multiple roles. Let us look at the Med-Arb process more attentively, analyze its goals, potential merits and drawbacks, and see if it is applicable in the international arena under different institutional rules.



“Med-Arb” is an abbreviated term for mediation mixed with arbitration. Mediation is a third party neutral, voluntary, and non-binding dispute resolution process. It is a workable alternative to adjudication. The parties have a chance to determine the decision which meets the demands of both of them. Therefore, the parties’ mutual satisfaction with the result achieved in mediation is much higher, than with an arbitration award or court decision. International arbitration, on the other hand, is considered to be a substitute for adjudication. By choosing international arbitration the parties pursue the primary goal of avoiding the challenges associated with international litigation and enforcement of international courts’ decisions. It is also important to understand that international arbitration does not have any mechanisms allowing the parties to contribute to the decision-making process. In international arbitration the third party neutral will issue a binding award in accordance with his/her understanding of the case and assessment of the submitted evidences. So the fundamental conditions of international arbitration are: an agreement to arbitrate signed by the parties; impartial and neutral arbitrators; enforceability of international arbitration awards. James T. Peter in his article argues that Med-Arb is created to combine the best of the two processes for resolution of international disputes.[2]  

The Med-Arb process works in the following way. The third party-neutral works towards the settlement of the dispute with the disputing parties. He uses mediation framework as well as mediator’s tactics and tools (meeting with the parties separately, extracting concessions, communicating offers to both sides, making mediator’s proposal, etc.). In case the parties fail to reach an agreement, the mediator changes his position and starts acting as the arbitrator of the same case. So, the key element of Med-Arb process is the same person acting as mediator and arbitrator pursuant to the parties’ agreement. The parties, however, shall be prepared to expressly stipulate this provision in writing, stating that they completely understand the process and will not object to it. As a result, the parties will not need to introduce the arbitrator to the merits of the case and will be able to proceed with the hearing. So, both stages of ADR are clearly distinct; arbitration follows mediation. Bearing this in mind Professor John D. Willis, director of ADR graduate studies at Sullivan University, suggested naming the Med-Arb process a “transitional arbitration” or “pre-arbitration.” He believes that this name will make Med-Arb process more publicly acceptable.[3]       

 Many practitioners and scholars have been disputing over the question of whether the same person can serve as a mediator and an arbitrator. Many commentators expressed their serious ethical concerns. Arbitrator may become aware of some confidential information during private caucus sessions with both sides under mediation framework. So, this knowledge, which he/she has learnt in mediation, might affect the binding award. As a result arbitrator might be considered partial and biased due to obtaining confidential information he would never learnt serving as an arbitrator exclusively. The role of the arbitrator determines that he should “do justice as he sees it, applying his own sense of law and equity to the facts as he finds them.”[4] This means that arbitrator shall rely only on the facts which are relevant to the case and presented during the hearing, when both sides have an opportunity to challenge them. I am reluctant to believe that an arbitrator will be able to stay impartial to any of the parties after hearing their personal, emotional, sometimes intimate stories in caucus sessions. Berry C. Bartel in his article argues that the most serious problem in the Med-Arb process is that the Med-Arbitrator will consciously or unconsciously become empathetic towards one of the parties.[5]

Even though becoming empathic is quite normal in mediation, it is absolutely unacceptable in arbitration. Arbitrators might be emotionally affected in some way by what they see, hear and notice in the hearing. But the level of such exposure to the information, irrelevant to the merits of the case, is much higher in mediation. Med-Arbitrators do not have special tools to block out this information in their heads when transforming the case from mediation to arbitration. This may lead to the following legal consequences: a party can challenge the arbitrator or an award alleging that Med-Arbitrator was affected by the information presented to him during mediation; a party may claim that the Med-Arbitrator prejudged the case on a mediation  stage by giving the party any mediator’s evaluations; the party may also complain that the Med-Arbitrator did not treat the parties equally as a result of the failed mediation. Being cautious of such legal consequences, Med-Arbitrators try to limit the variety of effective tools and strategies which they usually use for achieving settlement. As a result the whole Med-Arb process might become ineffective and even useless.[6]

There is also one more practical concern related to the Med-Arbitrators’ skills and abilities. Many commentators have reasonable doubts whether such “universal” Med-Arbitrators possessing special knowledge in mediation and arbitration exist at all.[7] I would not agree with the authors about such concerns. The modern ADR world demonstrates to us many professionals successfully practicing mediations and arbitrations on a daily basis. They skillfully merge knowledge of mediation and arbitration tools and techniques. According to my observations, I would think that the best potential Med-Arbitrator is a retired judge practicing ADR. Retired judges usually keep an evaluative approach to mediating the case. The parties, choosing a retired judge as a mediator, usually want to get a feeling of their chances in court as well as to learn the position of a respected person, who used to hear similar cases in court. Retired judges are also very good arbitrators since they have the best suitable experience from sitting on the bench.           


As I have mentioned earlier, the nature of Med-Arb process has been under intense discussions between scholars and practitioners for a long time. All of them define many advantages of this process as well as disadvantages. Let me define some of the advantages first.

· The same person serving as a mediator and arbitrator can save time and money for the parties. Being aware of the merits of the case and demands of the parties Med-Arbitrator can quickly change the role and proceed with the next stage of ADR. Parties will not need to draft new briefs or present the facts again. Also, if they reach partial agreement in mediation, they will not need to spend time on the agreed issues in arbitration.

·  There is also no need to review references and qualifications of the potential arbitrator after the parties have not reached an agreement in mediation, since the same person will serve as an arbitrator.

· The Med-Arb process encourages the parties to settle the case in cooperative manner. Unlike pure arbitration, special framework of Med-Arb allows the parties to focus on the future commercial relationships and mutual interests. James T. Peter notes that Med-Arb process shifts from “rights arbitration” to “interest arbitration.”[8] When writing an arbitration award, a Med-Arbitrator will use his understanding of the parties’ business relationship and possible future cooperation learned in mediation. Such an approach makes Med-Arb process especially valuable for international business. Carlos De Vera says that this advantage is critical for understanding Chinese culture: Chinese business strongly favors a Med-Arb framework.[9]

· The Med-Arb process is flexible and allows the parties to switch mediation and arbitration whenever they feel that they can agree on something. The parties can shape the Med-Arb process according to their understanding of the most effective framework. Thus, the parties can resume a mediation session after proceeding with arbitration (for example if the parties feel that their chances to win the case in arbitration are quite weak after adducing the evidence).

· Some remedies which cannot be used in arbitration, might serve as alternatives for mediation agreements. James T. Peter gives an example of such remedy: the parties can agree to rewrite the existing agreement and incorporate certain provisions into the future contracts.[10]

· Many commentators also notice that behavior of the parties and overall atmosphere in Med-Ard proceedings is more productive and cooperative than in traditional mediation or arbitration. The parties bear in mind that they need to behave constructively during mediation, since the same mediator will issue a binding award if they fail to reach any agreement due to negative attitude or insulting behavior. The parties believe that this factor might unconsciously influence the Med-Arbitrator’s decision. 

· Special Med-Arb format allows avoiding attorneys’ fear of being considered weak when they suggest mediation or settlement. If the parties agree to a mixed format of arbitration/mediation, then their attorneys can openly suggest settling the case via constructive discussion in mediation.  

As we can see, advantages of Med-Arb process are very obvious and very strong. Generally speaking, a mixed Med-Arb process is more efficient and less expensive, especially on the international arena. The parties cooperate more willingly during mediation stage being aware of the final binding award to be issued soon by the same neutral. What seems more important to me is the possibility to keep business relationship between the partners after going through a complicated process of international ADR. 

The multiple opponents of international Med-Arb format usually raise the following concerns (some of them I have covered in the beginning) against it:

·  Partiality of the Med-Arbitrator and empathy towards one of the parties;

· Violation of the due process: Med-Arbitrator will have an opportunity to examine the facts and circumstances of the case in mediation during caucus sessions without giving the other party an opportunity to challenge them;

· Using arbitrator’s power in mediation: some scholars and practitioners admit that med-arbitrator may force the parties to settle the case in mediation saying that the binding arbitration award might not favor one or both parties. A Med-Arbitrator may also recommend a certain settlement to the parties without putting any pressure upon them. But the parties, on the other hand, might unconsciously feel obligation to agree with Med-Arbitrator, since he/she might issue an unfavorable award after his proposal was rejected in mediation. I am not inclined to agree with the adherents of this argument, since the parties make decisions in mediation under some sort of pressure anyway. They consider all possible options for settlement, estimate costs, and agree on certain alternative in order to avoid the worst case scenario. So, generally speaking, the parties decide under the pressure of the most negative outcome.

·  The parties are not open and frank in mediation: bearing in mind that the Med-Arbitrator has the ultimate decision-making power, the parties will less likely reveal weaknesses of the case and their fears to the neutral. They might be afraid that the neutral will use these disclosures against them in arbitration. This circumstance diminishes the biggest advantage of mediation: safe disclosure of facts and interests by the both parties and search of intersection of these interests. In order to facilitate effective communication and help the parties to reach an agreement, mediator needs to know their true intentions, goals, bottom-lines, priorities, and the business background   

· Enforceability of Med-Arb agreements: as a general rule mediated agreements are not enforceable under the New York Convention. The national courts of the member-states will not treat such agreements as arbitration awards obligatory for enforcement by international convention. Therefore, mediated agreements will be enforceable as regular contracts. This will cause additional uncertainties for the parties.

· The neutral might experience difficulties in switching the roles from facilitator to decision-maker and back. Additional process confusions may occur. This might lead to certain grounds for challenging the award.       



I admit that mixed Med-Arb process might cause certain confusions and uncertainties for the parties. But I believe that the parties have the right to shape the dispute resolution process of their dispute in accordance with their understandings, preferences and beliefs. Such right is the biggest advantage of ADR in comparison with rigid litigation system (no matter domestic or international). I also believe that Med-Arb process with the same neutral serving as a mediator and arbitrator gives the parties many more opportunities for settlement than any ADR process proceeding separately. In order to avoid the associated risks, which I have mentioned above, the parties should incorporate into the agreement to arbitrate/mediate certain procedural provisions protecting the Med-Arb process form challenging and securing its effectiveness. Harold I. Abramson calls such provisions “protocol for med-arbitrators settling the case.” He suggests the parties should agree upon the following optimal protocol prior proceeding with Med-Arb: “(1) Neutral is Trained in Both Processes; (2) Neutral Consents to Serve Both Roles; (3) Neutral as Settler Will Respect Principle of Party Self-Determination; (3) Clients With Settlement Authority Will Be Present; (4) Documents and Statements in Settlement Process are Confidential; (5) Neutral as Settler Will Not Evaluate Merits, Evidence or Reasonableness of Positions; (6) Neutral Will Not Caucus, Unless Parties Agree to Exception; (7) Parties Agree to Reconfigure Arbitration Panel to Suit Settlement Process; (8) Arbitrator Will Not Be Influenced by Information Revealed in Settlement Process; (9) Parties Agree Not to Challenge Arbitrator or Award Based on Combined Roles; (10) Parties Consent to Combined Processes.”[11]



A properly drafted arbitration/mediation clause also means a lot. Thus International center for Dispute Resolution (ICDR) has developed a so called “concurrent arbitration/mediation clause,” which provides that mediation will start automatically as soon as the request for arbitration is filed by the parties.[12] So the parties will not need to agree on mediation and/or mediator separately. They can proceed with mediation at any time even when arbitration has been initiated. Even though ICDR strongly favors the new mixed Med-Arb process with the same neutral serving as mediator and arbitrator, Center keeps provisions about mediator’s impartiality and duty to disclose any conflicts of interest in its International Mediation Rules (Art. 5).[13] 

Unlike ICDR, International Chamber of Commerce in Paris (ICC) directly prohibits the same neutral acting “in any judicial, arbitral or similar proceedings relating to the dispute which is or was the subject of the ADR proceedings, whether as a judge, as an arbitrator, as an expert or as a representative or advisor of a party.” [14] Moreover, the neutral will be disqualified if he/she previously served in any judicial, arbitration, or similar proceedings relating to any dispute which was the subject of the ADR proceedings. However, ICC gives the parties the right to shape Med-Arb process in the way they see it more effective for their particular case. Article 7.3 of the ICC ADR Rules has a reservation provision: “unless all of the parties agree otherwise in writing”, allowing the parties to appoint the same neutral to serve as a mediator and an arbitrator.

Article 14 of UNCITRAL Model Law on International Commercial Conciliation implies similar prohibition on the same person serving as mediator and arbitrator as the ICC ADR Rules: “unless otherwise agreed by the parties, the conciliator shall not act as an arbitrator in respect of a dispute that was or is the subject of the conciliation proceedings or in respect of another dispute that has arisen from the same contract or legal relationship or any related contract or legal relationship.”[15] Similarly, special format of Med-Arb and the same neutral acting in 2 roles is subject to separate agreement between the parties. 

The major improvement in the sphere of Med-Arb was done by Hong Kong International Arbitration Centre, which has adopted the new Hong Kong Arbitration Ordinance (approved by the Hong Kong Legislative Council at the end of 2010). In accordance with the Ordinance a member of arbitral tribunal may be appointed to serve as a mediator after official arbitration has started (subject to the parties’ written consent). By adopting such provision, HKIAC is willing to provide the parties with maximum opportunities to reach voluntary and mutually beneficial agreement in mediation. Nevertheless the parties shall be aware that it they fail to reach an agreement in mediation, then mediator will have to disclose any confidential facts which he believes to be materially related to the arbitration proceeding.[16] I believe such provision will stop the parties from revealing much confidential information during private discussions with mediator. Interesting to note, that HKIAC Mediation Rules still have the provision which prohibits mediators to be appointed as arbitrators if the case moves from mediation to arbitration (Art. 14): “The parties undertake that the mediator shall not be appointed  as adjudicator, arbitrator or representative, counsel or expert witness of any party in any subsequent adjudication, arbitration or judicial proceedings whether arising out of the mediation or any other dispute in connection with the same contract.”[17]

As we see, different international ADR institutions look at the problem of appointing the same neutral to serve as a mediator and an arbitrator in the same case differently. Such an appointment reveals a lot of risks as well as providing a lot of benefits for the resolution of the dispute. As a matter of fact, monetary claims in the international ADR arena are significantly larger than in domestic arbitration and mediation. No-one wants to spend a lot of money and time committing to international arbitration/mediation if the case is not worth it. I am convinced that the parties should be entitled to shape the settlement process of the dispute in accordance with their best understandings and beliefs. Therefore, only parties shall be entitled to choose whether the same neutral will facilitate communication in mediation and consider the case in arbitration, or not.   


[1] Stipanowich, Th. J. Mixed and Changing Roles. Mediation: the roles of advocate and neutral. ed. by Golann, Dw., Folberg, J. 429, (2011).

[2] James T. Peter, Med-Arb in international arbitration. American Review of International Arbitration. 2, (1997).

[3] Gerald F. Phillips, Same neutral Med-Arb: what does the future hold? Dispute Resolution Journal. (2005).

[4] Peter, supra note 2, at 83

[5] Barry C. Bartel, Comment: Med-Arb as a Distinct Method of Dispute Resolution: History, Analysis, and Potential, Williamette L. Rev. 664, 685, (1991)

[6] Harold I. Abramson, Protocols for international arbitrators who dare to settle cases, American Review of International Arbitration.  4, (1999).

[7] Peter, supra note 2, at 97

[8] Peter, supra note 2, at 90

[9] Carlos de Vera, Arbitrating harmony: “Med-Arb” and the confluence of culture and rule of law in the resolution of international commercial disputes in China, Columbia Journal of Asian Law. (2004).

[10] Phillips, supra note 3, at 5

[11] Abramson, supra note 6, at 4.

[12] Steven K. Andersen, ICDR offers concurrent mediation/arbitration clause, Dispute Resolution Journal. (2008-2009).

[13] ICDR International Mediation Rules. (2009). Available at: http://www.adr.org/sp.asp?id=33994#INTERNATIONAL%20MEDIATION%20RULES  

[14] ICC ADR Rules, Article 7.3, (2001). Available at http://www.iccwbo.org/uploadedFiles/Court/Arbitration/other/adr_rules.pdf

[15] UNCITRAL Model Law on International Commercial Conciliation. (2002). Available at http://www.uncitral.org/pdf/english/texts/arbitration/ml-conc/03-90953_Ebook.pdf

[16] Justin D’Agostino, Simon Chapman and Ula Cartwright-Finch Herbert Smith, New Hong Kong Arbitration Ordinance comes into effect. June 1, 2011, Kluwer arbitration blog. (2011). Available at http://kluwerarbitrationblog.com/blog/2011/06/01/new-hong-kong-arbitration-ordinance-comes-into-effect/

[17]HKIAC Mediation Rules. (1999). Available at http://www.hkiac.org/index.php/en/mediation/mediation-rules

© Conflict Change Consulting Ltd.  2014