In an address to a gathering of international lawyers held in San Francisco in September 1993, the President of the American Bar Association shared with his audience, 'the ADR story' (as he called it). It was one of recent evolution in United States law practice, he said, dating from 1976. His suggested definition of ADR was: 'any method of resolving any dispute that does not require the ultimate decision to be made finally by a judge or a jury. While we recognize mediation, conciliation and arbitration as ADR techniques, the broad definition includes other practices designed to prevent and to quickly resolve disputes.'1

Experience in other parts of the world had not been quite the same.

In England, till recently, the only alternative to court litigation was 'arbitration', and this was the position in other common law countries as well.2 At common law, arbitration was 'the process by which a dispute or difference between two or more parties as to their mutual legal rights and liabilities was referred to and determined judicially and with binding effect by the application of law by one or more persons (the arbitral tribunal) instead of by a Court of law'.3 The change from court to arbitration was historically and conceptually only a change of forum, not a change in the method of resolving the dispute. It was because of the recognition of the judicial nature of an arbitrator's role, that an arbitrator enjoyed immunity from actions in negligence in the performance of his functions. And many lawyers in the common law countries still regard agreements for resolution of disputes outside courts, by persons appointed by the parties for the purpose, without any obligation to apply the law, as not being 'arbitration' at all.

Mediation and arbitration is a very large cake - you cannot have all of it nor hope to speak about it within the limits of the constraints of time we have today. So Horacio Grigera Naón - excellent chef du Cabinet that he is - has divided the cake into large slices: and the two slices that I have to encapsulate and digest are: (1) 'May the same persons consecutively act as mediators/arbitrators in respect of the same dispute? - the Pros & Cons' and (2) 'How broad should the power of an arbitrator to refer the parties to mediation be?'

First a few basics necessary to determine the approach.

My colleague Richard Hulbert spoke in the first session today about the beleaguered status of arbitration 75 years ago when the ICC was founded. May I remind you that in large parts of the commercial world mediation and conciliation had no status whatever even as recently as the late seventies. Definitions of 'mediation' were discussed earlier today; may I also remind you that in the preface to the second edition of Jowitt's Dictionary of English Law (which was published in 1977), 'Alternative Dispute Resolution', was not one of the legal terms for which a definition was supplied: ADR was then unknown in [Page44:] English law - and also unknown in the forty-nine nation-states that follow the common law. However Jowitt's Dictionary did define 'mediation', but only in its etymological public international sense: as 'a reconciliation of claims of States by a third power'. Mediation as a technique for resolution of private disputes was (at that time) also a stranger to the common law. But we have travelled far since 1977. ADR is now a frequent acronym in text books, articles and journals published across the United Kingdom and in the Commonwealth countries, including Australia, though there is acute controversy as to whether it includes arbitration, the better view being that it does not. Mr Arthur Marriott of the United Kingdom and Sir Laurence Street of Australia are strong proponents of the 'better view'.4

Whilst in the past, commercial men chose arbitration because it seemed a good way of resolving disputes, at the present time, it is selected mainly through habit, and only because all other methods have been tried, without success! The current preoccupation with Alternative Dispute Resolution is a symptom of this, and demonstrates a growing sentiment that there is need, not for an alternative to national courts, for that does exist, in most places and under most legal regimes in the shape of court-structured arbitration; there is a felt need for some alternative to 'judicial arbitration'. Hence the preferred use of the prefix 'Appropriate' (or 'Additional') in place of 'Alternative'.5

Both mediators and arbitrators help to put an end to disputes, but not in the same way, and certainly not with the same tools and techniques. 'Mediators' and 'arbitrators' I believe are descriptive of the separate and distinct functions of the persons appointed to hold these respective positions. The approach of a 'mediator' to a case at hand is essentially different from that of an 'arbitrator'.

But the same subject matter of disputation between parties could be dealt with in two different ways, not necessarily exclusive. First, by attempting to resolve a dispute in such a way that the parties involved win as much as possible and lose as little as possible: through the intervention of a third party steeped in the techniques and expertise of mediation; and second, (failing this) for the dispute then to be resolved by each party presenting its case before a disinterested third party with an expectation of a binding decision on the merits of the case:

a win-all, lose-all, final determination. MED-ARB therefore has its advantages: after a mediation, the parties and their counsel know their case better, know what discovery they really need and what they can get along without. Thus mediation often leads to an efficient binding arbitration of one type or another.6

But can the same person (persons/bodies) act as mediator, and then act as arbitrator? There is no apparent impediment if parties have so expressly agreed: not only at the beginning but also when mediation has failed. However, there are difficulties - they arise simply because the role-model of 'mediator' is essentially different from that of 'arbitrator'.7

A mediator is one who functions not only outside the litigation system, but even beyond the pale of the law, his role being to bring parties together to an agreed solution on the basis of what is 'fair' - disregarding 'legalities' (or 'technicalities', the more pejorative expression). At the heart of the mediation process is the caucus - a private discussion between the mediator and each of the disputants; discussions move to and fro, from one disputant to the other, the mediator exploring the perception, the prejudices, the objectives of each party, in a free ranging examination of the merits and the demerits of the dispute; such discussion takes place under a solemn commitment by the [Page45:] mediator not to disclose any confidences or information without specific authority of the parties. 'Caucusing' enables the mediator to comprehend the whole range of elements involved in the dispute, and helps guide the parties towards an agreed resolution.

An arbitrator, on the other hand, particularly in the common law world, is one who is expected to determine disputes by application of law. An essential part of the arbitral procedure is the principle of audi alteram partam, which includes almost 'all guarantees of judicial process' including in particular 'the obligation to hear each side only in the presence of the other'.8 Violation of this principle invariably invalidates an arbitral award, in both international commercial arbitration under the New York Convention of 1958, as also in domestic arbitration in states that have adopted the UNCITRAL Model Law.9 Caucusing is anathema to arbitration-but it is quite the most essential part of the mediation process.

And there we have the conundrum: 'May the same person/persons consecutively act as mediator/arbitrator in respect of the same dispute?'

The answer would depend more on the perception of the parties than the mindset of the mediator/arbitrator. And in this field, perceptions are more likely to change after efforts at mediation have failed, than at the start.

The UNCITRAL Conciliation Rules, 1980, unanimously adopted by UNCITRAL after considerable consultation with experts in the field of dispute settlement, offer tangible responses to the topic now under consideration; the Rules also furnish an insight into the pros and cons:

First-the normal and more prudent rule is (and should be) to provide at the start that the conciliator/mediator10 will not act as an arbitrator or as a representative or counsel of a party in arbitral or judicial proceedings in respect of the same subject matter (Article 19): this is obviously because a conciliator/mediator is expected to meet and communicate with each of the parties separately and need not share with a party confidential information disclosed to him by the other party.11 One of the avowed reasons for adopting Article 19 of the UNCITRAL Conciliation Rules was that in the course of conciliation proceedings the conciliator may acquire an intimate knowledge of the dispute at issue and of the strength and weakness of the legal position of each party; therefore, the willingness of parties to conciliate and to confide in the conciliator might well be adversely affected if it were possible for the conciliator, in subsequent arbitral or judicial proceedings, to act in a capacity where his knowledge could be prejudicial to the interests of a party. Article 19 was designed to safeguard such interest by describing the functions which a conciliator was precluded from performing whenever the dispute that was the subject of conciliation proceedings was subsequently submitted to a court or an arbitral tribunal.12

Second-but the normal rule is not the universal rule: the UNCITRAL Conciliation Rules (like the UNCITRAL Arbitration Rules) have no statutory force. They become applicable only by agreement of the parties; and they provide that parties may agree to exclude or vary any of the rules at any time (Article 1 paragraphs (1) and (2)). And in some jurisdictions, arbitration rules do make provision at the start for the same person who has acted as conciliator also later functioning as an arbitrator if this has been previously agreed to. The Hong Kong Arbitration Ordinance 1990, for instance, provides that where an [Page46:] arbitration agreement provides for the appointment of a conciliator, and further provides that the same person shall act as an arbitrator, then in the event of the conciliation proceedings failing, no objection can be taken to the appointment of such person solely on the ground that he has previously acted as conciliator.13

Third-it is suggested that the ideal situation would be to try and have the best of both worlds; that is, to start with a protective provision like Article 19,14 leaving parties at a later stage free to agree that a mediator be authorized to perform the functions of an arbitrator. There may be valid reasons for this, as the comment of the Working Party on the Draft Conciliation Rules indicates: 'they may do so, for example, where the conciliator's familiarity with the dispute is regarded as an asset rather than a disadvantage, or where a conciliation attempt has failed at an early stage of the proceedings without much involvement of the conciliator'. 15 The attitude of the parties would depend on their experience with the unsuccessful mediation: they would have to ask themselves whether they would be comfortable with the mediator (whom they have seen in action) changing his role and function into those of an arbitrator. The answer would be by no means predictable: it would vary, depending on the changing perceptions of the parties at different stages of the case.

How broad should the powers of an arbitrator be to refer parties to mediation?

The broadest-if parties so agree-reflecting the overriding spirit of ADR. The new Indian law: the Arbitration and Conciliation Act, 1996, expressly permits the arbitral tribunal to use mediation at any time during arbitral proceedings to encourage settlement. Section 30(1) of the Act reads: 'It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of the dispute and, with the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement...'

There are many cases more suited for mediation techniques than for determination by arbitration and since this may not become apparent until the arbitration has proceeded for some time, a provision like Section 30(1) could usefully be included in all arbitration agreements. This would enable an independent and fair-minded arbitrator to indicate to the parties the advantages of switching over to mediation at some stage of the arbitral proceedings. But if the parties choose to ignore his suggestion, he must proceed only as arbitrator and make a binding award.

If the arbitrator is old-fashioned, or (in Lord Denning's phrase) 'a timorous soul', he may only suggest that the dispute could be more appropriately settled with the intervention of a third party, and adjourn the arbitral proceedings for a brief period to enable parties to approach some third party as mediator: obviously, he cannot impose on the parties a 'solution' of mediation. And if he himself is requested to act as mediator and he accedes to this request, he must move cautiously, conscious that if the mediation fails he might find it difficult to steer the parties back to the traditional course of arbitration.

Acronyms are in fashion and I would suggest the following conclusions for the more adventurous in the common law world:

(i) ARB-MED (the multiple dispute clause) may be useful and in certain types of disputes may even prove highly successful; but [Page47:]

(ii) The problems of MED-ARB are far more difficult and complex, especially when Mr Med. and Mr Arb. are to be one and the same person.

AND A FINAL WORD OF CAUTION to those entrusted with dispute solving: tread cautiously, for you may be treading on thin ice!

1
ADR in American Courts, by R. William Ide III, President, American Bar Association in Vital Speeches of the Day, Vol. LX, No 4, p. 106, 1 December 1993: published by City News publishing, Mount Pleasant S.C. 29465.

2
The English took their law with them wherever they carried their flag - to conquered and newly-acquired territories. That was how the British Empire was established and the common law spread, adapting itself to local conditions. When the colonies and dominions severed their political ties with Great Britain after 1945 they retained the Common Law - it formed the basis of the legal systems of the newly-independent states. After the end of the World War II, there rose, Phoenix-like, from the ashes of what was once the British Empire, a new geo-political entity-'The Commonwealth of Nations'-an association of equal and autonomous States whose only remaining links with the Mother Country were trade, the English language and the common law. This is why forty-nine independent states in Asia, Africa, North America and the Caribbean (in which one-third of the world's population live) are known as 'the common law Countries.' Sir Vivien Bose, a distinguished Judge of the Supreme Court of India (1951-1958) has recorded that 'the only certainty about the migration of the common law of England into India is that the English brought it, their judges administered it and that it infiltrated deep into the laws of this country and has, to some extent, moulded its thoughts and customs' (Vol. 76, Law Quarterly Review pp. 5963). The same was true in other parts of 'the Empire'.

3
The classic definition goes back to the time of Bacon's Abridgment - 'Arbitrament and Award': the original and still vibrant source of the common law of arbitration. It is cited in the Reissue (1992) of the topic: Arbitration in Halsbury's Laws of England, 4th ed. Vol.2, para 601.

4
See the opinion of Brown/Marriott: 'ADR Principles and Practice', p. 9: 'Arbitration is closer to litigation and part of mainstream practice, leaving the term ADR to refer to mainly consensual rather than to adjudicating processes.' Sir Laurence Street has expressed the Australian view - 'we can and should discard any further suggestion that ADR is to be understood as including arbitration'; Languages of Alternative Dispute Resolution - by Street: 1992 ADRLJ, p. 145.

5
That is how we in India now understand ADR - and that is why our new dispute-resolution statute is titled the 'Arbitration and Conciliation Act, 1996'. It is based on the UNCITRAL Model Law and UNCITRAL Arbitration Rules and UNCITRAL Conciliation Rules. Since 25 January 1996, it has replaced a strict court-controlled arbitration regime which was worked for over forty-five years through the Indian Arbitration Act, 1940.

6
The preferred type in the US goes by the coined word: MEDALOA (or, MEDiation with Last Offer Arbitration): Robert Coulson's fancy name for a highly recommended process.

7
In New Zealand for instance, in construction disputes, the New Zealand Standards Association, dealing with general conditions of contracts, has favoured the following provision: 'The notice requiring arbitration may include a request for conciliation. If such a request is made and is acceded to by the other party, then the Principal and the contractor shall endeavour to agree on a conciliator and shall submit the matter in dispute to him. The conciliator shall discuss the matter with the parties and endeavour to resolve it by their agreement. All discussions in conciliation shall be without prejudice, and shall not be referred to in any later proceedings. Failing agreement, the conciliator may, by written decision, himself determine the matter. The conciliator's determination shall be binding on both parties unless within ten working days either party notifies the other in writing that it rejects the conciliator's, determination. The principal and the Contractor shall bear their own costs in the conciliation, and shall each pay half the costs of the conciliator.' But even under this clause the determination is in effect (and if one of the parties so decides) a non-binding one: the 'conciliator' remains 'conciliator' to the end.

8
See European Administrative Law by Jürgen Schwarze (1992) - Sweet and Maxwell, pp.1282-1283. In its application to arbitration: 'The arbitrator must not receive evidence or argument from one party in the absence of the other.' See Mustill and Boyd: Commercial Arbitration (2nd ed.) p. 289.

9
In the Commission Report on the UNCITRAL Model Law (A/40/17 para 297) it is stated that the term 'Public Policy' which was used in the 1958 New York Convention 'covered fundamental principles of law and justice in substantive as well as procedural respect...it was noted in that connection that the wording 'the award is in conflict with the public policy of this state' (Article 34) was not to be interpreted as excluding instances or events relating to the manner in which an award was arrived at' (see Holtzmann and Neuhaus - Guide to UNCITRAL Model Law, at p. 1002).

10
The difference between the two is marginal - like Tweedledum and Tweedledee: the conciliator takes a less pro-active role than the mediator.

11
Article 9 of the UNCITRAL Conciliation Rules recognising the caucusing role of the Conciliator provides: 'The Conciliator may invite the parties to meet with him or may communicate with them orally or in writing. He may meet or communicate with the parties together or with each of them separately.' And Article 10 states that when a party gives information to the conciliator subject to a specific condition that it be kept confidential, the conciliator may not disclose that information to the other party.

12
See Commentary on the Revised Draft Conciliation Rules: Clause 82 UN Doc A/CN.9/180.

13
See ICCA Handbook on International Commercial Arbitration National Reports - Vol.III: Hong Kong (Arbitration Supple. 15 August 1993).

14
I.e. of the UNCITRAL Conciliation Rules; like Article 5(2) of the ICC Conciliation Rules or Article 1(4) of the ICSID Rules of Procedure for Arbitration Proceedings. The latter clearly states that 'no person who had previously acted as a conciliator or arbitrator in any proceeding for the settlement of the dispute may be appointed as a member of the Tribunal'.

15
See para 86 of Commentary of the Working Party on the draft Conciliation Rules (UN Document A/CN/9/180).