Extra-judicial Dispute Resolution

Prof. Frederic Bachand

I.INTRODUCTION

A.EXTRAJUDICIAL DISPUTE RESOLUTION DEFINED

Ch. Jarrosson, “Les Modes Alternatifs de resolution des differends: presentation generale”

K.K. Kovach, “ Mediation: Principles and Practice”, pp 1-16

(i)Extrajudicial dispute resolution processes

(ii)The consensual nature of the dispute resolution methods we will be concerned with and the fundamental principle of party autonomy

(iii)Extrajudicial means of dispute resolution: typology

a.Non-adjudicative extrajudicial dispute resolution

b.Adjudicative (arbitration)

c.Hybrid processes (e.g. med-arb)

(iv)Examples of characterization problems:

Sport Maska Inc. v Zittrer

B.RESORTING TO EXTRAJUDICIAL DISPUTE RESOLUTION IN PRACTICE: WHY AND WHEN?

K.K. Kovach, Mediation: Principles and Practice, pp 17-22

UNCITRAL Model Law on International Commercial Conciliation, art. 12

T.S. Manufacturing Company v. Les Entreprises Ribeyron Ltd.

Evans v. State of Florida

C.EXTRAJUDICIAL DISPUTE RESOLUTION AND THE STATE: SUSPICION, ACCEPTANCE, PROMOTION

Zodiak International Productions Inc. v. The Polish People’s Republic

Desputeaux v Editions Chouette (1987) Inc.

O.M. Fiss, “Against Settlement”

B. Oppetit, “Theorie de l’arbitrage” pp 19-39

P.D. Carrington and P.Y. Castle, “The Revocability of Contract Provisions Controlling Resolution of Future Disputes Between the Parties”

D.EXTRAJUDICIAL DISPUTE RESOLUTION IN CONTEMPORARY PRACTICE

N. Antaki, Le réglement amiable des litiges pp. 232 – 238

Bruno Oppetit – Théorie de l’arbitrage p. 95-107, CH. 5 (CB 457– 463)

Phillipe Fouchard – Où va l’arbitrage international?

II.Non-Adjudicative Extrajudicial Dispute Resolution: Mediation

A.THE MEDIATION AGREEMENT

(i)Legal perspective

Cable & Wireless plc. v. IBM United Kingdom Ltd.

Jarrosson, Ch. “Note following Cass. Civ. 1ere, February 14, 2003, Poire v Tripie and Paris, May 23, 2001, SCM Port-Royal v. Pembay and Samper

Canada (A-G) v. Maritime Harbours Society et al. N.S.S.C. (p.39 CB)

C.B. Richard Ellis Inc. v. Environmental Waste Management

Article 13, UNCITRAL Model Law on International Commercial Conciliation

(ii)Practical perspective: the drafting of undertakings to refer future disputes to mediation:

B.THE MEDIATOR

(i)Judicial mediation

Landerkin & Pirie - “Judges as Mediators: What’s the Problem w/ Judicial Dispute Resolution in Canada?” (p. 397 CB)

(ii)Some aspects of the relationship between the parties and the mediator (i.e. quality of the mediation process)

a.Mediation Ethics

Pirie A.J. Alternative Dispute Resolution – Skills, Science and the Law (CB 560 ff.)

Model Standards of Conduct for Mediators (AAA)

Stulberg, J.B., “Should a mediator be Neutral?”

UNCITRAL Model Law of International Commercial Conciliation

b.The mediator’s liability and immunity

Thibault, J. “Les procedures de reglement amiable des litiges au Canada”

Quebec Code of Civil Procedure

C.THE MEDIATION PROCESS

(i)i. Overview of the mediation process

Pirie, A.J., Alternative Dispute Resolution – Skills, Science and the Law (CB 391-396)

Quebec Code of Civil Procedure

UNCITRAL Model Law on International Commercial Conciliation

(ii)Focus on confidentiality and privilege

Rudd et al. v. Trossacs Investments Inc et al.[2004] Ont Sup Crt (p. 185 CB) **overturned 2006!

Folb v. Motion Picture Industry Pension & Health Plans CA District Court (p. 106 CB)

Thibault, J., Les procedures de reglement amiable des litiges au Canada (pp 141-163)

Quebec Code of Civil Procedure

Commercial Mediation Procedure (AAA)

Mediation Procedure (CPR)

Model Standards of Conduct for Mediators (AAA)

UNCITRAL Model Law on International Commercial Conciliation

D.THE MEDIATED SETTLEMENT

(i)NO VALID CONSENT

a.deceit(misrepresentation)

b.non-disclosure of material facts

c.Unilateral mistake

d.Coercion

e.Error

CCQ 2637

(ii)Unfairness

Miglin v. Miglin

Russell Korobkin “The Role of Law In Settlement” CB 335-364

(iii)Public policy/public order

Lagarde, Xavier – Transaction et Ordre Public

UNCITRAL Model Law on International Commercial Conciliation

III.ARBITRATION

A.THE ARBITRATION AGREEMENT

(i)Validity and applicability of the Arbitration Agreement

a.Generally-applicable rules of contract

b.Separability

Buckeye Check Cashing Inc. v. Cardegna United States Supreme Court, February 21, 2006

c.The requirement that the arbitration agreement be set in writing

d.Arbitrability

Dell Computer Corp c. Union des consommateurs et Dumoulin [2005] QCCA 570 (CB p. 77)

Drahozal & Friel - Consumer Arbitration in the EU and the US (CB p. 282 ff)

(ii)The effect of the arbitration agreement

a.Negative effect

b.Positive effect

c.Selected issues

BWV Investments Ltd. V. Saskferco Products Inc. CB p. 22

GreCon Dimter Inc. v. J.R. Normand Inc.

Dalimpex Ltd. v. Janicki

Concordia Project Management Limited v. Decarel Inc.[1996] R.D.J. 484 (Que. C.A.)

B.THE ARBITRAL TRIBUNAL

(i)Constitution of the arbitral tribunal

a.Party autonomy

b.Subsidiary application of rules relating to the constitution of arbitral tribunals in force at the place of arbitration

c.The appointment of arbitrators: some practical considerations

Lavergne v. Pure Tech International Inc.[1998] Q.J. (Quicklaw) No. 2308 (Quebec Superior Court)

(ii)Status of the arbitrators

a.Contractual: arbitrators as service providers

b.The arbitrators’ contractual rights and obligations

c.Jurisdictional: The arbitrator as judges

d.Impartiality and independence

Laker Airways Inc v. FLS Aerospace Ltd and Burnton (CB – p. 126)

e.Arbitral immunity

Maconnerie Demers Inc. v. Lanthier [2002] R.J.Q. 1998 (Quebec Superior Court)

C.THE ARBITRAL PROCEDURE

(i)Party autonomy and limits thereto

(ii)Privacy and confidentiality of the arbitral proceedings

Ali Shipping Corp. v. Shipyard Trogir

Confidentiality: Is International Arb Losing One of Its Major Benefits? - Steven Kouris

(iii)Court intervention during arbitral proceedings

a.Judicial assistance

Carolina Power & Light Co v. Uranex CB p.44

Compagnie Nationale Air France v. MBaye

(iv)Applicable rules and amiable composition

J.E.C. Brierly, “Equity and Good Conscience” and Amiable Composition in Canadian Arbitration Law

D.THE ARBITRAL AWARD AND JUDICIAL INTERVENTION RELATING THERETO

(i)The notion of “arbitral award” and distinction with other decisions made by arbitral tribunals (procedural orders, jurisdictional decisions, etc.)

(ii)Procedural aspects of judicial intervention relating to the arbitral award

(iii)Substantive aspects of judicial intervention relating to the arbitral award: grounds upon which awards can be annulled/set aside or refused recognition and enforcement

Parsons & Whittemore Overseas Co. v. Societe Generale de l’Industrie du Papier (RATKA)

I.INTRODUCTION

This is a course on dispute resolution PROCEDURE as opposed to SUBSTANTIVE LAW. The course will be concerned with PRIVATE not PUBLIC disputes (including penal/criminal matters, despite increasing use of criminal and penal mediation), and not disputes between STATES (so these rules are different than NAFTA DS rules).

The course will be concerned with the LEGAL (as opposed to practical/clinical aspects) of EDR. This means the course will address “what are the rules according to which mediation must be done” NOT “how do you mediate, in practice; what skills are needed.”

The course will have a trans-systemic perspective: an outlook of the main arbitration/mediation rules that are commonly emerging in most modern legal systems. There seems to be a harmonized body of these rules taking shape.

The course is NOT specifically concerned with INTERNATIONAL mediation/arbitration (i.e. no conflict of law issues, no enforcement/recognition issues).

A.EXTRAJUDICIAL DISPUTE RESOLUTION DEFINED

Readings:

Ch. Jarrosson, “Les Modes Alternatifs de resolution des differends: presentation generale”

BIRTH OR RENEWAL OF ALTERNATIVE METHODS OF CONFLICT RESOLUTION

  • Started in Common law jurisdictions, from dissatisfaction of law and juridical solutions.
  • Wish to separate from procedural and substantive law
  • NB: Alternative methods are not non-legal methods.
  • Still not entirely accepted. General weariness of alternative modes of resolution
  • Jurists need to learn the new techniques of negotiation borrowed from psychologists and sociologists in order to be more flexible, fast, economic, efficient, and to allow the practice to progress.

NAMES AND TYPES

  • Alternative Dispute Resolution ADR (règlement alternative des différends, resolution amiable des différends RAD); MARC (modes alternatifs de règlements des conflits; SoRRèl (solutions de rechange au règlement des litiges

Note that the word alternatif in French is just a literal translation.

  • Arbitration is a non-pacific type whereby terms and solution are imposed on parties. It is a loi de substitution and has become an classical alternative method.
  • Other forms include amiable composition and ombudsman (mediation).
  • ADRs form an open category that is not defined or delimited by rules. Generally pacific (except arbitration). Solution is only obligatory if parties agree that it is.

TYPOLOGY

  • Core of all ADR = Mediation
  • Conciliation vs. Mediation:
  • Both are pacific
  • Mediation is active because it proposes solutions
  • Conciliation does not require a third party
  • Conciliation is an ends while mediation is a means
  • All forms of ADR can be (a) contractual (amiable, conventional) or under the control of a judge
  • Expertise serves as the basis of negotiation of the two parties; ends in transaction.
  • Other forms (all based on mediation) include the mini-trial = Three people presided by a neutral council are named by the parties and attempt to find a solution that works for both parties. The med-arb requires that the third party acts as mediator, then if this fails he becomes arbitrator. The co-med-arb is the same concept, but two different people act as mediator and arbitrator. Baseball arbitration (LOA last offer arbitration) requires each party to propose a solution and the third party must choose the best solution. The Medaloa follows LOA then uses the conclusion as basis for mediation.

REGULATIONS

  • Starting MARC can be from the law (judicial authority) or from conventional methods (contracts)
  • Functioning of MARC: Judicial ones follow rules of law or judges; Contractual ones follow wishes of parties from contract.
  • Obligation of parties: (1) Obligation of results: Parties must discuss with one another. (2) Obligation of means: Parties must act in good faith and ensure confidentiality.
  • Obligation of third party: (1) Confidentiality; (2) No re-intervention if first attempt fails; (3) Independence, impartiality, neutrality, objectivity, equity, justice
  • Effects of MARC: Will not always be the same, but greater goal is to avoid that a party is penalized for having chosen alternative method.
  • In case of success: No formalism is required. Success is found if parties agree on a solution and end dispute. Usually there is a signed document, transaction, but this is not always the case.

In case of failure: Parties must resort to proceedings. To counter this, there have been attempts for multiple level ADR (e.g., Med-arb) but there have been many problems with these methods.

K.K. Kovach, “ Mediation: Principles and Practice”, pp 1-16

ADR focuses on new and creative methods of resolving conflicts, which also includes an examination of the underlying causes of conflict. Mediation is one such way, whose popularity is largely based on disappointment with the court system.

To achieve a complete or final resolution of a dispute, the underlying conflict must be identified and resolved. One goal of mediation is to uncover hidden motivations of parties. The mediator should also be aware of intrapersonal conflict and how that might impact the interpersonal dispute or vice versa. Intrapersonal conflict is conflict existing within oneself, difficulty making personal choices. Conflict and how it develops depends on a number of variables: intensity, subject, how parties communicate. A mediator must be aware of the disputing process and its attendant characteristics.

Conflict can be positive: it is at the root of personal and social change. While mediation has at its philosophical basis the creative and constructive means of dispute resolution, this has not been a traditional approach to conflict.

Traditional Means of resolving disputes:

Traditional means of resolving disputes (conflict=struggle, response=fight, flight, force, coercion) have merit as well as drawbacks. Fight response can end up in serious injury or death, and is therefore undesirable. Avoidance can be an appropriate response, however, unresolved and internalized conflicts usually linger. Accomodation of the other party as a strategy of dispute resolution merely means that you are ceding to the other person’s demands and thus needs are not met. Leaving resolution of the conflict in the hands of outsiders decreases stress because it is more impartial but decisions made by the parties on their own would be likely better than those made by outsiders because parties have more information on the dispute than third parties would. Lastly, emphasizing the outcome sought by disputing party is also a means of dispute resolution. Parties may want 1) to reconcile underlying interests or 2) to determine who is right or 3) to conclude who is more powerful. Each alternative is appropriate in different circumstances. Interest-based dispute resolution is the most integrative method of dispute resolution, and most efficient at solving conflict.

The Variety of ADR Devices:

A number of alternatives to traditional means of dispute resolution have developed, which employ neutral third parties to resolve disputes.

ADJUDICATIVE: necessary when parties clearly want or need an outside decision-maker; binding, non-binding and adjudicative decisions are possible.

1)Arbitration:

  • Adversarial presentation, more formal, a decision is rendered, some rules MAY control process, live witnesses, actual evidence, experts possible, post hearing briefs possible, thirty days to deliberate, binding decision where the parties have previously contracted for arbitration.
  • Appeal from binding arbitration differs significantly from normal appeal process: very limited
  • Other variables to be considered before employing arbitration: determination of rules of procedure applicable, appropriate time when arbitration would arise after commencement of dispute, whether to have a motivated award, whether arbitrator will just make findings of fact or also render conclusions of law, whether to contract to expand scope of appealability, background of arbitrators, how many arbitrators to have.
  • Two of the more common variants are high-low arbitration and final offer arbitration
  • Most effective in cases where parties cannot agree on the facts or where dispute is purely monetary, or where matter is highly complex and technical

2)Private Judging

  • Parties hire a retired or former judge to hear the case and render a decision on either all or just some issues in the case
  • Procedure and rules are the same as in a regular trial and referee has same powers as a regular judge
  • Decision is then entered as a regular judgment by the court which referred the parties to private judging
  • Rights of appeal are the same as in regular trial
  • Criticized as private justice, only for the wealthy, but it may be more economical than traditional litigation in reality
  • Most useful in cases where dispute of both law and fact is the impediment to settlement, and so decision maker needs to possess legal expertise

3)Fact Finding:

  • Neutral third party makes a determination of the facts after gathering info from all parties; this neutral can be an expert
  • Can be binding or merely advisory: if binding, the fact finder has a duty to provide sufficient info to a final decision maker, but it is uncertain whether courts are subsequently bound by the fact finder’s decisions

EVALUATIVE: advocates present their version of the case to third party neutrals, who evaluate the strengths and weaknesses of each, and render a non-binding, confidential, evaluation of case to be used by in further settlement negotiations.

1) Peer Evaluation

  • Moderated Settlement Conference: neutral attorneys listen to presentation of both sides’ factual and legal arguments, ask questions and then render an advisory, confidential evaluation of strengths and weaknesses of the case; Michigan Mediation is very similar process, but both processes are flexible and can be modified to suit parties’ needs
  • Neutral case evaluation (ENE: Early Neutral Evaluation): sole evaluator, informal, but now court programs which provide a more structured process; goals include forcing parties to confront their case as well as that of the opponent, identify the actual matters in dispute, develop am efficient discovery process, and to obtain an assessment of the case; process differs in focus depending on the style of the neutral evaluator.

2) Lay Evaluation: the Summary Jury Trial

  • Trial in a summary fashion saves time and money for parties and court
  • Abbreviated version of their evidence to an advisory jury, opening statement, evidence that would be showed if case went to trial, limited testimony, closing arguments, then returns a non-binding advisory verdict; BUT process can be modified to suit the parties.
  • Used when parties or court feel that a preview of what a jury might do would be helpful to better assess the case for purposes of settlement, but possible for parties to stipulate that jury’s verdict will be binding

3) Judicial Evaluation:

  • Knowledge, experience and temperament a retired judge can bring to a case can be quite helpful in assisting the parties reach a settlement.
  • Judge merely point to the lawyers and litigants the strengths and weaknesses of the case
  • Can be done in both a more formal and informal setting.

4) Specialist or Expert Evaluation

  • For cases that turn on a technical issue beyond the understanding of the court, lawyers and jury
  • Neutral expert, whose findings are generally definitive
  • Expert evaluation can apply to entire case or a single case, or can be included as part of another process, such as mediation

FACILITATIVE: neutral provides assistance to the parties so that they may reach an acceptable settlement

  • Most common facilitative processes are mediation, conciliation and consensus building
  • In mediation facilitator assists in resolving a dispute between two or more parties; goal is to facilitate the parties’ arrival at a mutually acceptable resolution of the dispute; process is flexible; it is appropriate to all types of cases, even appellate level ones; is of value where parties want to maintain the relationship.
  • Mediation and conciliation have been used interchangeably but mediation has more structure than conciliation, and conciliation usually denotes that the disputing parties have reconciled, and the relationship has been mended (this is not the case with mediation, where resolution of disputes can happen without an actual reconciliation)
  • Consensus building is like an extended mediation: happens over a longer period of time and not everyone of the many people involved is present.

COMBINED PROCESSES AND HYBRIDS

  • Hybrids: completely new ADR procedures created by blending original processes
  • Combined processes: mixture of the primary processes
  • Med-Arb (mediation and arbitration), Mini-Trial (negotiation, mediation and case evaluation), jury-determined settlement (summary jury trial and arbitration) are the most well-known combined processes

(i)Extrajudicial dispute resolution processes

Originally, civil disputes were resolved in two ways:

1)Most often, by SETTLEMENT pursuant to direct negotiations