Upon what grounds should the court be able to upset an arbitrator’s award? What are the differences and similarities between conciliation and mediation? What powers the court has when it upset the award of arbitrator (s)?

Abstract

Arbitration is an ADR (alternative dispute resolution) method where the disputing parties involved present their disagreement to one arbitrator or a panel of private, independent and qualified third party “arbitrators.” The arbitrator(s) determine the outcome of the case. While it may be less expensive and more accessible than trial, the arbitration process has well-defined disadvantages. Some of disadvantages include the risk losing, formal or semi-formal rules of procedure and evidence, as well as the potential loss of control over the decision after transfer by the parties of decision-making authority to the arbitrator. Mediation and conciliation are also different types of ADR that helps in various judgments and can be handy in the modern world where the trial in a court can often be unsatisfactory and more costly. Thus all these three types of ADR are discussed in detail and the pros and cons are compared to understand which one should be chosen in which situation. The acceptance and the grounds of arbitrations is also made vivid for the future.

 Table of Contents

Introduction

At first the meaning of an arbitrator must be explained to fully understand the grounds that should be considered by the court to be able to upset an arbitrator’s award. An arbitrator is a neutral person who is chosen to judge a disagreement. An arbitrator could be used to settle any non-criminal dispute, and many business contracts make provisions for an arbitrator in the event of a disagreement. Generally, resolving a disagreement through an arbitrator is substantially less expensive than resolving it through a court of law.[1]

The difference between arbitration and a lawsuit is primarily one of formality. For example, in arbitration, the formal rules of evidence do not apply. Each side can go on and on with narrative discussions, drawings and charts, and the arbitrator will take in all of it and make a decision. There are no juries in arbitration. Instead, usually one to three people specially trained in the subject matter of the arbitration hear the case. Arbitrations are heard much sooner than lawsuits can be scheduled. This can be either good or bad, depending on which side you are on.

Unless specified as such in a contract’s arbitration clause, arbitrations are not final and binding. Either party can decide that they do not like the outcome. Once an arbitration award is made and a binding clause is in the contract, a court will make the arbitration award an enforceable judgment.[2]

Interim Awards and Partial Awards

Not all arbitrations, of course, are as simple and straightforward as. Sometimes the arbitrators will issue interim or partial awards.  Sometimes these awards are final, and sometimes not.  An interim award is an interim final award, if it fully judges a submitted, independent claim.  Suppose A has two claims — X and Y — against B, and before the hearing, the arbitrators issue an award granting summary judgment to B on claim X, but not adjudicating claim Y.  Even though the parties did not agree that the arbitrators would issue an award fully resolving only one of the claims, a court would consider the award to be an interim final award.

But what happens if the arbitrators issue a partial award that does not resolve any of the parties’ claims, but definitively resolves one or more of the issues pertinent to those claims?  Suppose the arbitrators declare that they will resolve claims X and Y in two phases, the first of which (Phase I) will deal with liability, and the second (Phase II) with damages.  The arbitrators issue a Phase I award definitively resolving the issue of liability for claims X and Y, but no other issues.  Is the Phase I award final?

The answer lies in what the parties agreed.  Since  the parties did not agree that the arbitrators would issue partial final awards, and since the awards do not qualify as interim final awards, the Phase I award is not a final award, at least until the Panel issues its Phase II award, and the awards, taken together, definitively resolve the controversy.   If, however, parties A and B requested the Panel to issue a partial final award for each Phase (or otherwise consented to that procedure), then the Phase I award would be final.

Now that we have briefly reviewed the general rules of finality, let’s look at why it matters.  There are seven key reasons, although this list is not exhaustive:

1. An award must be final before a court can confirm it.
2. An award must also be final before a court can vacate it, unless the arbitrators intended the award to be final, and a party seeks to vacate it on the ground that the arbitrators “so imperfectly executed” their powers that “a mutual, final, and definite award upon the subject matter submitted was not made.”
3. Once an award is final, the three-month and one-year limitation periods for vacating and confirming the award begin to run.  The limitation period for a motion to vacate on the grounds mentioned in 2., above, presumably begins to run upon the issuance and delivery of an award which the arbitrators intend to be final.
4.  Once an award is final, the functus officio doctrine prevents arbitrators from modifying, clarifying or otherwise revisiting the subject matter resolved in the final award.  There are exceptions to the rule where the award is ambiguous, exhibits a clear error on its face (usually a mathematical one), or does not fully adjudicate submitted issues.
5.  If the award is a final award as respects all issues and claims submitted to arbitration, then the arbitrators’ authority is exhausted and they have no further authority to resolve any other issues, unless the parties otherwise agree.
6. If the award is an interim final award, or a partial final award, the arbitrator’s remaining authority is limited to the issues and claims that were submitted to arbitration, but which remain unresolved, unless the parties agree to submit additional issues or claims to the arbitrators.
7. If the arbitrators issue a partial final award or an interim final award and, subsequent to the award a member of the panel dies, then the award remains final and binding on the parties.  In that case, a substitute arbitrator is appointed and the reconstituted panel resolves the remaining issues and claims.

Defining mediation and conciliation

Mediation, as used in law, is a form of alternative dispute resolution (ADR), a way of resolving disputes between two or more parties. A third party, the mediator, assists the parties to negotiate their own settlement (facilitative mediation). In some cases, mediators may express a view on what might be a fair or reasonable settlement, generally where all the parties agree that the mediator may do so (evaluative mediation).

Conciliation is an alternative dispute resolution (ADR) process whereby the parties to a dispute (including future interest disputes) agree to utilize the services of a conciliator, who then meets with the parties separately in an attempt to resolve their differences. They do this by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bringing about a negotiated settlement.

The differences and similarities between mediation and conciliation

Arbitration and mediation both promote the same ideals, such as access to justice, a prompt hearing, fair outcomes and reduced congestion in the courts. Mediation, however, is a voluntary and non-binding process – it is a creative alternative to the court system. Mediation often is successful because it offers parties the rare opportunity to directly express their own interests and anxieties relevant to the dispute. In addition, mediation provides parties with the opportunity to develop a mutually satisfying outcome by creating solutions that are uniquely tailored to meet the needs of the particular parties. A mediator is a neutral and impartial person; mediators do not decide or judge, but instead becomes an active driver during the negotiation between the parties.

Generally, an agreement reached through mediation specifies time periods for performance and is customarily specific, measurable, achievable, and realistic. It is advisable for the parties to put their agreement in writing to create tangible evidence that they accomplished something together. The written agreement reminds the parties of their newly achieved common ground and helps to prevent arguments and misunderstandings afterward. Most importantly, a written agreement provides a clear ending point to the mediation process. The agreement binds the parties contractually. In case of disputes concerning compliance with the mediated agreement (e.g., whether a party carries out an agreement) or implementation of a mediated agreement (e.g., disputes concerning the precise terms for carrying out an agreement), the agreement is enforceable as a contract, as it would be in cases of the non-fulfilment of any ordinary contractual provision. Enforceability is necessary for mediation, as an ADR process, to possess any legal strength or to impose any liability on the parties.

Conciliation is a method employed in civil law countries, like Italy, and is a more common concept there than is mediation. While conciliation is typically employed in labour and consumer disputes, judges encourage conciliation in every type of dispute . The “conciliator” is an impartial person that assists the parties by driving their negotiations and directing them towards a satisfactory agreement. It is unlike arbitration and mediation in that conciliation is a much less adversarial proceeding; it seeks to identify a right that has been violated and searches to find the optimal solution.

Conciliation tries to individualize the optimal solution and direct parties towards a satisfactory common agreement. Although this sounds strikingly similar to mediation, there are important differences between the two methods of dispute resolution. In conciliation, the conciliator plays a relatively direct role in the actual resolution of a dispute and even advises the parties on certain solutions by making proposals for settlement. In conciliation, the neutral is usually seen as an authority figure who is responsible for the figuring out the best solution for the parties. The conciliator, not the parties, often develops and proposes the terms of settlement. The parties come to the conciliator seeking guidance and the parties make decisions about proposals made by conciliators. In this regard, the role of a conciliator is distinct from the role of a mediator. The mediator at all times maintains his or her neutrality and impartiality. A mediator does not focus only on traditional notions of fault and a mediator does not assume sole responsibility for generating solutions. Instead, a mediator works together with the parties as a partner to assist them in finding the best solution to further their interests.

Also the role of the attorneys is different in mediation. Attorneys are more active in mediation in generating and developing innovative solutions for settlement. In conciliation, they generally offer advice and guidance to clients about proposals made by conciliators.

Conciliation and mediation both look to maintain an existing business relationship and to rekindle a lost balance of power between two parties. These concepts are sometimes used as synonyms, but they do indeed vary substantially in their procedures. In mediation, the mediator controls the process through different and specific stages: introduction, joint session, caucus, and agreement, while the parties control the outcome. By contrast, in conciliation the conciliator may not follow a structured process, instead administering the conciliation process as a traditional negotiation, which may take different forms depending on the case. [3]

Conclusion

Each of the ADR processes addressed herein, arbitration, mediation, and conciliation, provides important benefits to parties and may be seen as complementary to the judicial process. For commercial disputes, mediation also offers the opportunity to create innovative solutions to business disputes that further the unique interests of the parties in an analytical framework that is broader than traditional legal rights and remedies. In this sense, the mediation process may be used to secure “business solutions to business disputes,” because it encourages the parties to consider all the dimensions of a dispute, including both legal issues and business interests. Thus we hope to use the ADR processes to save money and settle problems in a short amount of time.

References

• Investor words, arbitrator [online]. Available at: http://www.investorwords.com/250/arbitrator.html

• Entrepreneur, Arbitration [online]. Available at: http://www.entrepreneur.com/encyclopedia/term/82118.html

·        S. Alessandra, Arbitration, Mediation and Conciliation [online]. Available at: http://www.mediate.com/articles/sgubiniA2.cfm