ALTERNATIVE DISPUTE RESOLUTION – A NEW KID ON THE BLOCK “MEDIATED EVALUATION”

We are all familiar with the traditional forms of alternative dispute resolution (“ADR”), namely, negotiation and failing that mediation and failing that arbitration. South Africa is well-served in that regard by the Arbitration Foundation of South Africa. South Africa’s corporate governance code, King IV, strongly recommends that all agreements (unless prohibited by statute) should include an ADR clause in an effort to avoid expensive, protracted and often acrimonious litigation, which is all at the expense of the stakeholders of the organisation and benefits only the legal advisors. Often all of the time, effort and money involved in finalising an agreement is lost, at the expense of the stakeholders, by the parties rushing into litigation when the matter could often be easily resolved by way of ADR.

But, sometimes the traditional forms of alternative dispute resolution don’t always neatly address the needs of the parties. The gaps, as neatly set out in a recent article, help explain the recent trend in the ADR communities to combine dispute resolution procedures in to one seamless service. For example, we’ve seen mediators transition to decision-makers with med-arb, and with arb-med, arbitrators actively assist parties in settling their cases.

Another concept that could fit well into this environment is mediated evaluation. The article I have referred to gives an excellent example, where, parties want a deeper merits evaluation than what typically occur in traditional mediation. At the same time, they do not want a formal evaluation or non-binding decision that might result in an expert determination, mock trial or arbitration. Those parties may benefit from having the evaluator assist them in reaching a final settlement.

Quoting from that article, here’s how mediated evaluations could work and, I may add from my personal experience, I believe that mediated evaluations not only could work, but will indeed work:

First Stage: Case submissions

In the first stage, each party would submit an initial written statement of their position, with relevant documents, to each other and the Mediation Evaluator (ME). For significant or high-value cases, the parties elect to have either a second ME or a panel of three MEs. Within 15-30 days, each party would submit a reply statement to the opposing party’s statement, again with relevant documents.

Over the next 15 days, the ME would read the submitted materials. After reading the, the ME could request additional documents or ask for clarification of further explanations of the submitted material. At this point, each party would have the option to request a separate confidential evaluation of their respective position vis-à-vis the opposing position. Or both parties could agree for the ME to issue a joint confidential evaluation to both parties simultaneously. In either case, each party could receive valuable feedback on their position which could help determine their course of action.

Second Stage: Case evaluation

The second stage of a mediated evaluation would focus on the case’s merits. Depending on whether the parties requested a separate or joint evaluation, the ME would issue confidential reasoned findings and determination to the parties based on how an arbitrator or other decision maker would likely rule. Seeing these findings would be like a student getting a sneak peek at how a teacher would grade her essay. Does it need more work? Or is it solid and polished?

Third Stage: Mediating the evaluation

After considering the evaluation, each party would decide whether to consult with the ME privately ex parte or jointly with the other party regarding the evaluation. This step is a chance for the parties to probe the evaluation’s conclusions and raise any potential factual errors or flaws in legal reasoning. The substance of all ex parte private meetings and communications between the ME and a party would be strictly confidential unless expressly authorized otherwise by the affected party. Assuming the parties do not settle, the ME would remain available to all parties to negotiate a resolution.

ADR is founded on the proposition that there are better ways to resolve disputes than the traditional legal system. But ADR is not static. It continues to evolve to meet the needs of parties. Mediated evaluations are just the latest example.

I agree with the conclusion in the article, which I have leaned on extensively for this article, namely, that ADR is founded on the proposition that there are better ways to resolve disputes than the traditional legal assistance but, as the author of that article states, ADR is not static. It continues to evolve to meet the needs of parties. Mediated evaluations are just the latest example, but certainly not the final one.

Competent, experienced and ethical legal advisors will advise their clients which form of ADR best suits the challenge at hand. Skilled legal advisors will be creative in the form of ADR that they recommend and not always stick to the stock standard form of ADR. Having said that, one realises the importance of the underlying agreement making ADR binding on the parties failing which the legal advisor of an aggrieved party will be dependent on the co-operation of the other party to agree to ADR. Fortunately, most advanced jurisdictions globally require that mediation is obligatory before proceeding to litigation and this is a welcome introduction into the world of ADR.

Finally, in this complex and ever-changing world in which we live, it is impossible for every judge to have knowledge of every subject. A critically important component of a ADR is the ability to choose a mediator or arbitrator with proven skill and experience in the field which is the subject matter of the dispute which benefits greatly in the resolution of same.