Mediator selection used to be so easy. There were a couple of retired

federal judges who were not quite all the way over the hill, and they had time on their schedule. Pick one, get told what to do, and maybe that was enough to get the case settled.

But now? There’s a mediator standing on every corner with a “Hire Me” arrow spinning in his hands. They all have taken advanced mediation training from one of the hundreds

of quality trainers out there. Some of them are even pretty good.

So how do you choose? By hair color? Lack of hair? Height? Quality of media-tion center snacks?

Or do you go the clever route? Since you want to influence your opposing counsel, do you choose whoever the other side proposes on the theory that your opponent will be more persuaded by “his own guy?”

Nice try. But there has got to be a better way.

And there is. Using critical analysis, some introspection, and a pinch of due diligence, you can significantly improve your likelihood of a successful mediation process.

But first, a story.

A SAD TALE

In a design patent case, the parties were looking for a mediator. The plaintiff ’s attorney sub-

scribed to the apparently clever media-tor-selection technique noted above, and agreed to his opponent’s first choice, a design patent attorney out of New York who mediated on the side.

The mediator’s education checked out—a top-notch pro from an Ivy League

law school—as did his mediation training (he had the standard 40 hour course) and refer-ences (the mediator’s friends seemed to like the guy). All seemed fine.

It wasn’t. The mediation was a disaster. The opposing party’s attorney presented a fancy Powerpoint explaining why he believed, on the law, he should win. The mediator bought it. Before he even caucused with the plaintiff, the mediator was convinced the defense would win on the merits, and then throughout the day he spared no adjectives in sharing his newfound expert analysis with the plaintiff and his counsel.

The mediator used his one—and on-ly!—trick, evaluation of the law, to try to convince the plaintiff to accept a number that would not even cover the plaintiff ’s attorney’s fees. By 5 p.m., the defense, em-boldened by the mediator’s views, had not offered a single dollar.

ADR SKILLS 105

CPR NEWS 106

INVESTMENT ADR 107

WORLDLY PERSPECTIVES 110

ADR BRIEF 115

Vol.30No.5MAY2012

Rethinking Mediation: A New and Better Path to Neutral SelectionBy MichAEL D. young

ADRSkills

The author, a former intellectual property and employment partner with Alston & Bird, is a neutral at JudicateWest in Los Angeles focusing full-time on providing ADR services. His mediation work con-centrates on intellectual property and employment disputes, among other complex civil matters. He is a Distinguished Fellow with the International Academy of Mediators. His website is www.MikeYoungMediation.com. His most recent previous Alternatives article is “Resurrecting the Stalled Mediation: Don’t Let an Ineffective Neutral Wreck Your Settlement,” 29 Alternatives 195 (December 2011). (continued on bottom of page 112)

TheNewsletteroftheInternationalInstituteForConflictPrevention&Resolution

Al­ter­na­tivesTo ThE high coST of LiT i gA Tion

2011

Visit us at www.altnewsletter.com View this newsletter online at wileyonlinelibrary.comAlternatives DOI: 10.1002/alt.20341

First in an occasional series

challenging

how business mediates.

cPR’S AnnuAL MEETing:highLighTS, AnD hoW To ATTEnD onLinE

CPR’s 2012 Annual Meeting is now available online, accredited for continuing legal education in jurisdictions nationwide.

Below are highlights from the meeting; the full re-cordings can be found via links at www.cpradr.org and at WestLegalEdcenter.com.

The CPR Institute is a conflict resolution content provider for WestLegalEdcenter, a division of Thomson Reuters. Individuals at CPR members automatically get a 25% discount as a member benefit when register-ing at the WestLegalEdcenter site. Many CPR member or-ganizations already have an existing purchase agreement with WestLegalEdcenter, too.

All of CPR’s 32 current online seminars carry CLE credit na-tionwide, including Ethics presentations—and including the Ethics in the 2012 Annual Meeting sessions, which are divided online into three segments. The courses cover hot ADR topics, systems design, and the latest commercial conflict resolution practices.

And now, 16 sessions are available as podcasts for CLE credit-on-the-go, where permitted. The roster includes a variety of CPR events from around the globe over the past year, including another new addition: a wide-ranging February CPR Y-ADR panel discussion held in Paris, “De-velopments in International Arbitration from the In-House Perspective.”

CPR’s 2012 Annual Meeting was called “It’s A Shrinking World: Acceleration and Evolution in Dispute Resolution,”

and was held at the Barclay InterContinental Hotel in New York on Jan. 12-13, 2012. The primary sponsor was an international law firm, SNR Denton.

The meeting opened with welcoming remarks by CPR senior vice president Beth Trent; SNR Denton’s Global

Chief Executive, Elliott Portnoy, of the firm’s Washington, D.C. office; and Alexander C. Schoch, who is general counsel of

Peabody Energy Corp. in St. Louis.They were followed by five substantive sessions on the first meet-

ing day, and three on the concluding day. The first day is discussed below; the second day will follow in next month’s Alternatives CPR News. And all have been recorded and are offered for online credits at WestLegalEdcenter.com, including the keynote sessions for each day.

EDITORIAL BOARD

CPR­News

KAThLEEn A. BRyAn Chair,EditorialBoardCPRInstituteNewYork

JOhn J. BOumA Snell&WilmerPhoenix

JAmIE BRODER Paul,Hastings,Janofsky&WalkerlosAngeles

A. STEphEnS CLAy KilpatrickStocktonAtlanta

CAThy A. COSTAnTInO FederalDepositInsuranceCorp.Washington,D.C.

ROBERT A. CREOMasterMediatorsllCPittsburgh

LAuRA EffEL larkspur,Calif.

LAwREnCE J. fOx Drinker,Biddle&ReathPhiladelphia

mARC GALAnTER UniversityofWisconsinlawSchoolMadison,Wis.

whITmORE GRAy FordhamUniversitySchooloflaw/UniversityofMichiganlawSchoolNewYork

JEff KIChAvEnProfessionalMediationandArbitrationlosAngeles

JEffREy KRIvISFirstMediationCorp.losAngeles

hARRy n. mAzADOORIAn QuinnipiaclawSchoolHamden,Conn.

CARRIE mEnKEL-mEADOw GeorgetownUniversitylawCenterWashington,D.C.

ROBERT h. mnOOKIn HarvardlawSchoolCambridge,Mass.

pAuL J. mODE JR. CitigroupNewYork

GERALD f. phILLIpSlosAngeles

JAmES m. RInGER MeisterSeelig&FeinNewYork

A. JAmES ROBERTSOn II SuperiorCourtofCaliforniaSanFrancisco

nAnCy ROGERS ohioStateUniversityCollegeoflawColumbus,ohio

DAvID L. SAnDBORG CityUniversityofHongKongHongKong

fRAnK E.A. SAnDER HarvardlawSchoolCambridge,Mass.

IREnE C. wARShAuER officeofIreneC.WarshauerNewYork

ROBERT S. whITmAnSeyfarthShawllPNewYork

GERALD R. wILLIAmSJ.ReubenClarklawSchoolBrighamYoungUniversityProvo,Utah

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(continued on page 118)

106­ Alternatives­ vol. 30 no. 5 may 2012

vol. 30 no. 5 may 2012 Alternatives­ 107

Embracing international arbitration is essential for any Latin American coun-try that wishes to entice U.S. business

or investment. For decades, U.S. companies

and investors have been wary of sig-nificant dealings in Latin America for fear of being dragged in front of hostile local courts should disputes arise. This fear was well-founded given that, for nearly three quarters of a century, Latin American coun-tries embraced the Calvo Doctrine, a nationalist policy which commanded that foreign parties to a dispute could only seek redress through domestic courts. See Denise Manning-Cabrol, “The Imminent Death of the Calvo Clause and the Rebirth of the Calvo Principle: Equality of Foreign and National Investors,” 26 Law & Pol’y Int’l Bus. 1169, 1172-73 (1995).

Now, at least as to international commercial arbitration, Calvo is dead or dying in much of Latin America. As to international investment arbitration, however, Calvo’s hold lingers.

Understandably, many U.S. businesses and investors are unfamiliar with the domestic le-gal procedures of the Latin American countries in which they seek to do business or invest. This unfamiliarity fuels suspicion that local courts are, at best, partial to their own citizens and, at worst, outright corrupt. Additionally, litigation in many Latin American countries is notoriously slow moving.

Effective international arbitration, which takes domestic Latin American courts out of the equation, solves these problems. It is relatively uniform; disputes are resolved by an impartial tribunal in an often-neutral location; the panel consists of legal as well as technical experts; awards are easily enforceable in a great many parts of the world; the process moves much

faster than litigation in local Latin American courts, and the risk of appeal is virtually nil.

The need for effective international arbi-tration in Latin America has never been greater. In addition to boast-ing several of the world’s largest economies and a robust business community, Latin America is rich with natural resources.

This article explores the recent divergent trends in international commercial arbitration and inter-

national investment arbitration. While inter-national commercial arbitration enjoys wide-spread acceptance, international investment arbitration lags behind.

In referring to “Latin America” in this ar-ticle, we include the countries of Central and South America with the exceptions of Guyana, Suriname, and Belize. Mexico, a North American country, is also excluded.

ThE gooD nEWS: inTERnATionAL coMMERciAL ARBiTRATion

International Support for International Com-mercial Arbitration in Latin America—The New York and Panama Conventions: Nearly all Lat-in American countries embrace international commercial arbitration. Indeed, a recent sur-vey identified 165 arbitral institutions that have sprung up in Latin America and Mexico in the past few decades. See “Inaugural Survey of Latin American Arbitral Institutions,” Institute for Transnational Arbitration (2011)(available at www.cailaw.org/ita/itasurvey.pdf).

This is reflected in the widespread accep-tance of various international treaties support-ing international commercial arbitration. All Latin American countries have acceded to, or ratified, both the 1958 Convention on the Rec-ognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), 21 U.S.T.

2517, 330 U.N.T.S 38, and the 1975 Inter-Amer-ican Convention on International Commer-cial Arbitration  (the “Panama Convention”), O.A.S.T.S. No. 42, 14 I.L.M. 336. See the United Nations Commission on International Trade Law (“Uncitral”) website for nations’ member-ship status, New York Convention (available at www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html); see Organization of American States for Panama Convention membership status (available at www.oas.org/juridico/english/sigs/b-35.html).

The New York Convention, perhaps the most important international treaty concerning international commercial arbitration, mandates that all member states must not only honor arbitration clauses agreed-to by parties from member states, but also must enforce, with few exceptions, arbitral awards by foreign panels. See New York Convention arts. II, V. The Pana-ma Convention, drafted by the countries of the Americas, mirrors the New York Convention’s objectives. See Panama Convention arts. I, IV, V.

Domestic Support for International Commer-cial Arbitration in Latin America: In addition to the promise of fair arbitration and enforceable awards under the New York and Panama Con-ventions, U.S. businesses can also now rely on similar domestic protections erected by many Latin American countries themselves.

Much of this domestic legislation is based on the 1994 Uncitral Model Law on Interna-tional Commercial Arbitration (referred to below as the Model Law). See Model Law (available at www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf). The Model Law, much like the New York and Panama Conventions, provides for the enforceability of arbitration agreements and awards made by foreign panels. It also greatly limits the grounds on which those awards may be appealed. See Model Law chs. II, VII, VIII.

Since the Model Law was drafted in 1985,

The Good, the Bad, and the Northern Andes: Current International Arbitration Trends in Latin AmericaBy gABRiELA n. ARcE DE SMiTh AnD BEnjAMin E. goRDon

InvestmentADR

The authors are litigation associates at Philadelphia’s Stradley Ronon Stevens & Young LLP. (continued on next page)

108­ Alternatives­ vol. 30 no. 5 may 2012

seven Latin American countries have enacted legislation based on it: Guatemala (1995), Pe-ru (1996), Venezuela (1998), Honduras (2000), Paraguay (2002), Chile (2004), and Costa Rica (2011). See Uncitral website, status of Model Law with amendments as adopted in 2006 (available at www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html).

Additionally, several countries that have not adopted the Model Law have crafted their own legislative schemes to adequately provide for ef-fective and fair international commercial arbitra-tion. Brazil, which boasts one of the world’s largest economies, serves as a good example.

Like the Model Law, the Brazilian Arbitration Act of 1996 provides for the enforcement of arbi-tration clauses and limits the grounds on which awards may be appealed. See Lei No. 9307, de 23 de setembro de 1996, D.O.U. de 24.09.06 (Brazil), Chs. II, V. Unlike the Model Law, the 1996 act limits the enforceability of foreign awards to only those awards that are approved by a Brazilian court. See id. Ch. VI, art. 35.

The Brazilian judiciary, however, has proven its willingness to stretch the 1996 act through creative construction with an eye toward enforc-ing arbitral awards. For example, on June 1, 2011, the Brazilian Superior Court of Justice confirmed its previous holding that awards rendered in Brazil by an International Chamber of Com-merce panel are not, in fact, foreign awards. See Nuovo Pignone S.p.A. v. Marítima Petróleo e En-genharia Ltda. and Petromec Inc., Special Appeal n. 1.231.554-RJ, Superior Court of Justice (Brazil 2011). As a result, ICC awards issued in Brazil will no longer have to be vetted by the Brazilian judiciary before they are deemed enforceable.

Argentina has taken a somewhat similar ap-proach. The Argentine National Civil and Com-mercial Procedural Code, which governs both in-ternational and domestic commercial arbitration, bows to the New York and Panama Conventions when they are applicable. See Global Legal Group, “The International Comparative Legal Guide to International Arbitration 2009: A Practical Insight to Cross-Border International Arbitration,” Ch. 35–Argentina, § 2.2, www.iclg.co.uk/khadmin/Publications/pdf/3054.pdf. Thus, while not an adoption of the Model Law per se, Argentine arbitration law incorporates the protections of the

New York and Panama Conventions much the way the Model Law does in other countries.

Another example—though a curious one—is Ecuador. Contrary to Ecuador’s position on inter-national investment arbitration awards, discussed infra, an Ecuadorian court recently enforced a $3 million arbitral award against an Ecuadorian distributor, and in favor of international elec-tronics giant Daewoo. See “Latin America’s pro-arbitration trend: Ecuador court enforces arbitra-tion award rendered in the U.S.,” Int’l Arbitration Newsletter, Latin American News (DLA Piper), Sept. 7, 2011 (available at www.dlapiper.com/bra-zil/publications/detail.aspx?pub=6275).

The court, operating in a precedential vac-uum, enforced the award by strictly construing

a provision of the Ecuadorian Law of Arbitra-tion and Mediation commanding that arbitral awards be given the same effect as judgments entered by Ecuador’s highest court. The deci-sion now establishes a precedent, though only a persuasive one, in favor of enforcing interna-tional commercial arbitral awards.

Colombia is similar to Ecuador. The Co-lombian Supreme Court of Justice has rebuked attempts to annul international commercial arbitration awards when both parties to the dispute are private. In 2004, for example, the court enforced an award against a Colombian party, and in favor of a Portuguese party, over the Colombian’s party objections that the interest rate on the award, while legal in Portugal, was illegal in Colombia. See U.S. Embassy, Bogota,

Colombia, Council of American Enterprises, Co-lombian American Chamber of Commerce, “An Overview of Arbitration in Colombia for U.S. Companies,” at 7-8 n.12 (May 2011)(available at http://export.gov/colombia/static/Report%20-%20Arbitration%20in%20Colombia%20-%20final%206-1-11_Latest_eg_co_033097.pdf).

On the other hand, when the arbitration is between a private party and a Colombian State entity, the Colombian government has a bad habit of getting involved. The Colom-bian Attorney General and the Fiscal Auditor are much more prone to insist on annulment proceedings or direct appeal to the country’s Constitutional Court when state money is on the line. Id. at 8-11. This runs parallel to the growing trend away from international invest-ment arbitration discussed below.

ThE BAD nEWS: inTERnATionAL inVESTMEnT ARBiTRATion

Convention on Settlement of Investment Disputes between States and Nationals of Other States: In contrast to the growing acceptance of commercial arbitration in Latin America, investment arbitra-tion, available when an individual or entity makes an investment in a sovereign state, is more and more frequently being rendered impotent or re-jected outright by Latin American governments.

The Convention on the Settlement of Invest-ment Disputes between States and Nationals of Other States (the “Icsid Convention” below) is the major international treaty governing international investment disputes in force in Latin America. See Icsid, List of Contracting States and other Signatories of the Convention (as of May 5, 2011)(available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSIDDocRH&actionVal=ShowDocument&language=English).

The Icsid Convention encourages countries to engage in international arbitration with inves-tors before the International Center for Settle-ment of Investment Disputes. See Icsid, “Icsid Convention, Regulations and Rules” 30 (available at http://icsid.worldbank.org/ICSID/StaticFiles/ basicdoc/CRR_English-final.pdf). And, while Latin America as a region has more claims pre-sented by investors against states than any other region in the world, several countries have a his-tory of making it extremely difficult to enforce Icsid awards rendered against them. See Icsid, 2011 Annual Report, at 284 (available at www-

WorldlyPerspectives

(continued from previous page)

Growing ADR; Lagging ADR

The setting: latinAmerica.

The practices: Internationalarbitra-tionamongprivateparties,andinternationalinvestmentarbitration,whereagovernmentisaparty.

where’s the problem?Whilecom-mercialarbitrationisembraced,governmentsfrequentlyareguttinginternationalinvestmentarbitration,orrejectingitaltogether.

wds.worldbank.org/external/default/WDSCon tentServer/WDSP/IB/2011/11/30/000386194_20111130020458/Rendered/PDF/657840AR02011000Box365727B00PUBLIC0.pdf) (reporting that nearly one-third of the Icsid cases registered in 2011 involved Latin American states).

Argentina is the principal example. Follow-ing its 2001 financial collapse, several investors won Icsid awards against Argentina. Argentina balked and tried vehemently to avoid paying, sometimes successfully.

In Sempra Energy International v. Republic of Argentina, for example, Argentina successfully got a $128 Million award against it annulled on a procedural issue. See Icsid Case No. ARB/02/16, Annulment Proceeding (June 29, 2010)(avail-able at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC1550_En&caseId=C8). Sempra is emblematic of Argentina’s so-called “Rosatti Doc-trine,” premised on the notion that, because Icsid favors foreign investors over local investors, Icsid awards are inherently suspect under the equal protection provisions of the Argentine Constitu-tion. See Katia Fach Gómez, “Latin America and ICSID: David Versus Goliath?” 17 L. & Bus. Rev. Am. 195, 201-02 (2011).

As recently as November 2011, the Argentine government forced two U.S. companies to seek recognition of Icsid awards in the Argentine fed-eral courts. See Argentina Ratifica que los Fallos Del CIADI Deben Tramitarse en el Pais, Clarín (Nov. 11, 2011)(available at www.ieco.clarin.com/economia/Argentina-ratifica-fallos-CIADI-tram-itarse_0_589141162.html.) This, obviously, poses a threat to U.S. investors.

Other countries have been even more aggres-sive in their rebuke of Icsid. Indeed, in the past few years, Bolivia and Ecuador have publicly de-nounced Icsid and have withdrawn from the Ic-sid Convention. See Icsid News Release, “Bolivia Submits a Notice Under Article 71 of the Icsid Convention” (May 16, 2007)(available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=OpenPage&PageType=AnnouncementsFrame&FromPage=NewsReleases&pageName=Announcement3); Icsid News Release, “Ecuador Submits a Notice Under Article 71 of the Icsid Convention” (July 9, 2009)(available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=OpenPage&PageType=AnnouncementsFrame&FromPage=NewsReleases&pageName=Announcement20). And in September 2011, Venezuela

indicated that it too will soon withdraw. See Jose De Cordoba, “Chavez Takes Steps to Exit Global Forum,” Wall Street Journal (Sept. 13, 2011), (available with subscription at http://online.wsj.com/article/SB10001424053111903285704576560760106674594.html).

Similarly, and as alluded-to above, Colombia may well be moving in this direction. In a seem-ingly favorable 2008 decision, the Constitutional Court held that a bilateral investment treaty, or “BIT,” between the U.S. and Colombia did not run afoul of the Colombian Constitution. See Con-stitutional Court Press Release No. 35 (July 24, 2008) (available at www.actualicese.com/norma-tividad/2008/07/24/comunicado-de-sentencias-c-750-y-c-751-de-24-07-2008). A BIT is a treaty between two countries that governs investment-related disputes and frequently includes an arbi-tration clause.

While the result was good for U.S. investors, the fact that the Constitutional Court felt the need to weigh in at all was troubling. Colombia, a civil law state, elects its Constitutional Court every eight years. See Constitutional Court home page at www.corteconstitucional.gov.co/lacorte. Therefore, every judicial election brings the pos-sibility that the Court will decide that it need not honor its international investment arbitration obligations. This is a particular concern given Co-lombia’s history of trying to evade paying arbitral awards against the state, discussed supra.

Brazil is an exception to this trend. Notably, because of the size and stability of its economy, Brazil is neither a party to the Icsid Convention nor to any BITs. To date, this does not appear to have caused problems since foreign investors have routinely negotiated successfully with the Brazil-ian government for arbitration clauses on a deal-by-deal basis. See Elizabeth Whitsitt and Damon Vis-Dunbar, “Investment Arbitration in Brazil: Yes or No?” Investment Treaty News (Nov. 30, 2008)(available at www.iisd.org/itn/2008/11/30/investment-arbitration-in-brazil-yes-or-no). Thus, Brazil’s solution to international investment arbitration tracks its solution to international commercial arbitration. See supra.

cLEAREST DiSTincTion

It isn’t surprising that commercial arbitration is more accepted than investment arbitration, given the nationalist leanings of many Latin American countries.

The clearest distinction between commercial

arbitration and investment arbitration is the ex-posure of state funds in the latter. It is easy to un-derstand why a sovereign country with an inde-pendent judicial system might choose to use that judicial system as a shield against foreign fingers tugging on its national purse-strings. Colombia serves as a perfect example; see above.

Nationalist political movements across Latin America serve to exacerbate this issue. Indeed, as nationalist political administrations have taken hold in Bolivia, Ecuador and Ven-ezuela, those countries have retreated from their international obligations.

For example, it is suspected that Ven-ezuela’s seemingly imminent withdrawal from Icsid is based on Venezuelan President Hugo Chavez’s fear that his country might wind up on the hook for the billions of dollars that he has expropriated from foreign investors. See Jose De Cordoba, Chavez Takes Steps to Exit Global Forum, Wall Street Journal (Sept. 13, 2011)(available with subscription at http://online.wsj.com/article/SB10001424053111903285704576560760106674594.html).

International commercial arbitration, by contrast, is generally not affected by the same political influences. Typically, commercial ar-bitration involves two private parties, both of whom usually have deep pockets. It is easy to see why countries, even nationalist-leaning coun-tries, would care less about the extent to which those companies have to pay awards made by a foreign panel. There are no state dollars at stake, so there is less for the state to worry about.

Ecuador’s recent Daewoo decision noted above is illustrative. So, too, are Colombia’s di-vergent positions regarding arbitration awards against private entities and similar awards against state entities, also described above.

* * *

In Latin America, the trend favoring international commercial arbitration continues unabated. To-day, there are precious few reasons for U.S. com-panies and investors not to do business with their Latin American counterparts. It is quite another story, however, when it comes to international investment arbitration. At best, Calvo will remain dormant in much of Latin America, and U.S. investors will merely wonder whether their invest-ment will spark the dispute that will rouse it.

At worst, they will not have to wonder. (For bulk reprints of this article,

please call (201) 748-8789.)

vol. 30 no. 5 may 2012 Alternatives­ 109

In the Czech Republic, mediation exists as a legal, and as yet unregulated, activity in-volving the amicable resolution of disputes

with the assistance of a neutral third person. But the term “mediation” is unknown to Czech law currently in force. Presently, the law rec-ognizes only one way to resolve a dispute in an amicable manner: a conciliation procedure.

Directive 2008/52/EC of the European Parliament and the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters—referred to here as the Directive—was scheduled to be implemented in the Czech Repub-lic, as it was throughout the Euro-pean Union, by May 21, 2011. The Czech Republic implementation process, however, is still continuing. (See previ-ous monthly Worldly Perspectives columns for examples of more timely implementations.) A draft Mediation Act is currently in the midst of the legislative process; negotiations were pro-ceeding about certain aspects of the content as of this writing, and the law likely has changed since this column was finalized.

This column presents a preview of the most prominent features of the proposed Czech Me-diation Act. The act was accompanied by an

explanatory memorandum, which will be ref-erenced here, as applicable, for indications of the legislative intent underlying the act.

ScoPE of REguLATion

The Directive’s main objective is securing bet-ter access to justice, which it envisions as encompassing increased ability to use extraju-

dicial dispute resolution methods. Because, as stated in points five and six of the Directive’s preamble, mediation can be a cost-effective and quick extrajudicial method of resolving disputes, it is important for member states implementing the Directive to regulate media-tion in a way that allows it to be

used in as many cases as are possible within the Directive’s scope.

In the Czech Republic, whether and how a matter comes within the Czech Mediation

Act’s provisions is determined by both the subject matter of the dispute, and who con-ducts the mediation.

According to the text of the act, all non-criminal matters may be recommended for mediation. All parties to the dispute must be private, however, allowing for legal standing on equal ground with regards to rights and obligations. For example, disputes between an individual or legal entity and the state are excluded from the act.

Moreover, the act’s provisions only regu-late services provided by mediators registered with the Ministry of Justice. Services provided by nonregistered mediators are not prohib-ited, but are not considered mediation under the act. This rule is expressed in the act’s paragraph 1: “The Act regulates the practice and the effects of mediation performed by registered mediators.”

Disputes most likely eligible for mediation usually arise out of family relationships. The

De Palo is co-founder and president of ADR Center, a member of JAMS International, based in Rome. He is also the first International Professor of ADR Law & Practice at Hamline University School of Law in St. Paul, Minn. Trevor is an associate professor of law and director of the legal research and writing department at Hamline. Flavia Orecchini and Karolina Galecki, from the ADR Center International Projects Unit, assisted the authors with research. Bie Heyninck, founder and managing partner of the Prague-based law firm Heyninck & Partners, contributed to this month’s column. She is registered as a lawyer with the Brussels and Czech Bar Associations. Heyninck is a mediator in civil and commercial proceedings and is accredited by the Czech Republic Federal Mediation Committee and bMediation (http://www.bmediation.eu).

110­ Alternatives­ vol. 30 no. 5 may 2012

The Czech Republic Mediation Act: A Work-in-Progress, with PotentialBy giuSEPPE DE PALo AnD MARy B. TREVoR

WorldlyPerspectives

The Czech Republic is located in Central Europe. Part of Czechoslovakia from the end of World War I, the peaceful “Velvet Revolution” in 1989 led to the 1993 separa-tion of the country into the Czech Republic and the Slovak Republic, or Slovakia.

The Czech Republic now lies to the west of Slovakia. It is also bordered by Aus-tria, Germany, and Poland. The majority of its inhabitants are, in fact, Czech, and recent estimates place the population at about 10,177,300 people.

With the Velvet Revolution, the Czech Republic left behind about 20 years of com-munist rule and became a democracy. It joined NATO shortly after, in 1999, and the European Union in 2004.

The Czech Republic is a parliamentary democracy with a civil law system. Prime Minister Petr Necas is the head of gov-ernment. The president, currently Vaclav Klaus, is the formal head of state, and has limited, specific powers. The Legislature is currently working on modifying the legal system, which finds its historical roots in both Austro-Hungarian civil codes and socialism. Supreme Court judges are ap-pointed for an unlimited term and Con-stitutional Court judges are appointed for a 10-year term. Supreme Administrative Court judges are appointed by the president for an unlimited term.

[Sources: http://en.wikipedia.org/wiki/Czech_Republic#Demographics; https://www.cia.gov/library/publications/the-world-factbook/geos/ez.html.]

The Basics

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Legislature is aware of the sensitive nature of such relationships: Family mediation is defined separately and subject to specific provisions of the Mediation Act.

ThE AcT’S MEDiAToR REquiREMEnTS

As stated above, only mediations conducted by a registered mediator are governed by the Czech Mediation Act. Mediations conducted by other persons are not subject to its statute of limitations provisions or the act’s other provi-sions or legal consequences.

A mediator subject to the act is a “natural person who is registered in the list of media-tors” managed by the Ministry of Justice. The act divides registered mediators into two cat-egories: mediator-advocates, lawyers who are partially subject to the Bar’s powers, and non-advocate mediators, who are wholly subject to the Ministry of Justice. Thus, even for those mediators subject to the act, there are distinc-tions made.

In order to register successfully, the aspir-ing mediator must have legal capacity, a clean criminal record, and at least a master’s level university degree. The issue of whether a mas-ter’s degree would suffice was widely discussed during drafting of the legislative text. He or she cannot have been removed from the mediators’ list in the past five years. Finally, the aspiring mediator must pass the mediation exam.

No showing of practical experience or pro-ficiency in mediation skills and techniques is required for mediator registration. The memo-randum explains that, due to the lack of a me-diation tradition in the Czech Republic, media-tion practice experience shouldn’t be required at this time. The legislators assume that media-tors will continuously learn and improve their skills in their own interest. It also is assumed that the free market will establish a network of educational institutions for this purpose.

EXAM conTEnT

While there is no requirement for mediators to have practical experience, the Legislature viewed the mediation exam as the most im-portant tool in assuring the high quality of registered mediators. It was also hoped that having high-quality mediators will motivate the disputing parties to choose their services.

The Mediation Act, however, only ad-dresses the mediation exam requirement in general terms, leaving the details of the exam’s content, as well as the manner in which it will be administered, to be determined by Ministry of Justice regulation.

Mediation Act Paragraph 23(7) provides that the exam should “verify[] the professional knowledge and skills required for the practice of a mediator,” by covering “appropriate legisla-tion, mediation techniques, basic human rights and freedoms, civil, commercial and labor law, family law, consumer protection law, civil pro-cedure law and the foundations of psychology and sociology.”

According to the memorandum, the exam for those who would like to conduct media-tions in family law matters should be particu-larly focused on that area. It remains unclear what the scope of the legal knowledge for the other fields mentioned should be.

Since mediation must not be viewed as just another branch of advocacy, mediators should not be expected to be proficient in legal mat-ters, but their communication or psychological skills should be highlighted.

The mediation exam is to be adminis-tered by the Ministry of Justice, with one important exception. Paragraph 23(6) empow-ers the Czech Bar Association to conduct the examinations administered to applicants who are attorneys.

This approach to the exam requirement raises some significant questions. The act makes no mention of how the relationship between the Ministry of Justice and the Czech Bar Association is to be regulated. Further-more, the exclusion of mediator-advocates from the otherwise uniform system of the mediation exam is questionable.

According to the Legislature, delegating part of the Ministry’s responsibilities for ad-ministering the exam to another entity will substantially reduce state expenses. This con-troversial segregation, however, creates the potential for unequal treatment of mediators.

nEuTRALiTy & confiDEnTiALiTy

The mediator must maintain certain obliga-tions concerning the administration of me-diations and the provision of information. Paragraph 8 of the Mediation Act deals with

the duty of maintaining impartiality. The act considers a mediator to be an impartial third party who assists the parties to the dispute in the search for common interests and possible mutual agreement.

The act protects this principle by pro-hibiting a mediator from providing any legal services in a conflict for which he or she is preparing to conduct, is conducting, or has conducted, a mediation. Nevertheless, under the act it is not considered the provision of legal services if the mediator expresses a legal opinion on the issues of the mediation or any follow-up questions. This section of the act has been subject to much discussion because the generally held viewpoint is that a mediator should not express a legal opinion. A proposed amendment to annul this section is currently under discussion.

Paragraph 9 of the Mediation Act re-quires mediators to “keep confidential all facts [learned] in connection with the preparation and conduction of the mediation, even after [their] removal from the list.” This obligation also applies “to any person involved in the preparation and progress of the mediation together with the mediator.” Breach of the duty of confidentiality is an administrative offense.

The duty of confidentiality is not absolute. The mediator is released from the obligation if it is “necessary for proceedings before a court or any other competent authority, if the subject of the litigation is a dispute between him and a party to the conflict or its legal rep-resentative, arising from his mediation activi-ties and to the extent necessary for his defense in the exercise of supervision of a mediator or in disciplinary proceedings.”

In light of the fact that mediation’s confi-dential nature often is the most crucial element that brings the disputing parties together at the common table, it is surprising that the duty of confidentiality is not extended to the parties themselves. They are left to decide whether to maintain the confidentiality of the mediation.

couRT coMPETEncE

Under the Czech Code of Civil Proceedings, the Czech courts have specific powers relat-ing to amicable dispute resolution. No code provision includes referring disputing parties to mediation.

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No Mediation Act section provides for referral either. It does, however, allow for the possibility of the court ordering the parties to a three-hour introductory meeting with a registered mediator. The parties, at their dis-cretion, can choose a mediator from the list of registered mediators to conduct the introduc-tory meeting.

The sole objectives of the introductory meeting are to make the parties familiar with the mediation process and explain its main advantages. The meeting is recommended for cases which are believed to be more appropri-ately resolved through mediation than judicial proceedings. The introductory meeting stays the court proceedings for a period not to ex-ceed three months, and its costs are covered by the parties.

The parties are not legally obligated to at-tend the introductory meeting, but the court may exclude the recovery of costs incurred by a winning party that declined to do so. After the meeting has taken place, it is fully up to the will of the parties whether they wish to mediate their dispute.

A mediation is initiated by a voluntary contract to mediate between the mediator and the parties. The contract should explain the nature of the dispute and identify the parties to the conflict.

Once the mediation starts, applicable limi-tation and preclusion periods are automati-cally suspended, as stated in amendments to the Czech Commercial Code and Czech Civil Code. The suspension ends when the media-tion concludes.

In order to prevent the unjustified and extended suspension of the periods in ques-tion, the mediator is obligated to terminate the

mediation if the parties do not meet with him or her for more than one year.

MEDiATion AgREEMEnT EnfoRcEABiLiTy

The most desirable outcome of a mediation is the signing of a mediation agreement. While the Mediation Act designates the agreement’s

essentials, it does not speak about its enforce-ability. The memorandum, however, is clear that the mediation agreement is not directly enforceable without court approval or a sub-sequent agreement on fulfillment of the claim. Such an agreement may take the form of a no-tarial deed or an execution record with consent to enforceability.

Supervision over the obligations estab-lished in the Mediation Act is split between the Ministry of Justice and the Czech Bar Association. While non-advocate mediators are answerable to the Ministry of Justice for a breach of obligations, mediator-advocates are

only subject to the disciplinary powers of the Czech Bar Association.

Differential treatment of mediators is once again created. Along with different supervi-sors, there are also differences in the possible sanctions for breach of the mediator’s duties, since the system of sanctions for administra-tive offenses strongly differs from the system of disciplinary sanctions. Current proposed amendments may change some aspects of this duality, however.

* * *

As mentioned above, there is no tradition of mediation regulation in the Czech Republic. Because of this, the legislative process has been quite extended, and the discussions on this subject have been difficult. Many divergent ideas and views, from many different interest groups and organizations, have been a part of the continuing debate. The serious examina-tions that have occurred show a genuine inter-est in establishing a strong mediation tradition in the Czech Republic, for both domestic and cross-border mediation, moving forward.

Three main questionable issues arise, how-ever, from the Czech Mediation Act proposal. First, it creates a dual track of mediators, since mediators who are also advocates are subject to certain exceptions and rights that are hardly defendable. Second, the duty of confidentiality is insufficiently regulated, in spite of its specific importance to the mediation process. Finally, the nature of mediation is unsettled because non-advocate mediators may express their le-gal opinions.

In order to offer its true value, mediation must remain the method of searching for mu-tual agreement with the help of a third neutral person while protecting interests of both dis-puting parties.

(For bulk reprints of this article, please call (201) 748-8789.)

WorldlyPerspectives

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112­ Alternatives­ vol. 30 no. 5 may 2012

Building a Tradition

The setting: TheCzechRepublic.

The task: ThelegislaturecobblestogetheraMediationAct,withoutanADRhistorytorelyupon.

The progress: Theactwasdueayearago,attheEuropeanUnioncross-bordermediationDirectivedeadline.Itisnowclosetocompletion.Andindicativeofapositivefuture.

What went wrong? Simply, the par-ties—including the defendant—picked the wrong guy. The legal dispute was ostensi-bly over a design patent, but the driver of

the dispute—what was really causing the problems—was the relationship between the parties.

The plaintiff manufactured high-end fash-ion products; the defendant sold cheap knock-offs through infomercials. The parties were upset with one another. There was a history, and some bad blood.

They also were two businessmen in lines of business that were not necessarily mutually exclusive. And there were some synergies avail-able for exploration.

The plaintiff was a hot-headed Irishman; the defendant a hot-headed Russian. Hence there were cultural and emotional issues un-derlying the thing.

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There also was a practical impasse. The plaintiff had already invested a lot of money in the litigation. He wasn’t going to settle without getting something for his investment, regard-less of what this attorney/mediator thought of the strength of the case—and even if the mediator’s analysis was right.

Unfortunately, for all his expertise in de-sign patents, this mediator was not an expert in any of the factors at play in the dispute. He was a one-trick pony who could look at the legal is-sues, evaluate them, and then share his analysis like a sledgehammer upside the head.

But deal with emotion? Get creative? Look at business angles? Focus on the real cause of the impasse? Bond with a hot-headed Irish-man? Understand the practical realities in front of him?

All well beyond this mediator’s limited talents.

It was really both attorneys’ fault. The plaintiff ’s counsel, by uncritically acceding to the opponent’s choice of mediator, gave his op-ponent another platform to practice his open-ing statement, and subjected his own client to the same type of badgering that created the conflict in the first place.

The defense attorney focused on selecting someone who would understand and buy into the defense’s theory of the case, failed to recog-nize that this dynamic would only serve to fur-ther alienate the parties rather than help find the collaboration necessary to end the conflict.

A BETTER WAy

So clearly there has to be a better way to match the mediator to the dispute.

The design patent mediation failed be-cause the attorneys selected a mediator who was really strong at evaluating design patent cases . . . but the dispute before him was not based on a misunderstanding of design patent law. The dispute before him was caused by more personal issues—a history of business conflicts, personal slights, cultural issues, and financial realities.

These two parties could have had 100% agreement on the legal issues and still it would not have settled. The legal issues that were so obvious above the surface were simply irrelevant to what was lurking below. Hence a mediator quick with the law addressed a problem that didn’t exist, and ignored the problems that did.

Had the plaintiff ’s attorney not been locked into the robot mentality of “going with whom-ever you want,” he could have made a better decision. After all, he knew what was driving this case, having lived it for two years. He knew emotion, as much as logic, was pushing under the surface. He knew the relationship between the two sometime-competitors was at the heart of the dispute. He knew a settlement would require creative thinking—dare we say “outside the box” ingenuity.

He knew all of this. He just didn’t con-nect this knowledge to the mediator selec-tion decision.

noT ThE SAME

We can learn from this. Start with the premise that not all disputes

are the same. While some disputes may exist as a result of a disagreement by the parties on the law, or even the facts, other disputes are driven by something else altogether.

Even cases that look alike on the surface could be driven by completely different factors. For example, four simple business contract dis-putes could be filed with identical complaints, and yet one plaintiff may be suing in order to teach the industry a lesson such as, “Don’t mess with me.”

The second case may simply be a desperate plea for cash in a failing economy. A third may be a company’s personal vendetta against a former-employee-turned-competitor, seeking not just to quash the new competitor, but to send a message to other employees who may be contemplating the same thing. A fourth may be driven by a plaintiff ’s attorney’s own

greed. The driver of the conflict—and hence the impasse preventing resolution—will be substantially different in each case.

There may be any number of possible driv-ers of a conflict, including:

• Financial: “The company is broke, and couldn’t pay even if it wanted to.”

• Emotional: “I hate that guy and I’m going to make him pay”; “I’d rather pay my law-yer than pay my competitor a penny.”

• Attorney Ego: “I’m better than my opposing counsel . . . and I’m going to prove it.”

• Client Inattention: “The adjuster with au-thority is on vacation . . . again.”

• Business Realities: “My cash flow is sea-sonal—and this ain’t the season.”

• Informational: “They claim our breach re-sulted in $1 million of lost profits, but they haven’t shared any of their financial records with us.”

• Legal: “These facts do not give rise to a copyright violation under the fair use doctrine.”

• You or Your Firm: “I need trial experience”; “I’ve been too busy to focus on this case.”

• Unrealistic or Stubborn Client: “I’ve seen people on TV get millions for having coffee spilled on them”; “I need justice”; “It’s the principle of the thing.”

• Your Opposing Attorney: “He needs to bill this case a little longer.”

Second, despite what some people might think, mediation is more art than science, more insight and subtlety than mere mes-sage-carrying or sledgehammer-wielding. And hence, shocking as some may believe this sounds and looks, mediators are not fungible.

Even outstanding mediators will have dif-ferent strengths, weaknesses, talents, special-ties, styles, and approaches. Some are strong evaluative mediators, like the mediator in the story above. Others are terrific at dealing with emotional issues. Some specialize in cross-cultural disputes. Others really understand numbers. Some are more creative, or are better at setting an atmosphere for creative brain-storming by all the parties. Some know how to manage disputes with scores of parties and innumerable issues. Some are better at forging a personal connection with clients and attor-neys and using that connection to help build

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Calling the Driver

The problem: Rotepracticeslead-ingtopartydisappointmentinthemediator.

The task: Yougottafindamediatormatch.

how?Thefirststepistogetrealisticaboutyourselfandyourdispute,notscanningpilesofneutrals’resumes.

bridges. Others love the negotiation game aspect of the process.

So if disputes are driven by different fac-tors, and mediators have different strengths and weaknesses, wouldn’t a more effective and appropriate mediator selection philosophy be one that seeks to match the mediator’s strength with the true cause of the underlying conflict?

finD ThE MATch

In other words, if the driver of a dispute—the impasse that is preventing the parties from finding a way out of their conflict—is emotion-al, wouldn’t a mediator who is strong at dealing with, and ultimately channeling and deflecting emotion, be a better candidate than one who simply evaluates legal strengths?

If the problem is a highly volatile mother in a wrongful death case, which mediator has the calming and patient personality to deal with grief and reach that party?

What if the problem is your own client’s intransigence? If your client happens to be a stubborn elderly male, then a mediator who is an elderly male might be the best fit. If your client is an African American female who feels she has been disrespected by an uncaring corporate employer, then an African American mediator might have the best shot at relating to, and really understanding, your client. See, e.g., Vivian Berger, “The Mediator’s (Female) Gender: Irrelevant, Important, or In-Between?” 30 Alternatives 83 (April 2012).

Or, shocking as this may seem, what if the problem is one of the attorneys who is creating an impasse, either because he is unfamiliar with the law or is simply overbearing and dif-ficult? Then going with a mediator that person chooses might indeed make sense.

On the other hand, if the impasse is actu-ally caused by a fundamental disagreement as to the strength of the legal claims asserted in the matter, then a strong evaluative mediator with experience in that legal field, possibly even a former judge, might be superior to a mediator who is really good at handling emo-tional parties.

In short, by thinking a little more strategi-cally, and analyzing the conflict a little more

introspectively, one can better identify the type of mediation skills that will best address the driver of the conflict.

hoW Do you Do iT?

The first step in selecting an appropriate me-diator, thus, is to turn inward—to really ana-lyze the underlying dispute to determine what exactly is creating the parties’ impasse.

Sure there are the legal claims, and a dis-agreement on whether the conduct did or did not violate some law or other. But if that’s all there is, then two good lawyers should be able to hash out a fair settlement by themselves. Instead, dig a little deeper. Find that driver. Is it financial? Cultural? Informational? Emo-tional? Legal? Is the cause on your side of the “v.” or the other?

Once this is discovered, then make the calls. Call the providers; call friends; check the list servs, and even call the opposing attorney. Do all the things one would normally do to develop a list of quality mediators.

Make sure the candidates have some back-ground in the suit’s subject matter—that’s always helpful. And of course ensure the candidates are experienced and well trained. That’s a must.

Further, include only those mediators who are serious about the profession—ones who are committed not only to continuing their own education and training, but who are making mediation their livelihood. This will increase the likelihood of selecting a mediator who re-ally knows what he or she is doing.

Then—and only then—identify those me-diators on the list who have the qualities best suited for addressing the driver of the dispute.

How can one find out? Ask. Ask friends. Ask colleagues. Ask for references and call them, even though this tends to be less valu-able than one might think.

But most important, ask the mediator. Call the mediator up, explain the dispute and underlying dynamics, and ask how he or she would handle the mediation. Any mediator worth his or her wages will take the time to walk through the dispute and share thoughts on how the mediator would approach the is-sues that have been identified.

In other words, do your due diligence . . . but do it with a proper understanding of your goal. Going with “the other guy’s guy” only makes sense when “the other guy” is the cause of the

settlement impasse. But in most cases—despite a litigator’s penchant for demonizing his or her opposing counsel—the opposing counsel is not the problem. That’s too simplistic. The impasse to settlement is generally found a little deeper.

finAL EXAM

You represent a major manufacturer being sued by a vendor owned by a 62-year-old Armenian-born male.

Your client refused to pay the vendor, and took the vendor off its list of approved suppli-ers, claiming the vendor falsified quality control records in order to pass off noncompliant goods.

As revealed in his deposition, the plaintiff saw himself as a pillar in his ethnic commu-nity—a first generation immigrant who had made it big in America, so big that he now owned his own successful business that was able to employ hundreds, including many of his extended family members. The plaintiff also felt there was racial discrimination under-lying your client’s decision.

Your client tells you it rejected the goods, and blacklisted the plaintiff, for the simple reason that the goods were noncompliant. One of the plaintiff ’s former employees provided your client with documentary proof that confirmed the fal-sification of the plaintiff ’s quality control records. Your client didn’t know the plaintiff personally, and had no idea what his ethnicity was.

The plaintiff filed suit for breach of con-tract, and alleged in the complaint that the breach was motivated by racial animus—that the breach was a blatant form of discrimina-tion. The plaintiff ’s attorney is a recent admit-tee, also of Armenian descent, who knows the plaintiff from church. The court has ordered mediation, and the plaintiff ’s attorney rec-ommends a young white woman mediator, well-respected in the business law community, whom he had used before with success.

Do you go with the suggestion of the plain-tiff ’s attorney?

* * *

Post your answer at www.mikeyoungmediation. com/ask-a-mediator; or in the Breaking News thread on this article linked at the home page of Alternatives’ publisher CPR Institute, www.cpradr.org.

(For bulk reprints of this article, please call (201) 748-8789.)

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ADR­Brief‘cALM WATERS,’ WiTh DiSSEnT: fLoRiDA REquiRES A couRT MEDiATion AuThoRiTy fiLing

Florida ADR practitioners are adjusting to a new, unique rule requiring mediation partici-pants to come to the bargaining table with au-thority to settle at court-annexed mediations.

Designed to discourage participants from gaming ADR and stalling cases, among other purposes, Florida Court Rule 1.720 took effect Jan. 1.

It is seemingly innocuous, but at the same time, it requires a new mediation filing that some practitioners view as unwelcome regulation.

The rule also is targeted, in part, at in-surance companies. It specifies that if there is an appearance by an insurance carrier’s representative, it is not merely performed by its outside counsel. The company representa-tive must have “full authority to settle in an amount up to the amount of the plaintiff ’s last demand or policy limits, whichever is less, without further consultation.”

The rule focuses on objective standards, requiring that mediation parties show up with someone who can make the final decision on a case, and “who has the legal capacity to execute a binding settlement agreement on behalf of the party.”

Florida has long had an “appearance” rule, requiring authority at the sessions, but now the rule has teeth, including sanctions, for a failure to appear. The sanctions are directed at parties, not insurance representatives or outside counsel.

Insurers already are protected by the state’s long-running nonjoinder statute, which re-quires that parties get “a settlement or verdict against a person who is an insured under the terms of such policy for a cause of action which is covered by such policy.” Fla. Statutes—Title XXXVII Insurance Section 627.4136 (Non-joinder of insurers).

Now, however, there are mandatory filings for insurers if they will appear, and sanctions for defense and plaintiffs who don’t comply. The heart of the new rule says that unless parties otherwise agree, they must each file a written notice 10 days before the mediation

identifying the participants who will be attend-ing and who have the “full authority to settle.” Other state appearance rules don’t go that far.

Most Florida officials and practitioners agree that it’s too early to judge the success of the new authority rule. Florida Supreme Court Committee on Alternative Dispute Resolution Rules and Policy chairman Wil-

liam Palmer says that there have been no requests for sanctions, and he hasn’t heard complaints about compliance.

“The waters are calm,” agrees Lawrence M. Watson Jr., name partner and full-time lawyer-neutral in the Maitland, Fla., office of ADR consulting firm Upchurch Watson White & Max, adding, “and there has not been a big storm of protest.”

Watson, who has been member of the Flor-ida Supreme Court ADR committee for more than two decades and was a driving force be-hind the new authority rule, says that there have been “some grumbles, but the plaintiff ’s bar is agreeing to this with open arms. And I don’t see the defense guys doing it that much differently.”

A big insurer has a similar view. David M. Karr, Associate Vice President, Regional Coun-sel in Gainesville, Fla., for the South Eastern Region of the Nationwide and Allied Insurance Cos., based, respectively, in Columbus, Ohio and Des Moines, Iowa, stated in an E-mail that

Nationwide is taking all steps to comply with the amendments to [Florida] Rule of

Civil Procedure 1.720. The amendments to the rule do not significantly change the way the Company has been approaching mediations. Even before the enactment of these amendments, Nationwide had been utilizing the practice of sending corporate representatives to mediations with full au-thority to negotiate and settle cases. So far, the additional certification of authority filing requirements have not added signifi-cant burden or expense.

Janice M. Fleischer, director of the Florida Supreme Court’s Dispute Resolution Center in Tallahassee, Fla., which oversees state mediator certifications, confirms that her office hasn’t seen any complaints, nor have grievances been filed related to the new rule.

But not everyone is quite so welcoming. Michael Packer, supervising attorney for Flor-ida insurance coverage and bad-faith matters in the Fort Lauderdale, Fla., office of Marshall, Dennehey, Warner, Coleman & Goggin, said that in the 20 cases he mediated under the new rule in 2011’s first quarter, the plaintiff had complied with the rule properly by filing the certificate of authority in only about five cases.

“My feeling is that the rule change unfairly targeted insurance companies,” he says, add-ing, “Insurance companies seem to be most affected. . . .”

The practitioners and Florida court of-ficials contacted for this article say that parties of all sizes are still getting educated about their new mediation obligations. Court ADR com-mittee chair William Palmer, who is a Fifth District Court of Appeal judge in Daytona Beach, Fla., says that the most significant feed-back so far has been requests for a form for the authority certification. On Jan. 27, the Court committee drafted a form, and Palmer circulat-ed it to courts around the state—not a required format, but a suggestion as to an appropriate version that local ADR offices can adapt.

The certification of authority requirement applies only to state court matters. Still, some practitioners hope that highlighting the impor-tance of authority in the mediation room will alert all neutrals, in both court-annexed and private matters, to be more process-oriented:

(you must) Bring It On

The goal: Improvingmediation.

The locale: Floridacourts.

what’s new? Arulethatrequirespartiestoshowupwithrealauthor-itytosettletheircaseattheADRtable—withrealimplicationsfortheirlawyersandtheirinsurancecarriers.

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ADR­Briefprepare earlier by touching base with the par-ties on mediation goals, and encourage the parties to make ADR more productive.

Better processes by addressing authority was a big part of the initial push for the law three years ago, led by Lawrence Watson, who raised the authority issues with the Court committee. “Our purpose wasn’t to create a new controversy,” he says. “It was to flush these issues out early and get mediators to deal with them before engaging.”

While the committee members were re-searching other jurisdictions and debating ways to address authority with a rule, the bank-ing crisis hit. Florida, struck hard by plum-meting real estate values, started a court-run mediation program to try to work out deals between under-water homeowners, and banks that no longer wanted to manage residential real estate if they could help it.

Melvin A. Rubin, a veteran Coral Gables, Fla. mediator who also is a longtime ADR Rules and Policy Committee member, says that some of the problems encountered in the

foreclosure mediations stemmed from a lack of authority. (See also “Mediation Rising: States Depend on ADR to Help Clean Up the Mort-gage Mess,” 27 Alternatives 57 (March 2009).)

Florida’s former Chief Justice Peggy A. Quince, who still sits on the Court, issued a December 2009, administrative order, which approves a Court task force recommendation requiring foreclosure mediation authority. In re: Final Report and Recommendations on Residen-tial Mortgage Foreclosure Cases, No. AOSC09-54 (available at http://www.floridasupremecourt.org/pub_info/documents/AOSC09-54_Fore-closures.pdf). But the order notes that the issue was the subject of a rulemaking study by the Court’s ADR Rules and Policy Committee. The 2009 order offers interim approval for its re-quirement that mediation managers investigate settlement authority, pending the ADR Rules and Policy Committee review.

There doesn’t appear to be anything like the new Florida rule in other states, though ap-pearance requirements are common. Even oc-casional federal court authority rules’ language generally avoids written certifications. Watson

says that the challenge for the committee was to define appropriate authority, and then de-vise a method to enforce it without violating mediation confidentiality.

The way it does that is by taking the mediator out of the enforcement equation. “Unless otherwise stipulated by the parties,” states R. 1.720(c), “each party, 10 days prior to appearing at a mediation conference, shall file with the court and serve all parties a written notice identifying the person or persons who will be attending the mediation conference as a party representative or as an insurance car-rier representative, and confirming that those persons have the authority required. . . . ” See box below.

The rule goes on to provide for sanctions for a failure to appear; and the failure to file a notice creates a rebuttable presumption of a failure to appear. Those lapses can mean me-diation fees, attorneys’ fees, and costs for the party that doesn’t meet the requirements.

The rule has an exception for governmen-tal entities that must make decisions by board vote. More than one person may be designated

Here is the text of the changed sections to Rule 1.720 of the Florida Rules of Civil Procedure, relating to mediation procedures:

(b) Appearance at Mediation. Unless otherwise permitted by court order or stipu-lated by the parties in writing, a party is deemed to appear at a mediation confer-ence if the following persons are physically present:

(1) The party or a party representative having full authority to settle without further consultation; and

(2) The party’s counsel of record, if any: and

(3) A representative of the insurance carrier for any insured party who is not such carrier’s outside counsel and who has full authority to settle in an amount up to the amount of the plaintiff ’s last demand or policy lim-

its, whichever is less, without further consultation.

(c) Party Representative Having Full Au-thority to Settle. A “party representative having full authority to settle” shall mean the final decision maker with respect to all issues presented by the case who has the legal ca-pacity to execute a binding settlement agree-ment on behalf of the party. Nothing herein shall be deemed to require any party or party representative who appears at a mediation conference in compliance with this rule to enter into a settlement agreement.

(e) Certification of Authority. Unless oth-erwise stipulated by the parties, each party, 10 days prior to appearing at a mediation conference, shall file with the court and serve all parties a written notice identifying the person or persons who will be attending the mediation conference as a party representa-tive or as an insurance carrier representative,

and confirming that those persons have the authority required by subdivision (b).

(f) Sanctions for Failure to Appear. If a party fails to appear at a duly noticed me-diation conference without good cause, the court, upon motion, shall impose sanctions, including award of mediation fees, attorneys’ fees, and costs, against the party failing to appear. The failure to file a confirmation of authority required under subdivision (e) above, or failure of the persons actually identified in the confirmation to appear at the mediation conference, shall create a re-buttable presumption of a failure to appear.

* * *

The Florida Supreme Court’s per curiam opinion adopting the new rule, In re: Amend-ments to Florida Rule of Civil Procedure 1.720, No. SC10-2329 (November 3, 2011), is available at www.floridasupremecourt.org/decisions/2011/sc10-2329.pdf.

What Florida Wants from You for Court Mediation

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in the certification as having authority to sign, and the party may designate multiple decision makers—“all of whom must appear at media-tion,” says the Court committee’s notes on the rule change.

Larry Watson says that the rule keeps it simple and corrects a problem. “I think Florida is admirable in not going down the path in saying ‘I am ordering you to mediation and ordering you to participate in good faith,’” he says, explaining that “there are judges that include that phrase in their directives around the country. . . . There is a slippery slope [there], because who is going to define what good faith is?”

Watson says that the rule provides a rea-sonable objective approach by setting out a legal standard on who can sign the mediation agreement, on final decision makers, and on the insurance carriers’ limits—the policy limits or the demand, whatever is less. “We are kind of happy we are able to put objective standards in a subjective concept of good faith,” says Watson.

Janice Fleischer of the Florida Supreme Court’s Dispute Resolution Center says she sees the rule primarily helping mediation in big commercial cases, probably even more than in the stereotypical personal injury cases.

She also says that it helps mediators by giv-ing the court a role in asking for certificates, which helps police court-ordered mediation sessions without putting neutrals into sticky confidentiality questions. “It gets the mediator out of it altogether if somebody starts making complaints,” Fleischer says.

Marshall Dennehy’s Michael Packer ac-knowledges that there were authority issues over the years, with adjusters needing telephone calls for settlement sign-offs. He quickly adds that insurers in his experience have always had full authority in mediation where they were a direct party, such as coverage dispute.

But while insurers and their counsel are com-plying with the new authority certification rule, says Packer, he still doesn’t like the requirement. “Other than the fact that I now have to jump through a hoop and spend the client’s money,” says the insurance defense attorney, “the rule hasn’t affected the outcome of anything.”

Packer, echoing Nationwide’s David Karr, emphasizes that insurers aren’t changing how

they evaluate claims. But he says that they are facing a “greater possibility of liability.”

The bigger picture issue, Packer says, is practicality. “What the folks who push for these rules don’t understand is that making [author-ity] mandatory . . . fails to recognize that a party . . . has a right to evaluate a case, and say what it is worth. If we say [a case is valued at] $50,000, just because they say half a million, why should we show up with someone where we have spent a year evaluating this claim?”

“A lot of carriers get bent out of shape about this,” says Larry Watson, noting that the Court committee took such situations into consideration. “We are not saying you have to pay it,” he explains, “We are saying you have to give settlement a fair chance. . . . You don’t have to settle it. You don’t even have to offer it.”

The Court committee notes on the new rule similarly state, “A decision by a party representa-tive not to settle does not, in and of itself, signify the absence of full authority to settle.”

The result of the rule, predicts insurance defense attorney Michael Packer, will be more litigation. “What is going to happen is eventu-ally there will be motions for sanctions for not bringing the proper person [and] failing to provide [authority, and] eventually [it] will create more litigation or more rule changes.”

Janice Fleischer of the DRC agrees in part. “The only time complaints are raised . . . are where it becomes a problem in the larger cases where there is no settlement,” she says. “You are going to see parties complaining that the person shows up without authority.”

But she says that insurance authority was not the sole problem behind the rule. Author-ity complaints came in, she said, from Florida circuit court commercial cases, not usually small claims or insurance.

Both defense attorney Packer and Court committee member Watson agree that the biggest impediment to settlement is a lack of information being provided before the media-tion. Says Packer, “I beg for medical records, for a settlement demand, etc., so we can prop-erly . . . evaluate the claim.” He says that getting authority out earlier might help with earlier access to other evaluation information.

Watson concurs, and says it applies to larger commercial cases too, not only individuals’

personal injury matters. “A lot of plaintiffs come to mediation with murky demands—for some reason there is a reluctance [to assess] until the last minute,” he says, adding, “We are hoping that this will stop that practice, . . . the business client [who is] not really sure what he wants.”

Some people on both sides also are wary of adding the authority rule and further regulat-ing mediation.

“I almost feel there should be no rules to mediation,” says Michael Packer. “I favor a rule that says, ‘Yes, it’s mandatory to appear,’ and everything you say there is confidential. But I don’t think there needs to be further rules.”

“I was against it,” says Court committee member Mel Rubin. “I just feel that we have be-come so institutionalized and so bureaucratized, and we have so many rules, that this was an ad-ditional burden. I at least foresaw mediations be-ing canceled at the last minute because of people challenging” a failure to file a certification.

But Rubin quickly adds that he is relieved at the early results. “So far,” he says, “I haven’t seen that—so I might turn out to be wrong.”

Still, Rubin says that bigger-picture ADR issues are at stake. He said he fears that more practice rules could impinge on mediation’s flexibility and creativity. He said there is a danger that the new practice guides could be ignored entirely—not necessarily for a filing, but in other instances—because the rules “are so distant from reality that nobody cares.”

Larry Watson says that when it was work-ing on developing the certification, the Court committee heard criticism that the authority rule would be a potential violation of self deter-mination, a core mediation practice principle. “We will preserve all the self determination in the world once you get to the table,” he says, alluding to Court committee notes that allow parties to structure and organize their media-tion sessions.

He adds that he expects an increased effect from the filing of the certifications of authority similar to the Florida courts’ ability to send a case to mediation. With the power, says Watson, “the court never has to order anybody to medi-ate. That takes away the stigma of who blinks first—just by removing that one barrier.”

(For bulk reprints of this article, please call (201) 748-8789.)

* * *

The Jan. 12 seminars opened with keynoter Scott Turow, who is a partner in the Chicago SNR Denton office. Turow, a former assistant U.S. attorney, is best known for his writing, though his substantial legal work has included pro bono death penalty representation.

Turow wrote “The Burden of Proof,” which was made into a suc-cessful television miniseries, and “Presumed Innocent,” which was a film, starring Harrison Ford. In 2004, Turow won the Robert F Ken-nedy Book award for “Ultimate Punishment: A Lawyer’s Reflections on Dealing with the Death Penalty.”

His first book, an autobiographical account, “One L: The Turbu-lent True Story of a First Year at Harvard Law School,” is a perennial bestseller, a must-read for many beginning law students.

Turow’s keynote speech was titled “Why Clients Don’t Trust Courts: Reflections on the Law’s Concept of the Truth.” Attorneys underestimate the level at which clients “dislike the courts,” Turow began, noting that processes are “alien,” and “even in some instances, flatly wrong.”

He backed conflict resolution processes as a response to dealing with clients’ concerns and fears. ADR results, he said, “are more accurate and [don’t] involve some of the fictions the law may engage in occasionally to resolve disputes.” He illustrated his point by noting how real estate law’s “implied warranty of habitability” had migrated to apartments, from its original basis of dealing with the land under buildings.

He said that law is a “selective narrative,” and often fails in its attempt “to speak as the voice of pure reason.” He described his view with a dis-cussion of the prosecution against so-called dirty bomber Jose Padilla, who was convicted of conspiring to commit terrorism in 2007. Padilla had long been held on suspicion of plotting to detonate a radioactive device, but he was never charged with that crime, Turow pointed out.

* * *The Jan. 12 panel discussions kicked off with “Current Perspectives on the Law and ADR.” The session reviewed current research and survey results on corporate legal practice and ADR, including the recently completed Cornell University/CPR Institute/Pepperdine University School of Law survey of the Fortune 1000; the 2011 Rand Report on Business-to-Business Arbitration in the United States; the Deloitte Global Corporate Counsel Report 2011, and the 2010 Inter-national Arbitration Survey conducted at Queen Mary, University of London, in conjunction with White & Case.

Moderator David Bruce Lipsky, director of the Scheinman In-stitute on Conflict Resolution at Cornell University’s ILR School, in Ithaca, N.Y., told the crowd that conflict resolution practices work, and the survey results prove it. “We have a gospel to preach,” he said, “and we have to continue to preach it.”

The Cornell/CPR Institute/Pepperdine study follows in the path of a predecessor 1997 corporate ADR survey. The new study involved interviews with top attorneys at 368 corporations.

Preferences run to mediation, Lipsky told the audience. There is a lot of arbitration use, but the numbers declined since the earlier study, with high percentages of corporate counsel saying that their company didn’t use arbitration because it was difficult to appeal; it wasn’t confined to legal rules; there was unwillingness on the other side; and the outcomes were compromised.

A surprise, Lipsky said, was the decline in the use of arbitration in employment and contract cases in recent years. For the employ-ment arbitration drop-off specifically, Lipsky noted that about one-third of the corporations surveyed “have adopted a so-called ‘inte-grated conflict management system’—a more strategic approach to proactively managing workplace conflict.”

Panelist Fred Kipperman, of the RAND Institute for Civil Justice in Santa Monica, Calif., discussed his nonprofit research organiza-tion’s 2011 study, “Business-to-Business Arbitration in the United States Perceptions of Corporate Counsel.” He said that “a slim majority” of 121 companies it surveyed believe arbitration is better, faster and cheaper than litigation. (For full information on the study, see “New Survey Shows that In-House Lawyers Believe Arbitrators Still ‘Split the Baby,’” 29 Alternatives 76 (March 2011).

Gregory Swinehart, national managing partner of forensic and dispute services at Deloitte LLP in New York, discussed the firm’s Global Corporate Counsel Report 2011. He noted the study’s find-ing that negotiated settlements were the most common method for resolving commercial and regulatory disputes.

In response to an audience question, moderator Lipsky noted that ADR techniques need to become more widespread via manag-ers and executives, not just the legal community. “It’s disappointing that the business schools, haven’t done better,” he said, returning to his theme, “We have some evangelical work to do.”

Lipsky said that managing conflict is just as important as man-aging sales or other corporate management responsibilities. “If you move toward managing conflict in a more proactive way,” said Lipsky, “not only do you avoid litigation, you avoid arbitration too.”

He quickly added that he wasn’t disparaging any processes. “Ar-bitration is not bad,” he said, “but many corporations find it is not necessary” with up-to-date conflict management structures.

Panelist Paul Friedland, a partner in New York’s White & Case, dis-cussed his firm’s 2010 report, “International Arbitration Survey: Choic-es in International Arbitration,” which was conducted with the School of International Arbitration, at Queen Mary, University of London.

The survey of 136 respondents to an online questionnaire and 67 in-depth interviews focused on a variety of issues, including arbitration location. It found, Friedland noted, that London is the most preferred and widely used seat of arbitration. It also showed that London, Paris, New York and Geneva are the most frequently used seats for the respondents in the 2006-2011 period.

The report notes that the level of arbitration user satisfaction for these locations as seats for their processes is high.

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* * *

The second Annual Meeting panel was the Business Roundtable, a regular CPR meeting feature in which in-house counsels talk shop. Richard Ziegler, the New York office managing partner at Jenner & Block—and a former general counsel at 3M—led the panel through a reaction to the survey data that had just been presented, and a variety of dispute management issues.

Picking up on David Lipsky’s comments, panelist Jean-Claude Najar, Paris-based General Counsel-France of General Electric Co., said that “the number of disputes will go down as you actively man-age your conflicts.” He later added that arbitration worked well for GE, saying it was reasonably fast. He said the company is careful in the type of claims and the choice of locations it uses arbitration for, suggesting disagreements with suppliers were the most frequent use.

Panelist Laura M. Robertson, lead counsel for arbitrations at Cono-coPhillips Inc. in Houston, said the number of international arbitrations for her company was increasing. She said Conoco’s concentration in the area has made it a better user. She said the company has improved its arbitrator selection processes and its knowledge and choice of provider institutions, as well as its ability to educate its legal department clients.

And, she said, the oil giant has developed far more user-friendly agreements.

Panelist Bradley E. Lerman, who oversees litigation as an associate general counsel at drug maker Pfizer Inc. in New York, said that the company has been involved in an increasing amount of litigation over the past five years. The driver, he said, is large damages claims in areas such as antitrust, not from repetitive business partners.

Panelist Carlos Hernandez, senior vice president and chief legal of-ficer at Fluor Corp., a big engineering and construction firm based in Irving, Texas, said his company avoids split-the-baby awards by choos-ing baseball arbitration, named after the Major League Baseball process where the team owner and the player in a salary dispute each pick a number, and the arbitrator must choose between the offers.

ConocoPhillips’ Robertson said that she doesn’t agree to same-neu-tral med-arb decisions, where a facilitator will stay on to make an award after a case fails to settle in mediation. GE’s Najar agreed, but said that he believed that arbitrators should “advocate” for parties to settle.

* * *Former New Jersey Attorney General Peter Harvey, now a partner in New York’s Patterson Belknap Webb & Tyler, led a discussion on maximizing the use of conflict resolution practices in a session titled “We Have Met the Enemy and It Is Us.”

ADR, said Harvey, “doesn’t always work, [but] perhaps the is-sues can be narrowed, perhaps the tempers can be [lessened], and perhaps the parties can be swayed.”

Panelist Edna Sussman, an arbitrator and mediator in New York, said that courts are more effective at encouraging ADR because of their own cutbacks. She urged meeting attendees to avoid mere

ADR acceptance and to think through their use and options. Sussman said, for example, unconscious bias could be reason

to opt for three-arbitrator panels over sole-neutral tribunals. At the same time, she said the finality of arbitration and the resolution provided, as well as cutting litigation costs, might be better than proceeding in court simply because of the need for the security of a right to appeal. She supported using a hybrid, med-arb process, not-ing that it could be restricted to a discrete issue or two.

Panelist Christopher Nolland, an Orlando, Fla., neutral, dis-cussed ADR session problems. He said some clients seemed de-termined “to get things off to as poor a start as possible . . . or let people know they are tougher and bigger and meaner than [their adversary].” On early impasse, Nolland said, “I assume everyone in the mediation is either lying to me, or themselves.”

He reviewed and then urged strong mediator tactics to correct the problem behaviors.

Panelist Michael Moore, a partner at CPR Annual Meeting sponsor SNR Denton in Dallas, said ADR practices should be near-mandatory for business disputes. “I think it has to become a check box to [go to] trial,” he said, citing the strong dispute resolution practices and institutionalization in Texas courts.

That, however, has led to some rote practices—“mediation ex-haustion” exhibited by poor preparation, and a cottage industry that serves it, too, said Moore.

Panelist James Breen, president of the Breen Law Firm in Pem-broke Pines, Fla., echoed similar concerns in neutral selection. “You want somebody to work with the parties,” he said, and “more often than not, we don’t think that through,” and end up with someone that the parties and counsel don’t like.

Breen said clients—when he is advocating in mediation as well as when he is a neutral—will shape up once they get educated about the mediation processes. “People start to feel that maybe they can get somewhere with this case,” he said.

Edna Sussman then discussed how to craft clauses to provide for, for example, limited discovery, in such a way that the carve-outs give the parties comfort about the process. She urged advocates to be aggressive about ADR clauses and terms.

* * *

The first CPR Annual Meeting day concluded with “Developments in International Dispute Resolution,” which looked at a variety of new initiatives around the globe. Jose Astigarraga, a name partner in Miami’s Astigarraga Davis, moderated.

First, panelist Teresa Giovannini, a law firm partner in Geneva, Swit-zerland’s Lalive, briefed the audience on the European Union’s mediation directive, which requires 26 member states to provide ADR for cross-border commercial disputes. [The topic has been a recurring subject in the Alternatives Worldly Perspectives column; see Page 110 of this issue.]

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Then, New York-based Debevoise & Plimpton partner Chris-topher K. Tahbaz provided a cautious view of tailored multistep conflict resolution clauses. He said contract drafters need to be careful about creating conditions precedent to litigation, such as a required number of days of negotiating. His specific concern was party conduct: “Good faith and best efforts—all of these words—are laudatory and wonderful,” said Tahbaz, “and they are hooks on which litigation can be placed.”

Panelist Eduardo Damião Gonçalves, a partner in São Paulo, Brazil’s Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advs., discussed ADR in his country. He said that he believes Brazil busi-nesses are receptive to mediation, and asked the “West legal culture” to teach and educate its business partners in mediation practice.

The huge volume of litigation in Brazil, said Goncalves, supports the need and apparent interest in mediation, as well as the dangers to arbitrating in the country. With 70 million court cases now pend-ing, he said, “It’s very cheap to litigate in Brazil.” Cases routinely drag on for 10-15 years, he said.

“The major risk for arbitration is lawyers in a country with a large number of appeals,” Goncalves concluded.

Panelist Colin Rule, chief executive officer of Modria.com in San Jose, Calif., discussed the Uncitral Working Group III Online Dispute

Resolution initiative. [The CPR Institute, which publishes Alternatives, is working with Modria, a software company, and Rule in the working group to establish an ODR platform, among other things.]

He explained that the working group’s purpose is to develop tools to be applied to high-volume, low-value cases characteristic of E-commerce. Traditional methods—that is, traditional litigation and alternative dispute resolution methods—don’t work, he said, adding, “There is no ‘A’ in ODR. Courts are irrelevant in these cases.”

He said that for E-commerce, parties generally would rather lose quickly than win over time. Websites increase their traffic when ODR is available, Rule said.

He advocated for an algorithmic base for settling the disputes, and concluded by explaining the eBay model—which he was instrumental in developing, and which is at the core of his Uncitral-related work.

EBay, Rule said, settles 90% of its disputes without human in-volvement. [For more on his ODR views, see Colin Rule and Vikki Rogers, “Building a Global System for Resolving High-Volume, Low-Value Cases,” 29 Alternatives 57 (July/August 2011).

* * *

Coming soon: Highlights from Day 2 of CPR’s Annual Meeting. (For bulk reprints of this article,

please call (201) 748-8789.)

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