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5 Reasons You Should Be Negotiating with Brackets in Your Mediation

by Matthew Rushton on 22 Sep 2016

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.

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What are the benefits and pitfalls of arbitration?

by Matthew Rushton on 20 Sep 2016

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”.

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The benefits and pitfalls of the mediation process

by Matthew Rushton on 19 Sep 2016

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.

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When arbitration is used and why

by Matthew Rushton on 16 Sep 2016

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.

1. Expedition

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.

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The mediation process: when and why it is used

by Matthew Rushton on 15 Sep 2016

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.

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The role of ADR in commercial dispute resolution

by Matthew Rushton on 14 Sep 2016

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.

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How does the mediation market look today?

by Philip McMullan on 02 Sep 2016

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. 

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The impact of common and civil law on international arbitration

by Philip McMullan on 24 Aug 2016

The growth of global trade over the last forty years has been mirrored by the growth of international arbitration as a means for parties to resolve commercial disputes efficiently and cost-effectively. While well-established institutional and ad hoc rules exist to provide the framework for running international disputes (including JAMS), these rules are not sufficient in themselves to cover the varying situations and diverse procedural questions that will arise during the course of the hearing.

The legal representatives of each party quite naturally look to their own substantive legal training under their national system when agreeing how to answer these procedural questions. But in the context of an international dispute these national legal systems can be inappropriate, especially given the diverse backgrounds of parties, lawyers and arbitrators.

International arbitration, therefore, has had to develop its own distinct procedures over the years, influenced heavily by both the common and civil law traditions. It is useful then to examine how common and civil law have helped shape international dispute resolution. And given that arbitrators are likely to come from one or other of the legal traditions, it is also useful for parties and their legal counsel to understand how that is likely to influence the tribunal’s thinking on procedures, evidence and, ultimately, award.  

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A question of privilege in the mediation process

by Philip McMullan on 09 Aug 2016

The mediation process, by its very nature, requires confidentiality to work. Parties in dispute need to be confident that they can discuss their case frankly and robustly in the hope of reaching agreement; at the same time, they want to reserve their right to pursue further legal redress in the event of the failure of the process.

The confidentiality of the mediation process stems at common law from the without prejudice privilege of all settlement discussions – with exceptions to be discussed further below. In addition, a well-drafted mediation agreement will also contain confidentiality clauses to ensure extra protection for the parties during the process.

Such clauses have been relied on in the past to provide injunctive relief for one party, as well as allowing the mediator to enforce the confidentiality obligation against one of the parties attempting to break it. In a real sense then, confidentiality is the bedrock of the mediation process.

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Dispute resolution clauses - FAQ

by Philip McMullan on 01 Aug 2016

When drafting an agreement for a new business partnership, after all the time spent negotiating around deliverables and costs, the deal's legal advisers might well be tempted to use a boilerplate dispute resolution clause. Under pressure from commercial, operational and management teams to get the deal signed and get started on the project, it would be perfectly understandable. It would also be a mistake.    

It might not be front of mind in the heady days of a new business venture but the dispute resolution clause can have far-reaching effects in the longer term. Forum, location, tribunal composition, rights (and ease) of appeal and enforceability of award all flow from the dispute resolution clause.These factors can be crucial in international disputes where the importance of black letter law can take a back seat to the realpolitik of a home jurisdiction tribunal for one of the parties or a location which makes enforceability a serious headache.   

So what are the key issues to consider when drafting a dispute resolution clause?

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