Building mediation windows
On November 16, 2020, during the IBA 2020 – Virtually Together Conference, the panel Mediation of International Commercial Disputes: Pitfalls, Risks and Opportunities was held. The speakers were Chiann Bao (Arbitration Chambers), Hansjörg Schwarz (TrojaPartner) and Karl Hennessee (Airbus).
At the time, the question “quo vadis?” was raised with respect to the application of the Singapore Convention on Mediation[1].
Quo vadis is a Latin expression that means “where are you going?”. The expression refers to a narrative present in the Apocryphal Acts of Peter. In fleeing a probable crucifixion in Rome, Saint Peter meets the risen Jesus and asks: quo vadis?
In other words, the discussion was about what the future would be in the post-Convention era, which came into force on September 12, 2020. In this sense, the panelists debated the risks, and opportunities regarding its use by professionals in the area.
The speaker Karl Hennessee highlighted the importance of the in-house council for the diffusion of mediation. He understands that it is necessary to “evangelize” about this method to promote it, referring to the text of the apostle mentioned above.
However, after some years of mediation development[2], perhaps there is another option more effective than mere evangelization or the insertion of a multi-tiered dispute resolution clauses in the contracts. This option would be the mediation window.
The mediation window is a procedural opportunity previously established in which the parties study the possibility of mediating their conflict.
The second panel of the 4º Congresso Online Internacional de Mediação Empresarial do GEMEP CBAr, held during São Paulo Arbitration Week 2020, approached the subject mentioned above.
The first speaker, Dr. Edna Sussman (arbitrator and independent mediator), highlighted that the mediation window is a previously established opportunity in which the parties stop and think about the possibility of conducting a mediation during the arbitration proceeding. This procedural opportunity would have the function of reducing stigma for the party that intended to propose a mediation (which can be seen by many as a sign of weakness).
Sussman mentioned that there is no specific moment in the schedule when the mediation window should be included, as each case is unique. In any case, she believes that the role of the arbitrator is evolving and that he can facilitate an agreement without losing his role as a judge[3].
In this same panel, Dr. Diego Faleck (Faleck & Associados) pointed out that, when choosing an alternative dispute resolution method, the parties must be aware that it is necessary to adopt a different mentality from the adversarial one[4]. In mediation, self-centeredness, and the fear of losing must be put aside to seek an open dialogue.
Faleck also added that the BATNA[5] is dynamic and an opportunity for a negotiation may arise from external factors (such as the company’s cash flow, possible changes in the corporate structure, information disclosed in the media, among others). Cases in which the initial strategy is compromised and need to be changed are not rare. Therefore, this can make a room for a mediation.
Dr. César Rossi (Demarest Advogados), the panel’s third speaker, mentioned that not every lawyer is trained to use alternative dispute resolution methods[6]. In addition, not every client is ready to find a solution to the dispute early on.
Once the evidence is presented, clients have a better view of the case and this ends up encouraging the possibility of an agreement. Thus, Rossi explained that the multi-tiered dispute resolution clauses have not shown as much efficient in practice, since the case may not be mature in this initial moment.
In fact, most arbitral tribunals ask the parties about the possibility of an agreement, as determined by article 21, §4 of the Brazilian Arbitration Act. However, in the author’s experience as a case manager of the CAM-CCBC, the provision of mediation windows in the arbitration terms of reference or in another document of the arbitration procedure was never seen.
Notwithstanding, three of the various mediations conducted by the author in the past two years have resulted from suspended arbitration proceedings.
In one case, the arbitration proceeding was suspended just before the discovery hearing; in the other, the suspension took place during the constitution of the arbitral tribunal, since the parties were having difficulties in finding arbitrators without impediments; and the third was suspended after the filing of the report by the expert engineer appointed by the arbitral tribunal. Two of them resulted in agreements and the third is still in progress.
There is also a fourth interesting case in which the arbitration ended with a final award and the parties are now negotiating, through mediation, the fulfillment of that sentence.
There are several possibilities as to when to use mediation. The examples above demonstrate that hybrid procedures[7], although they are still few, can result in greater benefit to clients who end up resolving their dispute in a self-composed manner even after arbitration has been instituted.
The CAM-CCBC, realizing this need in the market, edited Administrative Resolution No. 36/2019[8], which grants discounts in the mediation administration fee. One of the possibilities of granting a discount is precisely when the parties request the suspension of the arbitration procedure to start a mediation, that is, in the case of mediation windows.
In this way, building mediation windows seems to be a great way for mediation to continue to develop, both on the national and international scene, and for arbitration not to become definitively “the new litigation” in the terms described by Thomas J. Stipanowich[9].
[1] Available at: <https://www.singaporeconvention.org/>. Access in: 08.02.2021.
[2] “A second, concurrent phenomenon is the explosion of mediation and other competing dispute resolution alternatives to ‘extended adjudication’. Just as alternative dispute resolution (ADR) has played a prominent role in changing the landscape of civil litigation, the use of mediation and other ‘thin-slicing’ approaches is dramatically altering the environment of private dispute resolution”. Stipanowich, Thomas J. Arbitration: The “New Litigation”. Available at: <http://ssrn.com/abstract=1297526>. Access in: 06.02.2021.
[3] “This phenomenon of arbitrators taking on a mediation role is not new. It has a long tradition in the People’s Republic of China (PRC) and Taiwanese arbitration, and is also practised by arbitrators from certain civil law jurisdictions such as Germany – a reflection of the German judicial tradition of settlement.6 However the practice is not generally considered to be part of a western arbitral tradition, especially in common law jurisdictions ALEXANDER, Nadja. Opening the Mediation Window in the Arbitration House. Canadian Arbitration and Mediation Journal. 20, (2), 37-43. Research Collection School Of Law. Available at: <https://ink.library.smu.edu.sg/sol_research/1867>. Access in: 06.02.2021
[4] “Once promoted as a means of avoiding the contention, cost, and expense of court trial, binding arbitration is now described in similar terms – ‘judicialized’, formal, costly, time-consuming, and subject to hardball advocacy”. Stipanowich, Thomas J. Arbitration: The “New Litigation”. Available at: <http://ssrn.com/abstract=1297526>. Access in: 06.02.2021.
[5] BATNA means “Best Alternative to a Negotiated Agreement”.
[6] “A recent study, based on 50 focus groups of new lawyers and supervisors of new lawyers, found that new lawyers are ‘woefully unprepared’ to work with clients. […] Many clients notice these deficiencies even in experienced lawyers. Professor Clark Cunningham summarized studies showing that many clients – including individuals and large organizations – are extremely dissatisfied with their lawyers’ communication with them. He wrote, ‘Many lawyers equate client satisfaction with the outcome achieved; however, studies over the past three decades in three different countries [have] produced impressive evidence that clients evaluate their lawyers’ competence more in terms of the process experienced by them in the representation than the outcome’”. LANDE, John. Lawyers Are From Mars, Clients Are From Venus – And Mediators Can Help Communicate in Space. Available at: <http://mediationblog.kluwerarbitration.com/2021/02/06/lawyers-are-from-mars-clients-are-from-venus-and-mediators-can-help-communicate-in-space/> Access in: 08.02.2021.
[7] “The importance of planning for hybrid processes in a manner that takes into account issues relating to procedural fairness, impartiality and neutrality cannot be over-emphasised”. ALEXANDER, Nadja. Opening the Mediation Window in the Arbitration House. Canadian Arbitration and Mediation Journal. 20, (2), 37-43. Research Collection School Of Law. Available at: <https://ink.library.smu.edu.sg/sol_research/1867>. Access in: 06.02.2021.
[8] The Administrative Resolution provides for the following discount hypotheses: Article 1º – In the cases described below, a discount on the amount owed as Administrative Fee shall be granted to the parties on mediation proceedings:
-100% discount when the parties, following mediation proceedings, commence arbitral proceedings at the CAM-CCBC; or
-50% discount when the parties request, in the course of arbitral proceedings, suspension thereof to start mediation proceedings. Disponível em: < https://ccbc.org.br/cam-ccbc-centro-arbitragem-mediacao/en/administrative-resolutions/ar-36-2019/> Acesso em: 06.02.2021.
[9] Stipanowich, Thomas J. Arbitration: The “New Litigation”. Available at: http://ssrn.com/abstract=1297526. Access in: 06.02.2021.
