At the 26th convening of the UIA World Mediation Forum in Zurich on March 5-6, 2019, a panel on whether mediation should be compulsory, among representatives of France, the US, Switzerland, and Italy, wrestled with intriguing philosophical considerations. Is compulsory court annexed ADR inconsistent with the principle of judicial access? Should conciliation, rather than mediation, be compulsory with respect to municipal or other citizen concerns? Is compulsory mediation of parental concerns about children’s education more advisable than compulsory mediation of business-to-business concerns?
Catherine LeClerq of Armand Avocats in Paris made a strong argument for compulsory mediation of disputes between state employees and administrative agency employers, a plan that has been experimentally introduced in 2016.
Pasquale Orrico, of Arlenghi Agostini Avvocati in Milan, updated the complex and pervasive (one might say overreaching) compulsory mediation regulations in Italy. Topics subject to compulsory mediation in Italy include real estate, tenancy, business lease, banking, and insurance. The only thing compulsory, however, is a first meeting; if, after a mediator explains the process, the parties decline to engage in mediation, then they are relieved of any further obligation and may proceed with their lawsuit. In that sense, it seems to mandate compulsory awareness, consideration, and intentional rejection of mediation, rather than compulsory participation in the process itself. Clients as well as attorneys must attend this first meeting. As a result of this regimen, between 160,000 and 190,000 mediations per year are reported by the Italian Ministry and Justice; the number of settlements resulting from these mediations (i.e., sessions held as a result of these first meetings) is between 40-45%. The mediations are conducted by bar associations, chambers of commerce, and other entities. Voluntary mediation has risen 14% during this period – an interesting side-effect.
Katarzyna Przluska-Ciszewska, President of the Polish Bar Council Mediation Center, reported on a confusing current proposal by the Polish Ministry of Justice addressing family law and divorce proceedings. It requires, before formal filing of a divorce action, an informational conference meant to encourage reconciliation and, if not possible, outlining plans for child custody and financial support. These matters must be notarized or officiated by a court in order to be enforceable – agreements met as a result of private mediation are not enforceable. The proposal is that couples be informed of the “social consequences of the breakdown of the marriage” and the availability of “therapy and other means of family support.” Part of this support is family mediation which, if not mandatory, is strongly brought to the parties’ attention. If mediation is elected, the mediator presents to the court a “report containing the results of the mediation” as well as confirmation that the parties have been advised of the “social consequences” of the divorce. Only after this report is delivered may a petition for divorce be initiated. Thus, the mediator is a vessel to convey the concern of the state, rather than facilitating an autonomous decision by the parties. Katarzyna added concern that the use of the term “mediation” to describe this process threatens the understanding and acceptance of compulsory commercial mediation, which is also being considered in Poland.
Jeff Abrams of Houston, Texas, related the rise of compulsory mediation in that state. Key developments were legislative action to empower judges to require mediation prior to scheduling trials; training respected leaders in the legal community as mediators; presenting judges with the efficacy of using these mediators; maintaining metrics of early use of mediation in the original jurisdictions to measure its effectiveness in reducing dockets; and “scaling” the system to courts across the state.
Cezary Rogula, of Krakow, Poland, and Jennifer Lygren, of Geneva, Switzerland, reported on the application of mediation to administrative and quasi-public contexts. Jennifer explained an initiative involving regulation of financial institutions – mainly brokerages – with an eye to financial protection. Investors may use ADR to pursue errors or misfeasance of financial service providers through legislated processes. It requires a qualified mediator (skilled both in financial instruments and in mediation) to oversee the process. Private mediation bodies are currently competing to fashion proposals for the government to approve their administration of the process. A claimant client must first attempt direct negotiation and the request must come before any arbitration or other adjudicative proceeding. The process is funded by the financial industry participants, and participation is mandatory. Typical banking activities are not included – the scope is limited to executing securities orders, offering investment advice, managing portfolios, etc. Cezary discussed mediating disputes involving public authorities, as part of the Polish code of administrative procedure. The process has a goal, not of coming to a settlement agreement, but an “arrangement” by which the authority will deal with the private party on an ongoing basis. Proceedings are not public, and the mediator is a potential witness in any ensuing court actions. An example is the registration of a trademark. A private publisher of magazines confronted difficulty in registering the titles of those magazines as trademarks – an administrative decision. The mediation process allowed the presentation of factual, marketing, and expert evidence and informal discussion. Of 29 proposed trademarks, 12 were successfully registered as a result of this process, to the client’s satisfaction. The process allowed the airing of both the agency’s and the petitioner’s concerns, and the result was understood rather than resented or coerced. A second example was made involving construction, with building permit, historical preservation, and zoning issuance.
A panel addressed the application to mediation of concepts of marketing and economics. Thiruvengadam B.C., of Bangalore, India, reminded the group that demand arises from necessity – if litigation is necessary and arbitration is merely an option (even a luxury), where does mediation lie? Indian judges dispose of an average of 1,000 cases per year, and 10,000,000 cases are filed in Indian courts each year. The judicial system is complex, and it takes 10-20 years for litigation to yield a final outcome. Citizens therefore either give up or use alternatives to litigation – mosques, associations, mafia or other unconventional processes. Court-annexed mediation was first introduced in 2000; by now, 120 cases, on the average, are referred to mediation each day with a success rate of 69%. The quality of court-annexed commercial centers has been questioned (court-annexed mediation is free and mediators receive low fees) and there is a move to outsource mediation to private institutions. Gerard Kuyper of Brussels evoked the classic supply/price/demand curve and suggested that the market of justice has a strict and unmodified supply line, with price determined only by demand. Yet individual behaviors within this market are wildly different – Belgium has litigation at the amount of 7 to 1,000 but Netherlands less than one per 1,000. Another related metric is time to resolution – Belgium has clearance of 100 days and far longer for Netherlands. Gerard suggested that dispute behaviors are seldom rational and instead involve cognitive dissonances such as risk/loss aversion and emotional, rather than economic, choices. David Lutran of Paris encouraged the presentation of mediation as a product competing with — rather than complementing — others on the market, subject it to marketing analysis such as providing for the economic welfare of the customer. These considerations may include user assessment of the likelihood of satisfaction at trial or in other processes. The attraction of disputants to traditional justice is fundamentally irrational, and distinctly branding mediation would seem to hinge on appeal to similarly emotional characteristics. The mythology of the judge as a cultural figure is unique – mediators cannot hope to compete. Put otherwise, the image of a blindfolded woman holding a balance and promising fairness through the dispassionate application of social norms is far stronger than the image of a handshake. David suggested that emphasizing neutrality, expectations, control and the wide scope of potential outcomes are possibly effective branding approaches. Emphasis should be placed on getting what a party wants, rather than defeating another party – that is, seeking self-interested profit from the conflict rather than a pursuit of Justice.” The underlying approach is to satisfy the customer by proposing a process better designed to meet the customer’s own goals. Mediation is not a deviate of institutional justice, but a direct method of obtaining stated economic goals in a rational, self-interested manner that is designed to accurately reflects the stakes involved.
A successful Mediation Forum was made even more successful with a panel on “Users of Mediation,” featuring Jean Marguerat of Froriep Legal SA in Geneva, Torsten Bartsch of Caterpillar Sarl, Laurent DeVille of Froriep, and Franz Wiehler of Siemens AG. Torsten presented an unscientific survey of Lake Geneva-based general counsel, asking the preferred ways to deal with disputes. By far the most favored was direct conversations between the parties. There was little difference between arbitration and litigation, except in terms of certainty of results. Arbitration was preferred only in highly technical matters. Franz concentrates on conflict identification and management within the enterprise. He finds that identifying and assisting team members’ conflicts can add strength and value to a team. He considers the greatest roadblock to corporate use of mediation to be awareness of its attributes and possibilities. Laurent reports that a GC’s recommendation to a Board to engage in mediation is met with skepticism based on unfamiliarity, placing pressure on the GC that the outcome be favorable. Cost is less the issue than outcomes. In particular, a question is raised how an external facilitator can progress negotiation more effectively than an informed internal company representative. He also noted that, based on his experience of practicing for 10 years in Japan, the cultural expectations of participants must be respected. Dispute avoidance in Japan is a matter of dignity, reflecting a duty to behave in a certain way. This is particularly true in family and labor cases. Mediation is offered through a Mediation Court, and the process is formal, conducted by non-lawyers seeking consensus rather than vindication of rights.
The final speaker at the Forum was Wang Fang, Deputy Secretary General of the Mediation Center of the China Counsel for Promotion of International Trade in Beijing. She was introduced by Clarisse von Wunschheim of Altenburger Ltd, who encouraged a realistic view of the ascendency of the economies of Russia, India and China, which have real-world aggressive aims and real-world associated business disputes. And, when considering China, size matters: Civil and commercial disputes brought to the courts in China in 2018 approximated 8,800,000. Clarisse believed that the preferred method of commercial dispute resolution is arbitration using administered rules other than CIETAC. She considers that co-mediation of commercial disputes between Chinese and Western parties to be essential – that it is practically impossible for a single mediator to serve both parties possessing such distinctive cultural predispositions. Wang Fang reviewed the history of commercial mediation in China, which is intrinsic to the economy of the society and took institutional form in the early years of the Republic, starting in 1902 through Chambers of Commerce such as the one in Shanghai established in 1912. Current government policies strongly support both domestic and cross-border mediation as part of what Wang Fang terms a policy of “diversified dispute resolution mechanisms.” The Belt/Road mechanism has created occasions for increased attention to rapid dispute resolution mechanisms, most recently statements emanating from a January 23, 2018 reform committee and a similar notice dates January 12, 2017 concerning intellectual property rights. She also emphasized the importance of strategic partnerships with non-Chinese commercial mediation centers, and agreed with the idea that co-mediation has an important role in addressing commercial disputes. Most of CCPIT’s caseload of 2,000 cases per year continue to be internal, but joint centers with Italy, US, South Korea, Malaysia and other markets signify growth in international mediations. CCPIT also hosts an International Mediation Summit annually since 2016. The 2019 Summit will be held in October 16-18 in Chongqing.
This event attracted over 100 delegates from 20 countries in five continents. We worked hard and played hard. The 27th meeting of UIA World Mediation Forum is scheduled for January 17-18, 2020 in Milan. I have already marked my calendar.
