“Alternative dispute resolution” traditionally has been viewed as any of a variety of dispute resolution methods that are alternative to the default of filing a lawsuit in court. Most people immediately think of arbitration as the main “alternative.” Mediation is now more commonly considered as well, at least in the United States.
However, there are many “alternatives,” including a hybrid concept that is getting more attention these days, known as “Med-Arb.” In this process, the parties agree to begin with mediation, but if they reach an impasse, will proceed to arbitration conducted by the same neutral who acted as the mediator. On the surface, this seems like a good idea, at least from the parties’ viewpoint. But when you start to think about it, in California at least, the process can be fraught with risk, especially for the mediator/arbitrator hired to do the job.
“Binding mediation” is another term for “mediation-arbitration.” For example, the parties can agree that if they reach impasse, then the mediator – who then effectively becomes arbitrator – can decide on a final settlement amount within an agreed-upon range. (There are lots of options here.) If a “binding mediation” provision of an agreement is not sufficiently clear and detailed, then it will not be enforced. Lindsay v. Lewandowski (2006) 139 Cal. App. 4th 1618, 1620-1625.
However, if the agreement demonstrates that the parties agreed to a “binding mediation” process that is clearly defined, and a constitutionally and statutorily permissible method of resolving their dispute without trial, it will be enforced. Bowers v. Raymond J. Lucia Cos., Inc. (2012) 206 Cal. App. 4th 724, 728-737. The mediation agreement and subsequent mediation award will be enforced as a settlement under Code of Civil Procedure Section 664.6, not as an arbitration award.
Normally, we mediators encourage as much creativity as possible in working with parties to find solutions through their own self-determination. The more they “own” the solution to the dispute, the more durable and sustainable it will be.
At its philosophical heart, the concept of “med-arb” is inherently contradictory, nullifying the voluntary nature of mediation. Essentially, the parties are saying, “We’ll do our best, but if we can’t agree, then we’ll let you, the mediator, decide how we should settle our dispute.” It may seem like a rush to give up.