Mediation-Arbitration (a.k.a "Med-Arb") is a hybrid form of dispute resolution process which (as the name suggests) combines Mediation and Arbitration. Mediation and Arbitration are two distinct forms of dispute resolution, with different features. Med-Arb combines these two separate forms of dispute resolution into a single, two-step process which enables parties to obtain a faster resolution of their dispute while minimizing expense and inconvenience. The mediator and arbitrator are usually the same person.
Overview of the Process:
First, the parties agree with the impartial third party ("mediator") assisting them to work at resolving their dispute through mediation, in the manner discussed for the mediation process on this website.
If the mediation fails to produce a consensual, negotiated settlement, the mediator's role will then shift into that of an arbitrator, or private judge, who will make a binding decision on the issue(s) for the parties, in the manner discussed for the arbitration process on this website.
This two-step process reduces the costs and delays associated with educating a mediator about the issues and then doing it all over again for a different arbitrator or judge. It also retains the advantage inherent in mediation that the parties can control the management and process of their dispute, which moving straight to arbitration or litigation in the courts does not provide.
The outcome is a final resolution, one way or the other. If the mediation phase fails because the parties could not agree on their own settlement terms, then a binding decision will be imposed by the arbitrator. The parties do not need to start a court process at that point because they will automatically default to the arbitration phase, which will produce a final decision.
How can the mediator and arbitrator be the same person?
A common concern expressed by some people is that the arbitrator may become prejudiced or have his/her mind already made up as a result of things heard during the mediation phase. They question whether it is appropriate to have the same person making the final and binding decision for them.
Sometimes, parties address this issue by agreeing in advance that a different person than the mediator will act as their arbitrator (if necessary). In most cases, however, when people discuss using a Med-Arb process, they are expecting the same neutral third party will carry out both roles.
Ontario’s Arbitration Act, 1991, actually contains a section (s.35) which provides that “The members of an arbitral tribunal shall not conduct any part of the arbitration as a mediation or conciliation process or other similar process that might compromise or appear to compromise the arbitral tribunal’s ability to decide the dispute impartially.” The provisions of this section are capable of being waived by parties, however, if they wish.
The key point to keep in mind is that once the mediation phase is completed and the parties proceed to arbitration, an arbitrator must follow the law and base his/her decision on the evidence and the law which applies to that evidence. Arbitrators, just like judges, are able to draw a distinction between thoughts, feelings, suspicions and accusations which may be expressed during a mediation phase (which factor into their thinking while negotiating a consensual settlement) versus facts that can actually be proved with appropriate and admissible evidence, during an arbitration hearing.
Furthermore, an arbitrator’s decision must be delivered in writing and is capable of being appealed in much the same manner as a judge’s decision after a trial. A judge hearing such an appeal would certainly be reviewing the arbitrator’s decision carefully to be satisfied that there is sufficient evidence to support the decision and award made by the arbitrator.
Parties who engage in the hybrid Med-Arb process are satisfied and confident that these two roles can be kept separate from one another by the Mediator/Arbitrator they have selected, and that the advantages in cost and time savings outweigh any risk of the Mediator/Arbitrator becoming prejudiced toward one party or the other during the mediation phase.
Med-Arb agreements therefore typically include a clause which specifically waives section 35 of the Arbitration Act, 1991 and permits the same neutral third party to perform both roles. However, it always remains an option for parties to specify that a different person will be their arbitrator if the mediation phase is not successful in reaching a settlement.