By Julius Anthony R. Omila

Mediation recognizes the principle of empowerment of the parties-disputants by leaving it to them to settle and the terms of the settlement they will agree on. Hence, in managing the mediation process, unless the parties agree otherwise, a mediator may not “freely” give suggestions, opinions, and recommendations that may unduly influence the parties in the resolution of their disputes.

In saying this, I consider the following mediation principles, among others:

• Empowerment of the parties. The decision to settle and the terms of the settlement should come from the parties. Most importantly, the parties also need to have a sense of “ownership” of the outcome of the mediation, since (a) it is their dispute in the first place and they are solely responsible for its resolution, and (b) they will also be the ones to abide by and implement whatever terms of settlement they may agree on.
• Mediator’s impartiality and lack of bias. If the mediator is freely allowed to give their “views, proposals, or evaluations” of the dispute, they might unduly influence the parties in arriving at a decision to settle and the terms of their settlement. The mediator’s role is simply to “manage” the mediation process. The mediator is not even supposed to “judge” who between the parties is right or wrong or who between them has a “better or weaker” position. It is not also the mediator’s concern whether the parties settle their dispute. That is for parties the to decide.

I happened to attend the training workshop on mediation of intellectual property disputes conducted by the Intellectual Property Office of the Philippines-World Intellectual Property Organization (IPOPHL-WIPO) last May 7 and 8, 2014 where speakers from the WIPO Arbitration and Mediation Center lectured on mediation.

One of the lectures touched on facilitative and evaluative mediation, and mentioned “mediator’s proposals.” So I posed to them the following question:

In evaluative mediation, where the mediator can give his views, proposals, suggestions, and evaluation of the merits of the dispute, what will prevent a “biased” mediator from influencing one party in favor of the other?

Peter Moody, a U.K. lawyer, ADR practitioner, and one of the presentors during the workshop, acknowledged in response that evaluative mediation was indeed a “less pure” form of mediation compared to facilitative mediation.

• The parties’ implementation of the settlement agreement is just as important as the process of arriving at the settlement agreement. Based on studies, there is a higher likelihood of party compliance if the parties, on their own, arrived at the decision to settle and agreed on the terms of settlement by themselves, compared to a situation where the parties were influenced into arriving at such decisions.

The mediation process does not end at that point where the parties execute a mediated settlement agreement. It extends to the situation where the parties by themselves manage, implement and abide by such agreement.

In his book The Global Negotiator, Jeswald Salacuse, Dean of the Fletcher School of Law and Diplomacy, shared a wonderful insight: “The challenge of business negotiations is not just ‘getting to Yes’ but also staying there.”

I believe this also applies to mediation, which is simply facilitated negotiation. How the parties by themselves manage, implement, and abide by their agreement is equally important, and understanding this principle is fundamental in mediation. Simply put, there is a better chance of party compliance if the parties have a sense of “ownership” over the outcome of the process. Certainly, parties have to go past “Yes” in mediation.

Some institutions such as the International Chamber of Commerce (ICC) offer safeguards by restraining and cautioning mediators from giving recommendations unless requested by all the parties to the mediation. They give premium to the principle of party autonomy, which is essentially the authority of the parties to decide on the settlement process affecting their dispute and ultimately its outcome.

Paragraphs 40 & 41 of the ICC Mediation Guidance Notes, which is a companion to the ICC Mediation Rules, state:

Recommended terms of settlement

40. Without imposing terms of settlement on the parties, the mediator may, if requested by all parties, recommend terms of settlement for their consideration.

Combining mediation with other settlement procedures

41. The parties and the mediator may agreethat in certain circumstances (e.g. where a settlement agreement has not been arrived at after a certain period of time) the parties may jointly request the mediator to provide a non-binding evaluation of the merits of the dispute in order   to assist them in reaching a negotiated settlement agreement.” (Italics supplied)

Rule 9 (“Conduct of Mediation”) of the Philippine Dispute Resolution Center, Inc. (PDRCI) Mediation Rules also states:

1. Upon the request of both parties, the mediator may make a non-binding evaluation of the proposals for settlement, but not on the merits of the parties’ respective positions.
2. Whenever necessary and provided the parties agree and assume the cost, the mediator may seek expert advice to facilitate the settlement or evaluate the proposals for settlement.

Be that as it may, advocates of facilitative mediation may not agree with the evaluative approach.   It is not uncommon for a mediator to express disappointment when they are unable to see the parties through a settlement of the dispute they attempted to mediate.

We also know of court-annexed mediation where mediators’ fees are “success based,” meaning, they get paid only if there is a settlement between the parties. In the latter case, will success-based mediators’ fees not motivate the mediators into unduly influencing   the disputing parties to enter into a settlement? As a corollary, is a mediated settlement agreement the only measure of a successful mediation process?

On this note, I would like to share an insight on the importance and virtue of party empowerment in mediation expressed by Robert Mnookin, chair of the Program on Negotiation of the Harvard Law School. In Bargaining With the Devil, When to Negotiate, When to Fight, he recounted mediating a dispute between feuding siblings, ironically named Hardings, over their family inheritance. He said:

A common occupational hazard for mediators is getting hooked into taking responsibility for finding a solution. It’s all too easy for the mediator to believe that his value as a mediator depends on whether a deal is made. And many parties are all too eager to dump this burden in the mediator’s lap. “Aren’t we paying you to come up with a solution?” they often say—or at least imply.

I have to constantly remind myself that this is the parties’ dispute not mine. My responsibility is to help the parties better understand each other and their predicament, and then fashion their own solution. Parties seeking mediation are often in situations that put them under a lot of pressure, and the mediator shouldn’t add to that pressure by pushing them toward settlement. … But in family conflicts I am reluctant to do that, because I think it’s so important for the parties to learn to do business together.  If a neutral makes the decision, they have no opportunity to learn. (at 237–9)

All told, party empowerment is fundamental in mediation.

About the author:

Atty. Julius Anthony R. Omila is a member of PDRCI. He is a Trustee of the Philippine Institute of Arbitrators (PIArb) and the Corporate Secretary of the Philippine International Center for Conflict Resolution (PICCR). He is a trained mediator of the Department of Justice, Office for Alternative Dispute Resolution (OADR), and an accredited mediator of the Wholesale Electricity Sport Market (WESM). He is also an experienced commercial negotiator and mediation counsel.

By: Atty. Julius Anthony R. Omila

 

Flexibility is a feature of the arbitral process, which makes it more attractive and advantageous than court litigation. As a party-driven process, the rules and procedure, including timelines, in the arbitration are agreed upon by the parties, especially in the Terms of Reference (TOR). When parties agree to institutional rules, the proceedings are governed by such rules.

Thus, parties are free to design the arbitral procedure to suit their specific cases. Absent the parties’ agreement, the arbitral tribunal can exercise its procedural discretion. Either way, the parties should be treated fairly and given a full opportunity to be heard.

So long as the parties are treated fairly, an arbitration can be tailored to meet the specific   requirements of the dispute, rather than having to be conducted in accordance with fixed rules of civil procedure. To this flexibility- and adaptability- of the arbitral process, must be added the prospect of choosing a tribunal which is experienced enough to take advantage of its procedural freedom. Such a tribunal should be able to grasp quickly the salient issues of fact or law in dispute. This will save the parties both time and money, as well as offering them the prospect of a sensible award. [Redfern and Hunter on International Arbitration 33 (5th Ed., Student Version, 2009)]

Such principles are found in the UNCITRAL Model Law, specifically Articles 18 and 19, which respectively provide:

Article 18. The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.

Article 19. (1) … the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. (2) Failing such agreement, the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner as it considers appropriate.

Gary Born, a respected authority in international commercial arbitration, affirms that the arbitrators’ authority to determine the arbitral procedures is subject only to “mandatory protections of procedural fairness.” He quotes one U.S. court opinion:

Unless a mode of conducting the proceedings has been prescribed by the arbitration agreement … arbitrators have a general discretion as to the mode of conducting the proceedings and are not bound by formal rules of procedure and evidence, and the standard of review of arbitration procedures is merely whether a party to an arbitration has been denied a fundamentally fair hearing.

He adds,

The arbitrators’ procedural discretion under institutional rules is not unlimited. Rather, as with most national laws, institutional regimes subject the arbitrators’ procedural authority to overarching obligations to treat the parties fairly and to permit them reasonable opportunities to present their cases. [Gary B. Born, International Arbitration: Law and Practice150-51 (2012)]

However, the arbitral tribunal is generally mandated to conduct the arbitral proceedings expeditiously and in a cost-effective manner. Such inherent mandate of the arbitral tribunal is normally expressed in modern arbitration rules.

Time to render arbitral award

The UNCITRAL Rules of Arbitration, which is designed to apply in international ad hoc arbitrations, incorporates that principle:

Article 17 1. Subject to these Rules, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated with equality and that at an appropriate stage of the proceedings each party is given a reasonable opportunity of presenting its case. The arbitral tribunal, in exercising its discretion, shall conduct the proceedings so as to avoid unnecessary delay and expense and to provide a fair and efficient process for resolving the parties’ dispute. (Italics supplied)

The arbitration rules of modern arbitral institutions, including the Philippine Dispute Resolution Center, Inc. (PDRCI), also follow the same approach. Article 23 (1) of the 2015 PDRCI Arbitration Rules provides:

Subject to the Rules, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated with equality and given a reasonable opportunity of presenting its case. The arbitral tribunal shall provide a fair and efficient process of resolving the dispute, avoiding unnecessary delay and expense.

To ensure the expeditious conduct of the arbitration proceedings and avoid unnecessary delay, the PDRCI Arbitration Rules also specifies in Article 42 (1) the period within which the arbitral award shall be rendered:

When there is more than one arbitrator, any award or decision of the arbitral tribunal shall be made within one (1) year from constitution of the arbitral tribunal by a majority of the arbitrators. If there is no majority, unless the parties agree otherwise, the award may be made by the Chair of the arbitral tribunal alone.

The reality of delay

Modern arbitration rules clearly take into account the reality that delay is not uncommon in arbitration.

In conducting the arbitral proceedings and to ensure the fairness of the arbitral process, the arbitral tribunal must consider, above all, the reasonableness, or lack thereof, of any possible delay that arises during the proceedings. To illustrate this point, I refer to my recent experience in two arbitrations where I sat as a member of the arbitral panel.

Upon the commencement of an arbitration proceeding, it is normally the claimant who is most prepared. Once it initiates the arbitration proceedings, the claimant is already armed with the theory of its case and knows beforehand not only the timing when it will initiate the arbitration but also everything else that is supportive of its case, such as the number and availability of its witnesses and pieces of evidence, among others. Claimant’s advantage is further emphasized when it is backed by a highly competent legal team who collaborates in the preparation of its case.

Once claimant commences the arbitration, the burden is shifted to respondent to address the claims against the latter. At times, respondent may not be able to anticipate if and when the claimant will actually initiate the arbitration. Thus, once arbitration is commenced against it, the respondent usually scampers in gathering witnesses and pieces of evidence to support its defense and counterclaims.

Delay sets in when respondent needs to locate key witnesses who are no longer available or connected with it. Vital pieces of evidence may not be that easily accessible as well.

Avoiding and resolving possible delays

In one international construction arbitration, the respondent Philippine corporation’s officers who were conversant with the disputed transaction were no longer in the respondent’s employ and already stationed abroad. Securing these former officers’ commitment to cooperate and help their former employer in the pending arbitration posed a difficult challenge to the respondent.

Also, ensuring the availability of those witnesses on specific hearing dates when respondent can no longer compel them to do so (the officers were no longer in respondent’s employ) posed an equally challenging task. There was also the practical yet very vital side of this issue—persuading those witnesses to faithfully recall, gather, and study vital pieces of evidence that will support respondent’s position in that arbitration, not to mention the incentive, or lack of it, on the part of these former officers to fully cooperate in the arbitration.

Thus, in that arbitration, respondent was prompted to request the panel of arbitrators that it be given enough time to require its former officers, who will now serve as its vital witnesses in the arbitration, to submit their witness statements and vital pieces of evidence, among others.

In effect, given its unique situation, respondent asked the arbitral tribunal to give it some leeway and time extensions, invoking its right to be heard and present its case. For its part, claimant objected by pointing out that the time extensions requested by respondent were too long and would cause so much delay in the arbitration.

The arbitral tribunal was thus faced with the task of balancing between expediting the arbitral proceeding and conducting it in such manner that the substantive and procedural rights of the parties, including the respondent, were not prejudiced.

In that case, the arbitral tribunal considered the respondent’s situation, found that respondent’s request for time extensions was reasonable, and granted it. Foremost, the arbitral tribunal found that the parties, especially the claimant, would be not be prejudiced if respondent were allowed more time to submit the written statements of its witnesses and its pieces of evidence.

Even if respondent’s request for time extensions were granted, the arbitral tribunal would still have enough time to prepare and issue its award within the period agreed upon in the TOR and the applicable institutional rules.

In another domestic arbitration administered by PDRCI, respondent corporation promised to produce on the last hearing date allotted to it the last set of evidence, consisting of documents that respondent would secure from the Bureau of Internal Revenue (BIR). On the scheduled hearing date, however, respondent failed to produce the promised documents and, instead, asked for one “last chance” to secure the documents from the BIR, citing that the documents were vital to its defense and counterclaims and that tedious government bureaucracy caused the delay in securing the BIR documents. Claimant vehemently objected, stating that respondent should deemed to have waived its right to produce the documents.

The arbitral tribunal found the grounds raised by respondent as “good reasons” and granted the latter’s request.

The arbitral tribunal considered these circumstances together: the hearings were not yet declared closed at that time and, in compliance with the PDRCI Rules, the tribunal had more than enough time to prepare and issue its award within the period agreed in the TOR. The claimant would likewise not be prejudiced if respondent were given additional time to secure the identified documents.

On the other hand, respondent would be prejudiced if it were not allowed to present its documents, which were vital to its defense and counterclaim. Thus, the tribunal accorded the respondent its right to be heard. As promised, respondent produced the promised documents on the next hearing date. Thereafter, with no further evidence from the parties, the arbitral tribunal declared the hearings closed.

The tribunal relied on Article 39 (1) of the PDRCI rules, which provides:

The arbitral tribunal may inquire of the parties if they have any further evidence to offer or witnesses to be heard or submissions to make and, if there are none, it may declare the hearings closed.

Most importantly, in both instances cited above, the arbitral tribunal considered the respondents’ procedural behavior and “good faith” during the proceedings, particularly the way respondents cooperated during the arbitral process.

Full opportunity to be heard

Equal treatment of the parties and full opportunity to be heard are both duties of the arbitral tribunal and a right of the parties, including the respondent, in the arbitration.

How “full” is full opportunity to be heard? How is it distinguished from “reasonable” opportunity to be heard, as may be found in some arbitration rules?

A commentary on Article 17 of the UNCITRAL Arbitration Rules is instructive on this point:

… the reference to a full opportunity naturally draws meaning in contradistinction to an incomplete opportunity. One would certainly not expect any difference in behavior between arbitrators called on to afford a full opportunity and those called on to afford a reasonable opportunity to present a case. Where reference is made to ‘full’, ‘reasonable’ or adequate’, the opportunity must be a complete one, allowing each and every tenable argument to be presented in an appropriate format. Whichever adjective is used, the intent is never to afford an unlimited opportunity as to timing, extent or manner of presentation of a case. (Clyde Croft, et. al., ­A Guide to the UNCITRAL Arbitration Rules, 2013, page 177; italics supplied)

Certainly, the expeditious conduct of the arbitration and resolution of the dispute cannot be done at the expense of the parties’, including the respondent’s, right to be heard.

About the author

Atty. Julius Anthony R. Omila is a PDRCI member. He is a Trustee of the Philippine Institute of Arbitrators (PIArb) and a member of the Chartered Institute of Arbitrators (CIArb). He is also the corporate secretary of the Philippine International Center for Conflict Resolution, Inc. (PICCR) and an accredited arbitrator of the Construction Industry Arbitration Commission (CIAC) and Wholesale Electricity Spot Market (WESM).