Law Times

Law Times • December 5, 2011 An online resource 1.800.263.3269 Focus On ADR/MEDIATION Med-arb splits ADR community Combining roles can speed process, advocates say BY MICHAEL McKIERNAN Law Times H arvey Kirsh is an arbitrator and mediator, but like many of his fellow alternative dis- pute resolution practitioners, the idea of reversing those two words in his title makes him a little uncomfortable. Mediation-arbitration or med-arb, a process in which the same neutral acts as mediator, and if necessary, arbitrator, splits practitioners. Kirsh counts him- self fi rmly among the skeptics. "When I'm doing a mediation, I'm going to be meeting privately with both parties and I'm going to ask them to tell me about the nuances of their case," he says. "I want to know what's important to them, where the strengths are in their case, but also what the soft parts are. And I shouldn't know those soft spots or vul- nerabilities if I'm an arbitrator. Personally, I don't see that it works well. And I don't really like participating in it." Owen Gray, a former vice chairman at the Ontario Labour Relations Board who practises as an arbitrator and mediator, is less reticent about combining the two pro- cesses and says parties can benefi t from it. "Th ey've spent quite a while teaching you what the dispute is about and they don't have to teach another person what it's about," he says. "Th ey get the advan- tage of your already knowing." Gray says an awareness of the concerns raised by Kirsh and oth- ers highlights the impor- tance of mediator-arbi- trators keeping the two functions intellectually and practically distinct. Equally important is a requirement that the parties understand where one process ends and the other begins, he adds. "Th ere's a voluntari- ness to [the mediation stage] and the parties have to understand that I'm not gathering evidence. I'm hearing about the case. It's like hearing an extended opening statement. Th e diffi culties are going to come if the process doesn't look like what they expected. Th at's what is going to undermine it." Family lawyer Andrew Feldstein has diff erent? When you focus on writing your reasons, you have to focus on what evidence you received in the ar- bitration stage and only that evidence." Feldstein says many of his clients opt for med-arb because they can't aff ord a trial or arbitration. He fi nds tempers are less likely to fray in med-arb than with mediation alone. "People feel more 'People feel more vested in lis- tening to what the mediator says about the resolution than they do with mediation alone,' says Andrew Feldstein. vested in listening to what the mediator says about the resolution than they do with me- diation alone. When you know the same person is the arbitrator, been involved with med-arb both as coun- sel for parties and as mediator-arbitrator. He compares the role of the neutral to judges who decide the admissibility of evi- dence in a case they'll also hear. "You walk into court and somebody has provided an affi davit or evidence that you say should be excluded, and the judge may very well read the document they then decide to exclude. How is that any it creates that extra emphasis that leads to probably the overwhelming majority of cases resolving themselves in settle- ment. One of the other advantages is you're picking the judge. In family law, even where you have a unifi ed court in your jurisdiction, you may get a Superior Court judge that day. You have no con- trol over who the judge is. When you're selecting the judge, you can make sure it's someone who's expert in family law." In British Columbia, Craig Neville of Watson Goepel Maledy LLP says med-arb is increasing in popularity. He uses the technique in his role as a par- enting co-ordinator in order to build consensus among parties in with-prej- udice discussions before making deter- minations in the event of an impasse. Th e provincial government's recently tabled family law act includes both med-arb and parenting co-ordinators in its defi nition of family dispute reso- lution. "I think there are a fair number of writ- ers who still opine about the inconsisten- cies in the two approaches who might be described as purists," says Neville. "Bal- anced against that kind of concern today, given the way our system is working, is the time, energy, and cost associated with problem solving through the courts. Th e med-arb process I think is a response to the need for more pragmatic approaches to problem solving." For his part, Kirsh says he could be con- vinced to participate in a med-arb process if another person shared the responsibili- ties. "For example, you might start an arbi- tration and two or three days in, the parties might want to take a day off and they'll go to mediation. So another person steps in to conduct the mediation for that day to see if it can be settled. If it's not settled, you can go back to the arbitration again and get it settled fi nally. It just becomes diffi cult, in my opinion, to have both the mediation and arbitration done by the same person within the same time frame." Are arbitrators immune from suit? BY MICHAEL McKIERNAN Law Times immunity from suit, according to a leading Toronto arbitrator and mediator. In its July decision in Jivraj A v. Hashwani, Britain's top court found that arbitrators were not engaged in "employment under . . . a contract personally to do work" and overturned a lower court decision that many feared would have lumped arbitrators in with any other tradesperson and thereby exposed them to poten- tial lawsuits as employees. Instead, the court highlight- ed arbitrators' quasi-judicial qualities in fi nding that they're "in no sense in a position of subordination to the parties; rather the contrary." "Th e one-line lesson of the whole thing is that arbitrators are very close to God-like crea- tures and really can't be sued," said David Bristow, boiling down the case at an ADR British Supreme Court decision strengthens the case for arbitrators' Institute of Ontario event on Nov. 7. "I believe it will be fol- lowed in Canada." Th e case dates back to 1981 when Nurdin Jivraj and Sadrud- din Hashwani entered into a joint-venture agreement to invest in real estate around the world. Hashwani eventually moved to have the arbitration clause void- ed because of a requirement that all arbitrators must come from the Ismaili community. Th at breached the country's employ- ment equality regulations by discriminating on the grounds of religion, Hashwani argued. A trial judge dismissed the claim after fi nding that an arbi- trator isn't "employed" within the meaning of the regulations. But in June 2010, the England and Wales Court of Appeal disagreed, a move that sparked panic among English arbitrators. "Th e arbitration bar in Eng- land went crazy because the appellant court had said no, you're just a kind of tradesman and people can sue you for vari- ous things," said Bristow, for- mer counsel to Fraser Milner Casgrain LLP. Th e Supreme Court eventu- ally sided with the trial judge. It stressed the independence of arbitrators from the parties to the dispute. "Although an arbitrator may be providing services for the purposes of VAT and he of course receives fees for his work, and although he renders per- sonal services which he cannot delegate, he does not perform those services or earn his fees for and under the direction of the parties," wrote Lord Clarke on behalf of four of the court's fi ve judges. "He is, in eff ect, a quasi-judicial adjudicator." Th e fi fth judge, Lord Mance, quoted a German de- cision in his concurrence that said an arbitrator's position "is entirely free, freer than that of an ordinary judge." According to Bristow, the only Canadian cases to touch on the ability to sue arbitrators suggest the courts here view the issue in a similar way. In 1999's Cohen Highley Vogel & Dawson v. Bon Appetit www.lawtimesnews.com Restaurant, an Ontario Supe- rior Court judge overturned an assessment offi cer's decision to assess an arbitrator's account at nil because the service had no benefi t to the clients. A pro- vincial court judge who found the arbitrator had exceeded his jurisdiction had set aside the original decision. Th e clients argued they shouldn't have to pay for what they saw as negligent service, but the judge in the case steered away from that characterization, noting that although the arbi- trator "made serious errors" that ultimately "rendered the report worth little or no value to the cli- ents, he was not negligent." "Th ey start using the right words," said Bristow. "An arbitra- tor can be in error but not neg- ligent, which is the same criteria for a judge . Perish the thought of saying they were negligent." In Noble China Inc. v. Lei in 1998, Ontario Superior Court Justice Joan Lax struck an affi da- vit from the dissenting arbitrator in a three-person panel during an application to enforce the arbitral award. In the affi davit, the dissenting member alleged racial bias and prejudice against his fellow panel members, but Lax found the affi davit "off ends the rule on deliberative secrecy." Responding affi davits from the other two arbitrators and the fol- lowing cross-examinations would "abrogate the principle of fi nality of decision-making," she added. "What she was fi nding in the case was this secrecy applies to both the adjudicative procedure of judges and any other decision- makers," said Bristow. While the door is still open on the ability to sue arbitrators as employees in Canada, Bristow said he expects the courts here to follow the British example. Nev- ertheless, he has some advice. "I'd suggest that anyone doing an ar- bitration put a clause in the arbi- tration agreement that the parties agree that the arbitrator should be given the same power and the same protection as the judges of the Ontario Superior Court," he said. "My second observation is that I suggest you all get suf- fi cient proper insurance." PAGE 9

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