Britain has a long and proud maritime history with London at its heart. From Sir Francis Drake to Captain James Cook, British sailors have had a huge impact on world history, and the fact that the prime meridian runs through a suburb of South East London illustrates the UK’s central role in the history of seafaring. The economic impact of shipping to the nation’s prosperity and development is incalculable – it is an over-simplification to say that the British Empire was built on sea power, but true nonetheless.
New research by Francesca Gino and Ting Zhang of Columbia Business School, along with Mike Norton of Harvard Business School, suggests that the most effective mediation style might be being partial against both parties. The academics suggest that, contrary to the received wisdom that mediators should be neutral, attentive and empathetic, an actively hostile mediator is more likely to get a good result. They discovered that a mediator’s antagonistic and hostile treatment of both parties causes adversaries to unite against the mediator, which in turn increases the parties’ willingness and propensity to reach agreement.
The Civil Procedure (Amendment) Rules 2013, known colloquially as the Jackson Reforms, didn’t change the substantive rules governing when courts would require parties to engage in alternative dispute resolution (ADR). But the focus on efficiency, case management and controlling costs marked a change in tone which was always likely to advance the cause of ADR.
The benefits of ADR, in particular mediation, are clearly in line with what Jackson sets out to achieve in terms of driving value for money, efficiency and speedy settlement. And while the courts have long had the power to penalise parties in costs for unreasonable refusal to engage in the mediation process, application of that power has been inconsistently applied.
With a hint of self-mockery, a well-known US mediator declared himself “the master of bracketology.” For those in doubt, you won’t find “bracketology” in the Oxford English Dictionary, but the art and science of deploying brackets in the context of the mediation process is an “ology” worthy of study.
One might first consider why brackets are helpful in a mediation. A scenario familiar to all mediators is “offer alienation”: offers are made grudgingly in small increments, and a substantial gap between the parties remains. Every offer appears to entrench each side’s view that the other is either not prepared to put up “real money” or is utterly unrealistic.
When the gap remains large and each offer drives resentment, a walk-out by one party becomes an increasing likelihood. Mediators strive to get parties to table reasonable offers, but aren’t always successful, and while much has been written on countering “positional bargaining”, for many users of mediation it’s the negotiation methodology they most trust, and one which has no doubt been used to good effect in other aspects of business. Persuading them to take a different path in dispute resolution can prove unproductive.
When properly managed arbitration offers certainty, finality, a quicker, cheaper result than going to court and an award enforceable worldwide. Arbitration is, therefore, the default choice for cross-border contracts, providing for institutional or ad hoc proceedings before either a sole arbitrator or a panel of three. The composition of the tribunal is critical to achieving an acceptable result, and the opportunity to select arbitrators according to their sector expertise and/or disposition relative to your side’s arguments can offer major advantages.
Under a tri-partite neutral arbitration system, the convention is that each side appoints a single arbitrator and those arbitrators then appoint a chairman. Each arbitrator must meet the necessary standards of independence and impartiality. Selecting an arbitrator, therefore, is a question of finding someone maximally disposed to your side’s arguments with the minimum appearance of bias. So-called party-appointed arbitrators are not there to advocate for your side’s arguments, but can ensure that those arguments are considered by the tribunal.
Arbitration is inherently business friendly: selection of tribunal members permits a degree of sector specialism
unavailable through the court system; the consensual nature of proceedings makes for a less formal, more
flexible procedure, and hearings and the resultant awards are private and confidential. Nevertheless, issues of cost and time pervade the field, and users should be aware of potential pitfalls. Most stem from so-called “due process paranoia”.
Mediation has numerous, obvious benefits: saving time, capping risk, and exploring wider settlement options
than are available through the courts. All discussions are confidential and without prejudice to further proceedings, and mediation often represents the best chance of preserving a commercial relationship when disputes arise. Given that parties now run costs risks in the English court if found to have unreasonably refused an offer of mediation, the more relevant questions are not whether to engage with mediation, but how and when.
A common question, given that the overwhelming majority of disputes settle without the intervention of the third party neutral, is whether and in what circumstances mediation is preferable to inter partes negotiation. One of the best reasons to opt for mediation where negotiations are stalling is efficiency. Mediation brings structure to the negotiation, identifying and tackling the major points in issue. It also brings a different emphasis, shifting parties away from rights-based remedies (as defined by law) and onto commercial interests. This shift in mindset is
often enough to reinvigorate seemingly intractable negotiations.
Unlike court, or inter partes negotiations, mediation offers the parties the chance to discuss the past and vent frustrations. In some instances, pent up emotions are the obstacle to settlement, even if it’s “just business”. From such a position, it is possible for the mediator to encourage information exchanges and initiate a forward-looking approach to finding a solution.
In almost all instances, arbitration must be contemplated at the contract drafting stage. Parties may, of course, agree to take a dispute to arbitration at any stage, but once a dispute has broken out, positions become polarised, and agreement is accordingly less likely. The reasons for preferring arbitration clauses to the more usual reference to the courts – in a commercial context – boil down to the so-called "three Es": expedition, expertise and enforcement.
To elaborate, one of arbitration’s key strengths is that parties don’t join a waiting list for a trial date and the
attention of a judge in interlocutory proceedings. They are free to choose their arbitrator and should do so
mindful of availability and disposition to run an efficient procedure. Not only should arbitration run to a tighter
timetable than is possible in many courts, but also the final and binding nature of the award eliminates the
possibility of a decision being deferred until all appeal routes have been exhausted.
It is worth noting here that the option to incorporate an appeals procedure into the arbitration process exists, which some parties – as an arguable safeguard – choose to use. The convention remains, however, that arbitration is a one-shot process. The risk of the “wrong” result is generally considered an acceptable
trade-off for speed and certainty.
Mediation can be successfully deployed at any point in the timeline of a dispute – either before proceedings are issued, afterwards, up to, and even during trial. It is, after all, a facilitated negotiation and represents an opportunity to settle early, reducing stress, acrimony and legal costs.
Defining mediation is arguably a futile task: in the same way we accept that “beauty is in the eye of the beholder“, mediation is whatever users can imagine and can agree it to be. Thus, there are many different approaches, which vary widely according to users’ needs and the demands and timing of the case.
Alternative dispute resolution (ADR) has a critical role to play for in-house counsel seeking to do more with less, but it remains something of a novelty as compared to the centuries-long tradition of courtroom litigation.
While there were many international arbitrations in the nineteenth century and into the early twentieth century, they tended to be pursuant to treaties under public international law with states acting against other states on behalf of their nationals and their commercial interests. Such arbitrations tended to bebetween imperial powers – British, Dutch, Portuguese or Soviet – and only following the dismantling of these empires and the consequent explosion in the number of independent nation states did international arbitration become the mainstream concern it is today.
CEDR (The Centre for Effective Disputes Resolution) published the findings of its seventh market audit in May. Using a web-based questionnaire, the body set out to understand the attitudes of commercial and civil mediators to professional standards and regulation, as well as to benchmark how the market has grown and developed since the study was last conducted in 2014.
The fieldwork collected 319 responses, over half of the membership of the Civil Mediation Council (CMC), and was open to all mediators in the UK, regardless of organisational affiliation. The resulting report is focused on the commercial mediation field, so excludes community and family mediation, as well as the statutory ACAS service and the HMCS Small Claims Mediation Service. In tandem with the research among mediators, CEDR ran a parallel survey of lawyers in order to gain a client perspective.