Arbitration, Mediation and Mixed Modes: Seeking Workable Solutions and Common Ground on Med-Arb, Arb-Med and Settlement-Oriented Activities by Arbitrators

Today as never before, commercial dispute processing is “mixed mode,” with business parties and counsel employing a variety of diverse approaches in order to promote their varied priorities in resolving conflict. Just as drivers on a multi-lane highway shift from lane to lane as circumstances require in the course of reaching their destination, disputants move from settlement modes (such as negotiation and mediation or conciliation) to adjudicative modes (binding arbitration or litigation) and back again as circumstances warrant. However, we still have far to go in understanding and addressing the dynamics of “lane-shifting” in dispute resolution—the combination and interplay of settlement-focused activities and third-party adjudication. This is especially true of situations where it is agreed that a mediator will shift to the role of arbitrator, or an arbitrator mediates or engages directly in efforts to help parties reach a negotiated settlement of substantive issues in dispute. Such scenarios (often denoted by terms such as “med-arb,” “arb-med,” or “arb-med-arb”) may triggered by changed circumstances like the onset of a pandemic, by the special needs of disputants, or the desire for creative solutions to complex conflict. However, although such processes have been employed in many parts of the world, including the world’s largest economies, effective guidance for legal counselors and advocates, arbitrators, and mediators is woefully inadequate in light of the special challenges they present. International practice is complicated by divergent cultural and legal traditions and contradictory understandings about the roles of arbitrators and mediators. In the absence of specific, reliable information about actual experiences with dual-role processes, conventional attitudes in the U.S. and many other countries are largely driven by perceived risks, leading some jurisdictions to proscribe or impose significant limits on mixed roles for neutrals. In places like Germany, on the other hand, it is common for arbitrators to play an active role in setting the stage for settlement, or, as in China, to shift to the role of mediator if the parties agree —influences reflected in international standards such as the “Prague Rules.” This article proposes a more searching and systematic approach to med-arb, arb-med, and arbitrator roles in negotiated settlement in light of their potential utility as creative, if challenging, alternatives for problem-solving in appropriate situations. Drawing on first-hand accounts, it explores the variety of circumstances in which such process options may be employed as well as their potential pitfalls. It compares and contrasts the cultural and legal traditions underlying divergent practices and perspectives, as well as exemplary laws and practice standards. It concludes with proposed guidance for business parties, counsel, dispute resolution professionals and institutional providers that addresses varying international practices and policies and offers methods for addressing key risks and concerns.