ADR – A Wide Range of Choices by Murray H. Miskin
The following is the text of a paper delivered by Murray Miskin as the opening speaker at the Ontario Bar Association’s May 22.2002 full day program titled “ADR: Principles, Process, Practice” This presentation set the tone for the program and provides an overview of the many forms ADR can take. This paper continues to be cited as an authoritative source on the different forms Alternative Dispute Resolution may take:
Many alternatives exist to take you out of the court process, keep you from getting into it or shortcut the process for a quicker and more cost effective result. We begin with a dispute. Lawyers are not necessarily involved and the parties may choose to attempt to resolve the dispute for their mutual benefit. This requires goodwill and a common desire to move on in their relationship to a positive future. Communication is the key to succeeding. Phone calls, meetings, faxes, emails and third party involvement are common elements of the everyday process of alternative dispute resolution. Each will try to explain their position and their reasons and hope the other side will listen and understand. Frequently problems are solved and relationships return to normal. That is the way business is done and the way people work out issues in their personal relationships.
The above process assumes a certain level of maturity and common sense, which is not always found. In the absence of common sense humans turn to lawyers and the legal process to solve their problems. That process begins with the retainer and invariably moves on to the next step, which I like to call the threatening letter. That letter once sent heightens tension and creates fear, anger, a sense of betrayal and the desire to punish. Lawyer number two is retained and a series of threatening letters are fired like missiles from one side to the other. Before long the willingness to spend money having been tested, one side backs down or alternatively a claim is issued in court. It usually overstates claims and misstates facts so as to further antagonize. The long road to trial is then traveled with many casualties along the way. The time and costs of review to prepare affidavits of documents often kills a claim even before discovery. Discovery is often used as a process of intimidation and harassment to get the message across to the other side that this is war not worth fighting. Trial is always a gamble whose outcome may have nothing to do with justice.
We, the practitioners of ADR and the lawyers who believe in alternative dispute resolution, take a different approach when we can. We encourage communication and settlement attempts through every stage of a dispute. Settlement meetings and negotiations can resolve disputes especially with a skilled independent person such as a mediator involved to assist in the process. Some people just get stubborn or perhaps each side’s perception is so different that they are unable to settle and find a benefit from ending the conflict in a way that does not inflict great harm on the other.
When people come to us they have problems and are looking for solutions. Some have high expectations of the power of litigators and mediators to solve their problems. Others come bitter and cynical from past experience but see little choice but to deal with the legal process despite mistrust that often is deserved. Many have no idea what to expect. For all of these clients there is a wide range of services and products we can offer. I find most clients would like to spend as little as necessary and that is what opens the door to ADR more than any other factor. If you want a legal remedy fast your best bet is to settle. This may mean serious compromise, which the client may not be ready to make. In time the process usually leads them to interest based resolution following a broadening and changing of perception.
The leading ADR method is still negotiation. Negotiation is followed by mediation, which has leaped forward in the past decade to be the major focus of ADR practitioners and which has become public policy across Canada. Just over a decade ago ADR was given new prominence when Canada joined the United Nations Convention on International Commercial Arbitration. That forced every province to enact modern new arbitration legislation. That along with the lower Canadian dollar brought business and success to Canada in international trade. Our antique Ontario Arbitration Act was replaced in 1991 with a modern plain language code that brought lawyers and others into the world of ADR and helped expand the acceptability of mediation and other ADR methods.
I will briefly review a range of ADR methods before focusing on arbitration the final method of ADR, which by definition always works when all settlement methods fail.
Negotiation is a process of meetings with an exchange of ideas and exploration of options. It requires good timing and planning to make it fruitful. Preparation is critical which may require detailed preliminary work to ensure that accurate calculations and points of argument are ready for the negotiation meetings. A negotiator is a representative of a party who is there to put forward the party’s position and attempt to persuade. Such a person should be a polite and respectful listener who lets the other side know their concerns are being carefully considered. At the same time the negotiator must understand and be able to forcefully present their own side’s argument. The negotiator should be ready to engage in give and take showing flexibility. It is sometimes best to leave the actual decision maker out of negotiations where they are looked upon with hostility or are unable to act with the skills of a negotiator. The negotiator must be on the look out for signals from the other side and seize the moment for a breakthrough or a pause in negotiations.
Fact finding is a process where an independent person investigates the issues in dispute to arrive at an analysis of the problem and evaluation of settlement options. Without a common understanding of the facts behind the dispute it is hard to find common ground, as interests cannot even be determined. The investigation of the fact finder leads to accepted understanding of what events have led to the dispute and what actual problems need to be addressed. Each person involved has an opportunity to fully present a side of the story to the fact finder for consideration and evaluation. The fact finder may possess technical skills if applicable to the issues under consideration. If parties co-operate with the fact finder and trust the fact finder the report issued at the end of the process is likely to contain a solution that all parties can accept.
Some large organizations have appointed internal staff who are given a large degree of independence to review and intervene in situations where internal problems exist. If people can get past the fact that the ombudsperson is not really independent and accept that they are part of dedication to a good will process results can be achieved. The organization is comfortable knowing they are dealing with someone internally who ultimately has their interests at heart and the individual (complainant) knows that there is an opportunity to have someone listen to them and give their concerns a chance. After reviewing documents and interviewing people involved the ombudsperson report often only to the organization and a solution is then hopefully acted upon. Alternatively the ombudsperson can give effective guidance for negotiations to follow.
An outside facilitator can be brought into an organization for a specific problem or set of problems to play a role similar to that of the ombudsperson. There is added trust due to additional independence and a more objective perspective. There is less inside knowledge of the system of the organization, which can slow the process of problem solving as the facilitator learns how things work. Some organizations regularly use the same person for this process, which gives the benefit of experience with the system and people involved.
EARLY NEUTRAL EVALUATION
Fact finding as a process can be extended beyond an organization to assisting parties with a dispute by providing an independent perspective and opinions. This is sometimes called early neutral evaluation and is used as a preliminary step before court or arbitration. A neutral facilitator makes a non-binding assessment of the issues and merits of claims after hearing brief presentations from each side to the dispute. The evaluator is usually a lawyer or an expert in the subject matter of the dispute. Their assessment points out the strengths and weaknesses of each side’s case. The evaluator attempts to facilitate a settlement and if unsuccessful in that offers guidance on how best to conduct the next steps in dealing with the dispute. Ontario’s Financial Services Commission has a rarely used option of Early Neutral Evaluation after mediation and before commencing arbitration or a court proceeding related to automobile accident benefits.
Most of us are very familiar now with mediation where an independent person assists the parties in communicating their views and perspectives to the other with the goal of assisting in bringing about a settlement. If settlement is achieved it is the parties who have achieved it and should be given credit. Mediators are involved not to give opinions but to understand and direct discussion of issues and encourage reasonable compromise for the mutual benefit of the parties to the dispute. Mediation involves settlement discussion some of which are private between a party and the mediator. As such the mediator learns information and settlement positions that usually would prevent the mediator from acting independently as an Arbitrator should mediation not result in settlement.
In arbitration an independent person acts in a judicial way hearing evidence and making a decision, which is binding on the parties. This ends the dispute subject to limited rights to appeal to court. The arbitrator must give each party a right to be heard on all issues and fully respond to the other side’s case. An arbitrator decides only at the end of the process after hearing all of the evidence and argument. The arbitrator must avoid contact with the parties outside of the formal process to prevent any apprehension of bias and the influence of what may be heard or seen outside of the process. The arbitrator may be any person selected by the parties or by the selection process for appointment of an arbitrator. Often lawyers are selected to arbitrate due to their knowledge of law and ability to convene over a hearing. With proper training non-lawyers have little difficulty presiding over the arbitration process. One of the main benefits of arbitration is the ability to choose who will decide the dispute rather than be at the mercy of the judge who happens to be appointed by the court. Arbitration is a great area for experts who can use their expertise to decide the dispute. Knowledge and understanding of a technical dispute can be of far greater importance than understanding legal and procedural questions. In a large dispute it would be economical and beneficial to have a panel of three arbitrators with two being experts and one who is a lawyer acting as chair. Proceedings with a panel of three arbitrators can be quite costly and prolonged so that it would not be suited to most disputes. If the parties are comfortable with a single arbitrator a very fair speedy and cost-effective process can bring a very satisfactory conclusion to a dispute that is beyond hope of settlement.
Combining mediation with arbitration is analogous to walking a tightrope. It is very dangerous and should only be done by the ADR practitioner with careful forethought, training, experience and the right tools. It also places the parties in danger and as such appropriate waivers should be signed in advance acknowledging that problems may arise which make completion of the process impossible. The mediator is perceived during the mediation stage as one who has much power and who may to an inappropriate degree be putting pressure on the parties with their comments and expressed opinions. The mediator learns things during the mediation phase, which do not go into evidence and also learns the settlement positions of the parties. This makes it very difficult to then make a decision based solely upon the evidence. In a court process the situation would usually lead to a mistrial.
The med/arb process is a flexible one where rules can be tailored to the particular situation and can and often must be changed by agreement during the process. The arbitration if conducted could be non-binding if there is serious concern of fairness following the mediation. By definition a non-binding arbitration is not arbitration. In the med/arb process another person could replace the mediator for the arbitration phase so that the decision maker only hears what is in evidence. To me this is mediation followed by arbitration rather than a true blend of the processes and a safe and fair way to proceed.
A mini-trial is a process with many variations but generally can be seen as a form of non-binding arbitration. Often portions of a trial are played out to see how they would go if they actually took place in court or at an arbitration hearing. It is not necessary to formally call witnesses in presenting the evidence. Typically one or more ADR practitioners are present to comment on the evidence and argument presented. Executive level representatives of the companies involved tend to come and observe and guide decision making after the reactions to the case are discussed. This process obviously requires close co-operation between opposing parties. It is rarely used in Canada.
PART II – WHEN TO ARBITRATE
Arbitration is the form of alternative dispute resolution that remains when all settlement options have failed and the parties require someone to decide the merits of their dispute. Despite that, most matters, which proceed through arbitration, settle before the arbitrator renders a decision. While arbitration is usually less costly than court it is still the most costly of ADR processes and that is probably a major factor in encouraging settlement. Probably more important in encouraging settlement is that the parties see how their case is turning out during the process and having a better sense of the outcome see the merits in settlement. This is the same factor, which leads to most civil cases settling at or during the trial stage.
The pressure of an impending decision makes arbitration as a form of ADR an excellent one to encourage settlement. A wise arbitrator knows that if the parties settle during the process that is a good outcome. The arbitrator should encourage settlement discussions when the time appears appropriate and assist to a limited degree by facilitating. The arbitrator must carefully avoid involvement in settlement negotiations or revealing how their own decision making process is progressing.
If ADR is how you wish to proceed rather than through court planning a series of steps including arbitration is an effective way of increasing odds for settlement.
Comparing arbitration to court the main perceived difference is speed. People expect to spend years in court and expect arbitration to be a speedy and decisive process. There is potential for discovery and extended preliminary proceedings in arbitration under Ontario’s Arbitration Act and so speed is not a certainty. An obstructionist can delay the arbitration process perhaps more than they can a court case. With co-operation and deadlines arbitration will be a speedy and cost efficient process. It may still cost more than court because there are no free courtrooms and judges in arbitration. With three arbitrators your costs will almost certainly exceed the cost of going to trial.
If the parties can co-operate to the extent of agreeing on a fair process and streamlining procedures they can write their own rules for the entire process with their own deadlines, timetable and hearing format. Normally the conduct of arbitration is less formal than a court trial. Without agreement the process is in the hands of the arbitrator and the reasonably good rules in the Arbitration Act to regulate the process.
Arbitration is a private process, which makes it highly suited to business partnership disputes, personal matters and matters otherwise requiring confidentiality.
If the parties can place their trust in a person to decide their dispute they are far ahead of the court system, which imposes a judge for trial and preliminary steps by means of a random process. With a technical dispute the expert arbitrator is far better equipped than any judge of lawyer to fairly consider the merits and make a decision. If legal questions are in issue the parties are well served by an arbitrator who is an expert in the area of law involved. For findings of fact based on credibility the court may be the best option.
Once the arbitrator has ruled the process is usually over with an order that has the enforceability of a court judgment. There is only a limited right of appeal of arbitrator’s awards, which the parties can agree to reduce or if they prefer extend. Safeguards exist for court review of the outcome related to fairness of process and not the merits of the decision.
If parties are unable to settle through alternative dispute resolution arbitration is ADR’s way to ensure finality.