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Practical Problems and Solutions in Mediation Proceedings

Practical Problems and Solutions in Mediation Proceedings

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Published by Mladen Vukmir

This paper examines some of the practical issues arising in the field of mediation, with the introduction focused on the recent developments in Croatia. Some of the most common issues and obstacles professional mediators encounter within their work are enumerated and brieflya addressed. Some problems are noted in relation to the fact that mediators often appear in dual roles, as lawyers, or judges while mediating. That leads to another issue that is fundamental for the mediation process, which is the question of impartiality and independence of a mediator. It is demonstrated in the article that impartiality and independence need to be analysed in mediaiton somewhat different from the arbitration context, and especailly that the different role of independence in mediation neatly demonstrates the difference between these two ADR methods. Additional issues arise when evaluative approach is used and this and other variances are analysed. Moreover, the paper deals with problems such as conflict of interest and ethical discrepancies related to the mediation profession when performed by the members of the Bar or the Bench, and possible solutions to overcome those risks are considered, especially in lightof the invoicing procedures for mediation. Possible difficulties, such as unfavourable taxation can affect especially mediators who do not perform their activities exclusively. The author emphasizes the open issues discussed in the paper and indicates the areas likely to face further developments. This paper invites the members of mediation and legal professions to an open discussion in hope that it will serve to the benefit of both, the mediation community and mediation users

This paper examines some of the practical issues arising in the field of mediation, with the introduction focused on the recent developments in Croatia. Some of the most common issues and obstacles professional mediators encounter within their work are enumerated and brieflya addressed. Some problems are noted in relation to the fact that mediators often appear in dual roles, as lawyers, or judges while mediating. That leads to another issue that is fundamental for the mediation process, which is the question of impartiality and independence of a mediator. It is demonstrated in the article that impartiality and independence need to be analysed in mediaiton somewhat different from the arbitration context, and especailly that the different role of independence in mediation neatly demonstrates the difference between these two ADR methods. Additional issues arise when evaluative approach is used and this and other variances are analysed. Moreover, the paper deals with problems such as conflict of interest and ethical discrepancies related to the mediation profession when performed by the members of the Bar or the Bench, and possible solutions to overcome those risks are considered, especially in lightof the invoicing procedures for mediation. Possible difficulties, such as unfavourable taxation can affect especially mediators who do not perform their activities exclusively. The author emphasizes the open issues discussed in the paper and indicates the areas likely to face further developments. This paper invites the members of mediation and legal professions to an open discussion in hope that it will serve to the benefit of both, the mediation community and mediation users

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Practical Problems and Solutions in Mediation Proceedings

Mladen VUKMIR

UDK kategorizacija rada

I.

Introduction

Mediation is not anymore an unfamiliar topic at legal conferences. It could be said that a sea change occurred in the reception of mediation and other ADR techniques both on the side of the practitioners as well as on the side of dispute resolution techniques users. This has led to the introduction of mediation topics at legal conferences at regular basis. However, it might be said that, in spite of its rapid introduction and acceptance in many countries, dispute resolution toolbox, ADR methods are still of a somewhat unknown quantity among some legal practitioners. It is only natural that a subject that is still but a footnote in many law school curriculums did not get to be a familiar topic to too many legal practitioners. It should not look strange that many young lawyers might be reluctant to lead their clients into the direction of an area that s/he is not really familiar with. It is deeply ingrained into the human nature that we are weary of the unknown and, consequently, that lawyers who are not trained in communication and mediation techniques are somewhat reluctant to use them. This is exacerbated by the fact that applying interest based dispute resolution techniques to a heated dispute might feel counterintuitive to the lawyers whose training was geared towards mastering the position based dispute resolution techniques based on adjudication. Deciding by a third party is very seductive in its essential simplicity in spite of the complexities that arose in the millenary development of legal systems. It might be suggested that one of the ways to get a person formed by legal education to accept the very different, but equally challenging simplicity of the interest based dispute resolution, is to unlearn partially the acquired way of position based thinking. While it is still not widely thought at the graduate level, on the other end of the spectrum, at the highest levels of dispute resolution traditions, i.e., in the arbitration communities, paradoxically a very similar dynamics of perception exists. Those of us who participate in assisting the parties resolving their disputes using all available techniques, from litigation and arbitration to mediation and moderation, will sometimes note that reluctance in adopting mediation is resulting in misperception of its characteristics. Sometimes, in addition to the lack of familiarity that arbitrators not trained in the mediation techniques feel when the subject is raised, there is just a whiff of a defence of vested interest reaction resulting in pushing the issue aside. Unfortunately, due to its expenses and complexities arbitration has sometimes been pushed into defence of its unequivocally useful role in dispute resolution, long noted by the experts in the field1. As mediation is very different in that
Vukmir & Associates, Zagreb, Croatia. Mladen Vukmir is an IMI (International Mediation Institute) Certified Mediator and certified by the Croatian Ministry of Justice. He is listed by the international Institute for Conflict Prevention and Resolution (CPR, NYC, NY, US) and Croatian Chamber of Commerce (HGK) Permanent Arbitration Court and Mediation Centre, WIPO and other mediation centres. He currently serves as a Member of the INTA Board of Directors, and is immediate past INTA ADR Committee Chair. He serves on the INTA Panel of Neutrals (recently renamed as INTA Mediators’ Network). As the current AIPPI Croatia President, Mladen Vukmir is proposing further introduction of ADR methods in the intellectual property field. Mladen Vukmir is trained as a Mediator Trainer by CEDR and regularly works as Mediator Trainer in Croatian Ministry of Justice Mediator’s Certification Program. He was recently teaching Negotiations and Dispute Management course as an adjunct professor at the American College of Management and Technology (ACMT) in Dubrovnik, a Rochester Institute of Technology (RIT) graduate school.

1

See e.g. introductory part of the article “Witness Conferencing”, by Wolfgang Peter, in Arbitration International, Vol. 18, No. 1, LCIA 2002, p.p. 47-58 at p. 47, where the author finds that: “It is increasingly felt that arbitration no longer lives up to the expectation of its users. Complaints about formalism, over-lawyering, delays and inefficiency are frequent. This chorus of complaints counts amongst its members a fair number of lawyers who cannot truly disclaim a share of responsibility in this development. The idea that arbitration is a simple and straightforward procedure for adjudication of disputes has no longer much meaning, if it ever had. And the question as to which of the so-called common law or civil law procedural systems has had more

respect, a great flexibility is necessary for it to be fully embraced by the practitioners of other ADR techniques. It could be said that, in spite of its natural affiliation with various dispute resolution methods, the legal community still shows much more affection for the positional-thinking based dispute resolution tools than it shows for the interest-based dispute resolution techniques. It might be useful therefore to explore in this short write-up some of the issues that are arising in connection with ever-higher level of penetration of mediation in many countries. This author would be glad to look into the situation of various countries situations he is familiar with, but for the purpose of this study it will suffice to look at the practical issues arising in the practice of the country he is most familiar with. Croatia’s mediation industry development is a good example as any of the numerous countries going through similar or comparable developments.

II. Mediation system in the Republic of Croatia as a basis for a discussion on practical issues
In the Republic of Croatia the mediation system was finally set up by adoption of the third Mediation Act in 2011 and preceding institutional structure development2. This endeavour to set up a mediation system started at the beginning of the millennium with the training of a first batch of mediators under the organizational and financial support of the USA and EU member states3, and rounded out with the adoption of the first Mediation Act in October 20034. It is interesting and important to note that the first Croatian Mediation Centre, the Croatian Chamber of Commerce Mediation Centre was founded well before the enactment of the first Mediation Act5. Only a year later, but still just before the enactment of the first Mediation Act, Croatian Mediation Association (Hrvatska udruga za mirenje) was founded.6 The Croatian Mediation Association (HUM) was founded as an umbrella organization, having as members the large majority of Croatian mediators. The HUM has also acquired the authorization to perform trainings required for mediators’ certification by the Ministry of Justice of the Republic of Croatia. The kernel of the national mediation system was, thus, set up and all the premises for

influence on International Commercial Arbitration may be of academic interest, but it fades in the light of the realisation that, in any event, the lawyers with their entire procedural arsenal have taken over.” He refers also to: Redfern and Hunter, 'Law and Practice of International Commercial Arbitration' (1999, Preface to the 3rd edn), at pp. v-viii; Fali S. Nariman, 'The Spirit of Arbitration, The Tenth Annual Goff Lecture' in 16 Arbitration International (2000), at pp. 261-278; and Bruno Oppetit, 'Théorie de I'arbitrage' Paris 1998), at p. 25 who speaks of the 'déviation processuelle' of arbitration. This is to thank Dr. Branko Vukmir for pointing me to this article. Dr. Branko Vukmir is an ICSID arbitrator. 2 Act on Mediation, Zakon o mirenju Oficial Gazette nr. 18/2011. 3 The US provided a USAid funded program conducted through Booz, Allen, Hamilton consultancy and Carr, Falkner, Swanson ADR experts, while the EU countries that were active at various stages are The Netherlands, the United Kingdom, Austria, Slovenia and Germany, in the first place. 4 Act on Mediation, Zakon o Mirenju Oficial Gazette nr. 117/03. This first Croatian Mediation Act was drafted following the UNCITRAL Model Law on Mediation. 5 Centar za mirenje Hrvatske gospodarske komore was founded in July 2002. See CZM HGK webpage at http://www.hgk.hr/o-centru-za-mirenje/ In Croatian language, October 10, 2012 6 Hrvatska udruga za mirenje (HUM) was founded on September 19, 2003 by coming into force of the Rules on Mediation (Pravilnik o mirenju, Oficial Gazette nr. 81/2002). See HUM webpage at: http://www.mirenje.hr/index.php/o-nama/openite-informacije.html and followed by Rules on Mediation (Pravilnik o mirenju, Oficial Gazette nr. 140/2009), In Croatian language. For a summary in English see: http://www.hgk.hr/category/sudovi-pri-hgk/centar-za-mirenje-pri-hgk/ October 10, 2012.

performing the mediator’s profession in Croatia were created. All these systematic endeavours have led to the formation of a network, including today the majority of mediation institutions7. After the adoption of the first Mediation Act additional mediators were trained thanks to the efforts of initially trained mediators and with the support of the Ministry of Justice of the Republic of Croatia and the European Union (Phare project 2005)8. As a consequence further Mediation Centres were gradually founded. During that time, mediation was initiated in practice through a pilot program, firstly at the Commercial Court of Zagreb, then at the High Commercial Court of the Republic of Croatia and thereafter at many Commercial and Municipal Courts. This enabled listed mediators to acquire skills and experience. The role of the Ministry of Justice of the Republic of Croatia has to be recognized as its support lent the “official” approval of the efforts and gave more significance to the results that were achieved. In the local context this was a very strong signal. The second Croatian Mediation Act was enacted in 20099 and immediately opened numerous new questions to which the newly emerging mediation scene was trying to answer as quickly as possible. Although interesting, as they would fall under the scope of our present interest, inasmuch as the nature of the dilemmas raised by its text, we shall not enter in their analysis in the present paper. One of the topics that was frequently discussed and studied included the changes in the regime of confidentiality. This Act strongly modified the original strong confidentiality protection by severely restricting its scope, for the confidentiality protection only to be reinstated on different principles by the third Mediation Act. It should be noted, however, that the efforts made to recognize the challenges and develop the appropriate solutions in response to the modifications have brought to an accelerated advancement of the profession and also raised new revelations on the nature of mediation at the local level. These discussions have opened up discussions of greater depth and consequently brought about a greater insight of the local mediators. Much useful cognition in administration of mediation proceedings and development of explanatory material raising awareness among potential users were created in the process. Although the scope and extent of this report leave no room for further elaboration of the quite remarkable history of the recent mediation development in Croatia and its comparison with that of other countries, we are of the view that the foregoing facts should be kept in mind. In fact, it could be argued that the development of mediation in Croatia is really a story of success, one of those stories that, according to many, are missing in Croatian transition process. The attainments of the mediation system are such that they almost seem unreal if compared with what seemed likely or possible ten or fifteen years ago. Many were sceptical at the time towards a successful introduction of mediation, and have undervalued the possibility of mediators’ education and attraction of clients. The results achieved in the meantime have completely disproved these fears and today’s achievements seem far larger than the most daring predictions. At the same time, in spite of the achievements that are obvious, the mediation market still lacks many elements that are yet to be built. The wealth of experience, however, provides a fertile ground for a discussion of the issues that are arising in practice. Because of the mediation development level thus achieved, we are able to elaborate today particular practical issues appearing in practice, which can be firmly answered given present knowledge and familiarity with mediation matters in Croatia. Let us examine here a few randomly chosen issues we have come across in the recent dialogues on the practical aspects of mediation. The issues selected are not meant to be exhaustive in any way.
7

A list of mediation centres registered with the Croatian Ministry of Justice is available on the webpage: http://mirenje.pravosudje.hr/Default.aspx?sec=50. Another list available on HUM-CPA webpage lists a number of mediation related institutions: http://www.mirenje.hr/index.php/o-mirenju/mirenje-u-hrvatskoj/institucije-zamirenje.html). Both lists are as of October 10, 2012, but the webpage of the Ministry of Justice was last updated on February 5, 2010. 8 Following web pages show information on the 2005 Phare project: http://mirenje.pravosudje.hr/Default.aspx?sec=48, http://www.mediationeurope.net/eng/croatia.htm, http://www.mprh.hr/Default.aspx?sec=469, 9 Act on Mediation, Zakon o mirenju Oficial Gazette nr. 79/2009.

III.

Practical issues related to the mediation practice

This brief selection of open issues from the mediation practice is hardly bringing forward the wide range of issues in need of discussion. We do hope that by selecting the issues and putting some of them forward for discussions will help analyzing them to the benefit of the mediation community and the mediation users and in the process involve broader legal community in discussing the phenomenon of mediation. a) Impartiality and independence

This issue might not seem to be controversial at all, as it is historically accepted that in order to be acceptable and accepted by the parties in dispute and the society at large, the decisions in the dispute resolution processes must be neutral. Neutrality is best achieved by scrupulously observing impartiality and independence of the party that makes such decisions. And indeed, in all adjudicative processes, including both litigation and arbitration, any violation of impartiality and independence is seen as a ground for unenforceability of such decisions10. Exactly because of the widespread acceptance of these principles, it might come as a surprise to assert that this applies to the positionbased dispute resolution processes, while in the interest-based processes we may observe a subtle but very important difference. Surprisingly, this issue is not explored or taught at law schools, that is at those law schools that teach their students the methods of alternative dispute resolution at all. The fact that this difference is underplayed, in our view, points to the scant interest and shallow understanding of mediation in some legal circles. In other words, only due to the lack of studious perception of such differences and due to the lack of exploratory teaching of the subject, it often comes as a surprise that we can observe a notable difference in the roles of impartiality and independence in arbitration versus their role in mediation. While both impartiality and independence requirements are inviolable in arbitration and should be guarded and defended zealously, this is not always necessary to the same degree in mediation. Moreover, it is sometimes rightly said that arbitration is in jeopardy not only when partiality or independence are compromised by actual links between the arbitrators and the parties, but that it is sufficient to compromise arbitration by not recusing an arbitrator upon a mere perception of such links11.
10

See e.g. the text of an anonymized Swiss Federal Court decision as reported on a ZPG arbitration law firm webpage: http://www.praetor.ch/arbitrage/issues-of-lack-of-independence-raised-against-enforcement-of-awa/ (October 10, 2012): “Art. V of the New York Convention exhaustively sets forth the grounds on which recognition and enforcement of a foreign arbitral award can be refused (ATF 135 III 136 at 2.1 p. 139). Article V of the New York Convention reads in its pertinent part, related to the unenforceability stemming out of the lack of independence and impartiality that is generally considered to fall under the paragraph (2): 1. (…) 2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: (a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or (b) The recognition or enforcement of the award would be contrary to the public policy of that country. 11 See the same decision where the application of Art. V of the New York Convention, 1958 is elaborated in Swiss national context: http://www.praetor.ch/arbitrage/issues-of-lack-of-independence-raised-againstenforcement-of-awa/ (October 10, 2012): “According to Art. 30 (1) of the Cst (Swiss Constitution), anyone whose case must be decided in judicial proceedings has a right to his case being brought in front of a court established by law, having jurisdiction, independent, and impartial. That guarantee makes it possible to challenge a judge whose situation or behaviour is such as to cast doubt on his impartiality (ATF 126 I 68 at 3a p. 73); it seeks in particular to avoid that some circumstances external to the case may influence the judgment in favour of or against a party. It does not impose removal only when a bias of the judge is established, because an internal disposition on his part may hardly be proved; it is sufficient for the circumstances to create the appearance of

While many ADR experts still seem to be surprised when it is suggested, we need to acknowledge that the mediation does not require identical rules on independence and impartiality for well-founded reasons. At the same time, we also need to learn how to harness the difference of the role of independence between arbitration and mediation. In arbitration, parties cannot waive this requirement due to arbitration’s binding nature and to the requirements of the modern arbitration laws that provide a strong element of state authority to the enforcement of arbitral awards. It could be said that the more state authority backs a decision, more important will it be for a society to require impartiality and independence from the underlying process of decision to be enforced. Again, while an arbitrator must be and remain fully impartial and independent, and should these requirements be violated, an arbitral award could become unenforceable - in mediation the aspect of limited independence will have an entirely different impact. In mediation it should suffice that mediator remains fully neutral, based on his/her impartiality, while independence is a much more of a malleable category. This is due to the inherent nature of mediation as a non-binding, third-neutral-party assisted negotiation. We need to understand and appreciate fully that, absent the power to decide on the outcome of the dispute, a mediator cannot influence the outcome of mediation s/he conducts. Once the outcome remains in the hands of the disputants the role of the neutral in an interest-based dispute resolution procedure shifts, and from an adjudicator a mediator is essentially converted into a person responsible for the process of managing the negotiations process and facilitating communication between the disputants. Accordingly, his role cannot result in an outcome against the disputants’ wishes, as they are in theory always free to refuse settling. This will be especially so if a mediator does cross the line and jeopardize his/her neutrality by actually acting partial. However, if disclosed properly and accepted by the parties as such, a mediator can be dependent to one party more than s/he is to the other. Let us explain this further in the next paragraph. Full disclosure is paramount in enabling parties to overcome the fact of asymmetrical independence; properly informed parties can accept that a mediator with previous or current relation with one party mediates their dispute. As there is no decision to be made in mediation that will bind the parties, the disputants can easily accept the advantages that a proximity and previous links with a party can bring to facilitating the communication between the parties. In other words, in mediation the parties will often see an advantage in selecting a mediator that has links to the other party in the dispute. Moreover, it will be often the most sophisticated mediation users that will select a mediator close to the other party in the dispute in order to enhance the facilitative role a mediator plays in building the communication and rapport between the parties12. It is our view that this characteristic of the role of mediator has to be more proactively taught both at the level of legal education and in the mediation trainings to the benefit of the mediation community and its users. It is surely one of the most illuminating features that can help lawyers grasp the nature of mediation. The understanding of such crucial features of mediation should enhance the understanding of its most fundamental characteristics. b) “Duty to mediate”

Can we speak about the duty to mediate at all? Frankly, although this issue seems to be of marginal practical importance, it still might help us to understand more clearly the nature of mediations. If the above discussion of the specifics of impartiality and independence in mediation is taken to a next hypothetical level, we might encounter the following dilemma.
bias and to cast doubt that the magistrate’s activity may be deemed biased. Only circumstances objectively established must be taken into consideration; mere individual impressions of a party to the trial are not decisive (ATF 128 V 82 at 2a p. 84 and the cases quoted). 12 I am taking liberty in quoting Michael Leathes, formerly of BAT (British-American Tobacco) and today of the International Mediation Institute, who often pointed out in his public discourses to the fact that his former company was using this approach in difficult cases.

If we accept that a mediator does not need to recuse13 her/himself for a mere existence of proximity with a party in a dispute, another question immediately arises. That is: does a mediator have a duty to mediate if both parties wish him/her to do so in spite of his/her ethical reservations and/or actual lack of independence? It can be said that so far, such a duty has not been perceived, possibly due to the lack of clarity in the underlying question on the impartiality and independence of mediators. Probably, the proper full disclosure is the universal initial step in any situation that involves all kinds of proximities and previous links between a neutral and a party. If such a full disclosure is followed by joint discussions of the issue, a situation might arise in which the parties would both decide to retain the neutral. The question that remains thereafter is whether it would be ethical for a neutral to decline to mediate if both parties wish that s/he steps in as a mediator? We do not lean in favour of either a positive or negative answer to this question. After the parties face, thoroughly and comprehensively clear, their possible dilemmas, it appears that it would be ethical on the human level to accept and assist the parties in resolving their dispute and that the mediator needs to accept. At the same time, it could be stated that if the mediator does not feel comfortable to mediate, s/he should be free to decline mediating in this situation, as s/he would do in any other matter. In any way, it is probably premature to talk here about a duty to mediate when selected by the parties and only further developments of mediation practice will offer firmer positions on this issue.

IV.

Liability and ethical issues

This set of issues relates closely to the practical issues touched upon above, but is focused primarily primarily to the problems that might arise due to the dual roles a mediator carries into the mediations session when a mediator is a member of the Bar or pertains to the Bench of her/his country. For example, if an attorney acts as a mediator, some of his professional conduct might fall under his/her Bar Association Code of Conduct (professional ethics, deontology rules). Although no research of the particular rules has been conducted for the purposes of this paper, I should submit that I feel it is becoming ever more pertinent to explore this issue in greater depth. a) Legal malpractice claim agains a medidtor

One of such situations that we might contemplate would be, e.g. if a mediator who is an attorney accepts to draft the settlement agreement that resulted from a mediation settlement. Let’s suppose that although done with the best intentions to help the parties conclude the mediation and leave their dispute behind, but done in the haste at the end of a long day, this document turns to be unenforceable. The mediator might have been an attorney specializing in another field of law and the real estate title clauses have not been drafted properly nor were they following high standards of the practice in the field. The question here would be: to which degree would the parties in a mediation that would choose to hold her/him liable for unenforceability of such a settlement be able to find him/her so under his/her professional standards rules? Would it be possible to sue such a mediator for malpractice? Such professional codes of conduct would clearly not apply to non-attorney mediator who “just helped” the parties to articulate their agreement. Another example could be in the situation when conflict of interests is not properly disclosed. Should a mediator be held liable only to the applicable mediation codes of ethics or mediation laws, or could
13

See e.g. Abramson, Leslie W. 1992. Studies of the Justice System: Judicial Disqualification under Canon 3 of the Code of Judicial Conduct. 2d ed. Chicago, Ill.: American Judicature Society and Comisky, Marvin, and Philip C. Patterson. 1987. The Judiciary—Selection, Compensation, Ethics and Discipline. New York: Quorum Books.

s/he be held responsible also under his/her Bar Association conflict rules and might bear further professional consequences? The question of conflict of interests further appears in relation to attorneymediators working in larger law firms who might have numerous clients a mediator has never worked with. If a mediator has never personally worked on a matter or with a client that could be regarded as involving conflict of interest with parties selecting him/her to serve as a mediator in their mediation proceeding, what would he need to do? Is his position one of an inherent conflict of interest, or could it be asserted that due to the lack of personal involvement on his/her mediator’s side there is no such inherent conflict? We are of the view that neither in this case should the conflict of interest rules from the Attorneys’ Code of Ethics apply, but we should expect scrupulous compliance with the mediator’s obligation to notify the parties of all the relationships potentially relevant for dispute resolution. S/he can then leave the decision about a possible neutral engagement of such mediator to the parties. Experienced mediation users will often chose a mediator close to the opposing party to facilitate the communication process. By doing so, they clearly do make their own position vulnerable. However, this is a calculated risk, given that the mediator has no power of adjudication in the dispute, but only conducts the communication process. This bet normally rewards the party who made it, with a smoother and more productive mediation sessions. The answer to these questions will, as we will see below, also partially depend on what a mediator agrees with the parties in the mediation agreement and how s/he will invoice the mediation users for his/her services. b) Can sitting judges accept commercial mediations?

Although they will largely overlap with the issues of attorney-mediator liability, some questions are more sharply expressed in the case of judge-mediators. While it is a regular occurrence that judges enter mediation circuit upon retirement, some countries have strong and rather developed active judges serving as mediators not only at the court-annexed mediation programs, but also in the private mediation circuit. Both Slovenia and Croatia are among countries where numerous sitting judges act as mediators and are often leaders in the professions. It might be remarked that such situation primarily indicates that in countries with weaker economies, where business users are not the driving force for the introduction of mediation, it were often members of the judicial system that might have taken the lead. As a consequence, a number of judges will become leading mediators in such countries. The questions that will arise in that connection will be deriving from the fact of the commercial nature of mediation and the conflict of interest questions that might occur. One of such questions would be: what are a Judge’s duties to recuse themselves in various situations? For example, if a judge mediates a dispute, what would s/he need to do in the event an unrelated dispute involving the same party comes before his Bench? Would s/he need to recuse his/herself if the matter before her/him to decide is completely unrelated to the dispute they mediated? Would it be better in such situation if both parties in the judicial dispute were parties to the mediation, rather than if only one of them was? Obviously, should such a judge-mediator become involved in drafting of the agreement, what are his/her limits of professional liability, having in mind that they are nor regulated by the Bar malpractice regulations? Also, it might be advisable, if not necessary, to include the judges activities as mediators explicitly on the list of the activities legally permitted for the judges to perform while sitting on the Bench. It is plain that these issues need further exploration of the nascent mediation profession. However, we shall now look at other issues that are sometimes raised in connection with the commercial nature of mediation.

c)

Invoicing for mediation

In connection with the above-described problem of double liability we need to ask ourselves further questions. One of the questions we have in mind is under which circumstances might it occur that attorney/judge-mediator double liability is further compounded? In the way of answering it, we might include here ancillary practical invoicing issues and issues regarding tax regimes for mediation professionals and arrangements with mediation users. The number of open issues set as examples here clearly indicates towards the practical problems facing the young profession. It is fair to say that in Croatia there are still no individual professionals who dedicated hundred percent of their professional time only to mediation. Once this shift occurs we can expect more rapid resolution of the open issues. In the Centres where mediators are allowed to charge according to their own fees, the issues of the amount of tax payments arise when they charge their mediation parties directly. Considering that mediators still do not generally perform mediation activities exclusively, but they do so in parallel and in addition to their own profession various taxation issues have to be considered in order for that income not to fall under unfavourable taxation regimes. Both VAT and income taxes can be affected, depending on the amounts invoiced. Furthermore, as mentioned above, when the mediator is an attorney, the question whether s/he should issue invoices as an attorney or as a private person performing mediation activities is raised. In fact, it is obvious that such person does not perform mediation within the scope of his/her activities as an attorney. Such person acts solely in his/her capacity of a trained and certified mediator. It is, hence, additionally inappropriate to apply attorney’s fees upon invoicing or specification of the fee. Of course, if the hourly fee is applied, this can be freely set below, above or at the exact amount of the hourly fees suggested by the attorney’s tariffs, as the mediator and the parties agree. Also, because of the professional performance compliance requirements with the Bar Association codes of conduct, the attorney performing mediation should avoid, if possible, to participate thereto as an attorney. It was elaborated above that in such a case s/he could or would have to be found liable for the legal deficiencies of the settlement agreement s/he helped to draft, or for the additional conflict of interest issues. It should be stated that, in our view, not only the practical purposes would lead us to recommend to a mediator to stay away from participating in any inherently legal role in a mediation s/he mediates. Fundamentally, this would be due primarily to the fact that the settlement is a matter among parties in the dispute. Very often it is perceived that a settlement is a measure of success for mediation. We do not necessarily agree with that perception and wish to emphasize that settlement belongs to the parties and the mediator is only there to facilitate it not to create it. Should a mediator overstep this line and become overpowering towards the parties, s/he would clearly damage the underlying principles of voluntary mediation. A much more precise measure is the success the mediator has in re-establishing communication between the parties. It is true that if the mediator succeeds in re-establishing communication between the parties, it is likely that the parties will be able to work on achieving settlement. However, it does not automatically follow that a mediator is less successful if s/he does not succeed settling their dispute. We have to keep in mind that, just as the dispute becomes no mediator’s dispute, neither should the settlement agreement become his/hers. It is far more appropriate for a mediator that s/he participates in the dispute resolution only as the person conducting the process of communication between the parties. The legal outcomes and the quality of the settlement agreement is a question of the party’s arrangement and choice. The parties need to put their effort and take their responsibility for the quality of the settlement of their dispute. While the mediator may influence the outcome, it is best if his role is limited to providing information, without involving his legal professional contribution and the professional responsibility as a consequence. The role of the mediator is, as already stated, to conduct the process so that it leads to the reinstatement of communication among the parties.

If not contractually excluded, the unsatisfied party that perceives an attorney mediator primarily as a member of a Bar/Bench might seek to start professional disciplinary procedures. Therefore, it would be recommendable to draft the mediation agreements for the individual ad hoc mediators and the mediation rules for the centre so as to exclude the possibility of confusion between the dual roles of attorney/judge-mediators and their professional liability. Therefore, it is necessary to properly explain to the parties this issue and, thus, achieve sufficient understanding so as to be able to exclude the liability. This understanding is best fixed by the mediation agreement in advance of the mediation. Moreover, an attorney mediator should avoid billing for mediation services under his firm’s or his own professional Bar membership accounting, as this would bring him under the umbrella of his/her professional liability even clearer. Finally, and in addition to the above, we should in passing mention that there can also be billing issues of much subtler influence on the mediation process. For example, there might be pressure coming from an attorney’s law partner or law firm management which might try to influence the rates and the flexibility in billing for a mediation, thereby hampering the flexibility that is sometimes necessary to achieve success in mediation. Needless to say, these types of issues diminish or vanish completely in a situation where a professional mediator works exclusively on the ADR circuit.

V.

Engagement of multiple mediators and frequent mediators

One of the issues frequently encountered in practice is: what are the advantages to the parties regularly considering or accepting the engagement of multiple co-mediators? In the ordinary two-party mediation proceedings without a large number of participants, engagement of several mediators is the exception rather than the rule. However, when examined attentively it is not quite apparent that using one mediator is always an advantage. This will be especially so in situations of certain asymmetries, such as gender or power asymmetries, when having mediators working in pairs can be advantageous. a) Co-mediators

In the ordinary distribution of work co-mediators may assume different tasks. In fact, one of them may take charge of the relations with and among parties, and the other one of the proceeding, logistics and communication with and among the parties. In certain types of assistance, as the frequent situations of power asymmetry or gender asymmetry, the different identity and background of “shadow” or comediators can be decisive in building up a parallel relationship among the single parties in the dispute and each mediator. Such a setup can thus enable the development of special relationships between the persons of various backgrounds or identities and reduce mediation times significantly. Many situations in practice reveal that the engagement of several mediators can have multiple benefits, although the scope of this text does not allow us here to go into detail and lay out the practical examples. It will suffice to state here just that it is obviously useful to have different gender co-mediators as their communication and perception techniques will be more layered than it would be the case if the comediaotrs would be of the same gender. If the parties are different genders it the beneficial effect might multiply. The engagement of several mediators is more frequent after the completion of new mediators’ training, generally when newly qualified mediators, having completed their training, take on their first practical experiences. It is much easier to gain first experiences as a co-mediator rather than autonomously, thus, the so-called “shadow mediation” is considered the best way to gain experience. Based on my own experience as a mediator, shadow mediators are often of great help in the mediation proceeding. Namely, as in the ordinary co-mediation proceeding, in many regular situations shadow co-mediators largely facilitate mediator’s tasks. It should be kept in mind that the engagement of

several mediators in situations when the parties themselves have not considered such arrangement should be skilfully prepared. Upon scheduling the mediation the process should be conducted so that all the participants to the mediation timely agree to the attendance of a person they did not originally plan to engage. The fact that shadow mediators, unlike the regular co-mediators, work on the voluntary basis and incur no additional costs for the parties should be kept in mind as it is an additional benefit to the parties. As to mediation teams, their use will be generally recommended for complex collective mediations involving multiple stakeholders. For instance, such teams are used in ethnically or environmentally complex disputes. In these cases, in addition to qualified mediators, the teams may include also experts on the history of the involved groups, psychologists or technical experts. Such complete teams are frequent with environmental and mining disputes, which in New World countries may also include indigenous peoples. b) Frequent mediator for a party and other conflict of interest issues

Mediators often impress the parties whom they have mediated and they choose to use such mediators that impressed them positively on the next dispute where they decide to use a mediator. Larger mediation users, such as multinational corporations, can develop close relations with their preferred mediators and use them on repeated occasions and rather frequently. Such frequency may lead to a situation where a mediator ends in a position of dependency of his/her business interest towards such a party. Needless to say, it is absolutely necessary to properly disclose such relations. In spite of the fact that no mediator can easily coerce the parties into a settlement, a skilled person can misuse his/her mediator’s role in exerting undue influence in a skilled way towards a “less-skilled” party which is prepared to succumb to the perceived authority of a mediator. What type of full disclosure is appropriate in such cases? Should mediators’ codes of conduct explicitly deal with such situations? Would such “house” mediators need to disqualify themselves at some point from their “customers” and what can they do to remain neutral as long as possible? All these and other similar questions need to be discussed, but the scope of this text allows us to raise the questions without necessarily answering all of them here. c) Effects of settlement in mediation

Another issue appeared as a subject of discussion in recent Croatian mediation practice. We refer to the issues related to settlement enforceability in mediation. One needs to understand and accept that as a rule lawyers with no mediation education often perceive the basic simplicity of the mediation proceeding as counterintuitive and distressing. Specifically, in respect of the execution of the mediation settlements lawyers are often reluctant to accept voluntary execution of the settlement in mediation as the rule rather than the exception. In fact, the implementation of the settlement provisions is not perceived as a driving problem in mediation. Of course, unforeseen events such as bankruptcy or even plain dishonesty can disrupt the settlement execution plans, but such cases do not define the mediation experience in general. Given that mediation represents a voluntary act, its execution is also voluntary and the parties in the biggest number of mediations have simply the desire and intent to fulfil their assumed obligations. Naturally, even with the best intentions unforeseen circumstances may arise and prevent the fulfilment. A skilled mediator shall warn the parties of such risks. In these situations, when the opposing party is not able to fulfil its obligations, e.g. in case of bankruptcy during the performance, or an event of force majeure, the issue of legal security of the other party arises. Thus, the mediator needs to warn the parties and their counsellors during the preparation of the settlement of such possibility in order that the parties use their best efforts to secure their position and interests in the appropriate manner. It should be thereupon kept in mind that

recourse to the legal system would not be of simple help in these situations, not only due to its length, high costs and inefficiency. It is simply so that if obligations cannot be fulfilled even when the opposing party has agreed thereto, the legal system’s intervention would hardly make any difference. If the mediation was successful it means that communication has been reinstated and that the parties will resolve the issues arising during performance themselves, and cooperate in minimizing potential damages. If we draw this to a conclusion, we might say that if fulfilment of the settlement was not achieved voluntarily it can always be subject to further mediation proceeding, mediation on enforcement. Certainly, this will be of no great comfort to a party that rightly expects the fulfilment that is not forthcoming and this is why this issue was further addressed with the introduction of a new enforcement system under the third Croatian Mediation Act14. Without embarking upon a further analysis of this provision, it is clear that it provides certain benefits and advantages to the parties who draw up their settlement agreement correctly, and who shall be able to rely on automatic effects of enforcement in line with the law, thus, enhancing their sense of legal security in the mediation proceeding.

VI.

Roles of an evaluative approach

Another equally frequent issue, though having no connection with the foregoing, is the appearance of evaluative point of views which may be unfortunately expressed by the mediator on his/her own initiative, or more frequently and appropriately upon the client’s request. Evaluation during “ordinary” facilitative mediation implies many risks. Namely, the principal role of a mediator is to conduct the mediation proceeding in a manner perceived by the parties as neutral, maintaining thus the possibility of building a relationship of trust with each party and between the parties. Evaluation itself implies comparison of parties’ point of views’ in hierarchical terms and is thus hardly compatible with the traditional mediator’s role. Evaluation is, nonetheless, accepted when the informed parties expressly request it. Parties may engage an expert in the field of their dispute other than the mediator if the need be. If the parties desire to hire a mediator who in addition to being a mediator shall have the role to assess, using his/her skills, the legal or technical positions of the parties who are aware of their requests, it is perfectly acceptable if the mediator is trained in the skill of evaluative mediation. Dangers of a botched mediation will increase, most typically, if mediation hits an impasse, and the dispute resolution is apparently not possible without evaluation. When and if the mediator performs evaluation during such mediation
14

Art. 13 of the Croatian Mediation Act Oficial Gazette nr. 18/2011 (Effects of the settlement agreement) reads as follows: (1) A settlement agreement concluded in the course of mediation proceedings is binding on the parties. If by the settlement, the parties have taken over some obligations, they are bound to fulfil them in a timely manner. (2) A settlement agreement concluded in the course of mediation proceedings shall be an enforcement title if it contains an obligation to perform an act on which the parties may reach a settlement and if it contains the obligor’s statement on immediate authorization of enforcement (an enforcement clause). (3) In the enforcement clause, the obligor explicitly agrees that on the basis of the settlement agreement, in order to carry out the performance of the due obligation, immediate enforcement may be ordered. An enforcement clause may also be part of a separate document. (4) The enforcement of a settlement referred to in paragraph 2 of this Article shall be rejected if: - the settlement agreement is not allowed, - the settlement agreement is contrary to public policy, - the content of the settlement agreement is not implementable or possible. (5) The parties may also agree that the settlement agreement shall be drawn up in the form of a notarial act, a court settlement, or an arbitral award based on the settlement. A lively debate on the best modalities for concluding self-enforceable mediation settlement agreements has since developed in Croatia and the formalities required are being discussed with the Courts.

impasse, the party whose position has been evaluated unfavourably will often find itself in the position of believing that such evaluation was one-sided. One needs to be aware that in such a situation it is very difficult for the present mediator to proceed with mediation process even if the parties require continuing with the proceedings in their desire of resolving the dispute. It is likely that the easiest way out of such situation would be the engagement of a new mediator. On the other hand, thanks to high-level mediation techniques, the evaluator may reinstate or try to reinstate parties’ trust in his/her impartiality. In any case, it is very useful that the parties are aware of this possibility of mediation development in advance of the evaluation being abruptly performed within a facilitative mediation. As it has been hinted, evaluation can itself also be used as a technique to overcome roadblocks, i.e., impasses during mediation. The mediator can, if s/he senses that such development is expected by the parties, suggest that a third party or himself/herself, if the informed parties wish so, makes a nonbinding evaluation of the situation. It the parties agree to assign this task to the present mediator, and if s/he warns them of the possibility of the loss of impartiality, the mediator skilled in the field of the dispute at hand may propose to the parties to examine the values of their positions in the dispute. Naturally, in order to minimize the possible fallout, a skilled mediator shall even then try to make an evaluation as objective as possible, avoiding personal assessments. Deploying reality checking techniques and using the evaluation as a technique for overcoming impasses, maintaining thereupon the neutrality, a mediator can help the parties return to the path towards the fulfilment of their interests.

VII.

Mediation techniques used in general disputes prevention and resolution

Parties may not be willing to engage in formal mediation, but mediation techniques might still be used in a variety of social interactions and transaction. One of such frequent uses, especially by large corporations which trained their staff in mediation, is using mediation techniques to prevent disputes from arising. Once the mediation culture is instilled in an organization, it is probably better use of the art than mediating the disputes that already arose. The efficiency of preventing disputes rather than mediating the existing disputes is obvious. Once an individual is empowered by the regular mediation techniques such as active listening, use of empathy, reality checking, mirroring and reframing, such individual will become a strong agent of dispute elimination. In other words, the individuals that have mastered mediation techniques will easily adapt and use those techniques in everyday life and business situations, thus helping their organizations in minimizing unproductive breaches of communication that lead to the judicial dispute. Some companies that have successfully deployed similar applications of mediation techniques, such as GE Oil and Gas, will call their program “early dispute resolution” methods or EDR, rather than the traditional alternative dispute resolution techniques or ADR. In respect of other desirable uses of mediation and communication techniques acquired through mediation training it is important to appreciate that they can very productively be used out of the classical mediation settings. In other words, it is sometimes better to use mediation and communications techniques outside of the formal mediation session. In that sense, it can be said that the best mediation is the one that does not occur at all. If one knows the ins and outs of mediation one can often productively moderate. This means that the results are likely even if one of the participants to the dispute negotiations uses his or her knowledge of mediation and communications techniques in a situation in which one or both of the parties still did not contemplate the possibility of formal mediation. Segments of the established mediations techniques might be used in the following ways in the context of dispute discussions with one’s own clients. Every in-house or outside counsel can moderate ”mediation with oneself”. This entails working with only one party in recognizing both parties’

common and individual interests. From our own experience we can confirm that “mediation with oneself” works fine with potential individual plaintiff prior to starting the litigation. Very often such potential client will thereafter decisively use their internal resources in jump-starting communication with his/her disputants. “Mediation-like” informally moderated dispute negotiations can occur in various contexts if skilfully steered towards. In this situation typically no mediation agreement or rules frameworks are used or discussed. A person that will take a role of moderator will work towards affirming interests of the disputants and affirming and exposing them to all involved. Additionally, reality will be checked, as it would be in a formal mediation setting and the statements reframed and mirrored. Based on the reallife experience this mode works fine in an evaluative mood between the parties and with the natural “wise-old-man” role recognized to one of the participants who takes the responsibility to moderate. Another situation that might be exploited under the right circumstance might be nicknamed a “hearing-mediation”. Typically, this would entail turning a litigation hearing into an “informal” mediation session. This, of course, works best at civil court procedure and in the Central European context, when some of the frequent short hearings sometimes take a turn towards informality. Such hearings are especially likely to be turned into productive private discussions after the litigation exhaustion kicks in and/or there is a personal change of people involved on at least one side, and emotion is introduced in a right dosage between the parties that do not feel inferior towards each other. Although they will be necessarily short, such hearings can serve as powerful introduction of communication to the damaged relations of the parties to the dispute. Finally, an atypical situation can occur that further proves the power of principled negotiations that are underlying to all mediation. That is to say that, as always, once the interests of the disputants are revealed, result-oriented negotiations can be started. Although it is typically considered that mediation plays only a limited role in criminal law proceedings, there are situations in which interest based negotiations will take place in order to protect interests of the damaged party and the perpetrator of the criminal act. There are societies, such as Scandinavian countries, that have attempted mediation between the victims and the offenders to quite a success15. In spite of this, in commercial mediation it is generally held that it is not conducive environment for mediation in which criminal charges are already filed against an individual or a company. Although such situations are rarely thought as possible for commercial mediation from our experience in the field of anti-piracy and anti-counterfeiting it became obvious that principled negotiations would work as usual with individuals, who are not organized crime counterfeiters: Those individuals would typically be negatively charged towards contacts with the party that filed charges against them and which resulted with the investigation being opened against them. However, at that stage they would typically already have sought and obtained proper legal advice. At that point they would already realize that the criminal procedure would be likely to continue against them. Planning ahead, they regularly realize their interests and become legitimately interested in creating alleviating circumstances for themselves. In an attempt to create such alleviating circumstance they sometimes reach the conclusion that it is in their interest to remedy the damage they have created to the right holders of the rights they have infringed. Once they accept settling the damage, they can legitimately demonstrate to the criminal court that they acted in remorse and that they have undertaken all reasonable steps to mitigate the damage to the damaged party. Needless to say, this will open up opportunities to reaching a settlement with such individuals. Although these steps can hardly be called mediation, the use of mediation techniques and the understanding of principled negotiations are just another example of using advanced ADR knowledge outside the formal mediation settings.
15

See papers such as: Victim-Offender Mediation: Observations from Scandinavia, Mari-Louise Pabsdorff, Lise-Lotte Rytterbro, Saija Sambou, Erika Uotila at http://ssrn.com/abstract=1737385, Victim-offender mediation in Sweden and South Africa, Frida Eriksson https://gupea.ub.gu.se/bitstream/2077/19708/1/gupea_2077_19708_1.pdf and http://www.restorativejustice.org/editions/2006/august06/vomsweden

VII.

Instead of the conclusion

Rapid expansion of mediation services we have witnessed over the last decade or two is likely to continue and accelerate. Many other issues in mediation will remain unresolved for the time being and only further development of the mediation profession and practice will lead to exploration and resolution of those issues. Compiling a full list of such issues would go far beyond the scope of this brief text, and we are happy to leave this task to the mediation community at large. At the same time, we are certain that mediation gatherings such as those that have invited this author to prepare the present text shall serve as one of the principal platforms for their identification, discussion and resolution in the future.

Practical Problems and Solutions in Mediation Proceedings Mladen VUKMIR

KEY WORDS Mediation, impartiality, independence, liability, ethical issues, co- mediators, frequent mediators, mediation settlement enforceability, evaluative mediation, mediation techniques

BRIEF SUMMARY This paper examines some of the practical issues arising in the field of mediation, with the introduction focused on the recent developments in Croatia. Some of the most common issues and obstacles professional mediators encounter within their work are enumerated and brieflya addressed. Some problems are noted in relation to the fact that mediators often appear in dual roles, as lawyers, or judges while mediating. That leads to another issue that is fundamental for the mediation process, which is the question of impartiality and independence of a mediator. It is demonstrated in the article that impartiality and independence need to be analysed in mediaiton somewhat different from the arbitration context, and especailly that the different role of independence in mediation neatly demonstrates the difference between these two ADR methods. Additional issues arise when evaluative approach is used and this and other variances are analysed. Moreover, the paper deals with problems such as conflict of interest and ethical discrepancies related to the mediation profession when performed by the members of the Bar or the Bench, and possible solutions to overcome those risks are considered, especially in lightof the invoicing procedures for mediation. Possible difficulties, such as unfavourable taxation can affect especially mediators who do not perform their activities exclusively. The author emphasizes the open issues discussed in the paper and indicates the areas likely to face further developments. This paper invites the members of mediation and legal professions to an open discussion in hope that it will serve to the benefit of both, the mediation community and mediation users.

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