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Med-Arb
Meditation is a dispute resolution
process in which the parties request a neutral person
(called the mediator) to facilitate negotiations between
them with a view to resolving their dispute privately and
amicably by reaching a mutually acceptable agreement. The
mediator does not decide the outcome of the dispute.
Arbitration is a dispute resolution process in which the
parties appoint a neutral person (called the arbitrator) to
decide their dispute, having regard to each party's legal
rights and having given each party an opportunity to present
his or its case.
Med-arb (or mediation-arbitration) is a hybrid dispute
resolution process that brings together the elements of both
mediation and arbitration. In med-arb, the parties will
first attempt to resolve their dispute by mediation. Where
the mediation does not result in a settlement, the parties
will proceed to arbitration. Where the parties choose med-arb
as their dispute resolution mechanism, they prescribe a
fixed time frame during which they will retain control over
how the dispute will be resolved and work towards a
voluntary settlement with the other party, after which they
agree to relinquish control over the outcome and opt for a
final determination of the dispute by a neutral person. Med-arb
therefore strikes a balance between party autonomy and
finality in dispute resolution.
A neutral person who acts as a mediator in the mediation
phase of med-arb may, if he consents and the parties agree,
act as an arbitrator in the arbitration phase of med-arb.
However, the appointment of the same person to act both as
mediator and, if the parties fail to reach a settlement
through mediation, as arbitrator is not recommended. There
are 2 main reasons. First, a party may, during the mediation
phase of med-arb, disclose confidential or privileged
information to the mediator. The mediator is obliged not to
disclose such information to the other party without the
consent of the party disclosing the information. Should the
mediator subsequently act as an arbitrator in the
arbitration phase of med-arb, he might be in possession of
information that the other party is not given an opportunity
to explain or rebut. If he allows himself to be influenced
by such information in rendering his decision as an
arbitrator, he would be acting in breach of the rules of
natural justice. Second, a party may be less open with a
mediator during the mediation phase of med-arb if he is
concerned that the information provided to the mediator may
be relied on by the mediator, subconsciously or otherwise,
when the mediator assumes the role of an arbitrator in the
arbitration phase of med-arb. This could undermine the
effectiveness of the mediation phase of med-arb.
Generally, the mediator appointed for the mediation phase of
med-arb and the arbitrator appointed for the arbitration
phase of med-arb should be different persons. In any event,
a mediator should only consent to act as an arbitrator in
the same case if he is of the opinion (on justifiable
grounds) that any confidential or privileged information
that one party discloses to him and that is not shared with
the other party will not have a bearing on his decision as
an arbitrator.
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