Can a hand-tailored ad hoc arbitration be used to resolve an impasse in mediation?
Mediations is often successful in clarifying and resolving some of the disagreements between the parties, but after 90% of the work is done, an impasse may arise that threatens to derail the prospects of settlement. Mediators have shared many ideas about how to overcome such impasses, however, less frequently considered is the use of an arbitration to resolve the limited issues that are preventing the parties from reaching an agreement.
When properly tailored to the situation, such limited, ad hoc arbitration can be an effective settlement tool. An arbitration can be designed to resolve the issue or issues that are preventing the parties from reaching a final agreement. Because the issues to be arbitrated are limited, and discovery has probably already been taken as part of the mediation process, the arbitration hearing can be held expeditiously and with minimal costs.
Usually, agreement on this type of process is arranged informally in email and phone conversations and that can lead to potential problems. Although the law strongly favors arbitration awards, there are some basic legal requirements that are designed to ensure that the arbitration process is fair and objective. These include arbitrators disclosing any conflicts they have, the creation of a written arbitration agreement that states that judgment may be entered on the award, and a general structure or set of rules that is equitable and by which the arbitration will be conducted. So, parties should seriously consider utilizing a limited arbitration process to assist with mediations, but should be careful to observe the minimum standards of arbitral procedure.
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