The twisted course of arbitration jurisprudence in New Jersey has taken yet another peculiar detour. In the most recent development, it is hard not to infer a judicial bias against arbitration reminiscent of the 19th century.

In Itzhakov v. Segal (A-2619-17T4, August 28, 2019), the mid-level Appellate Division reviewed the trial court’s denial of defendant’s motion to compel arbitration. The court below had determined that the parties — commercial entities engaged on a breach of contract claim — had not conveyed their intention to arbitrate with sufficient clarity, and ordered plenary discovery in preparation for trial. The Appellate Division modified the order below to the extend of limiting discovery to the issue of the validity and scope of the arbitration agreement. On the way, however, the court wreaked havoc like a tornado.

The contract at issue was for the sale of an interest in a business. The contract was drafted by Mr. Yisroel Knopfler, was written in Hebrew, and contained a provision that in the event of dispute over the contract’s meaning the parties would “accept his interpretation as if it were one hundred valid and credible witnesses.” A second dispute resolution clause reads in translation:

It is hereby agreed between us that any questions of Jewish law that are relevant to this sale and to this document shall be decided by the Lakewood [NJ] Rabbinical Court, and we are required to do as they decide, and signing this document constitutes an acceptance of everything in the arbitration agreement that the said court regularly uses, and under no circumstances shall any dispute between us come to the civil courts, G-d forbid.

A subsequent contract for a related deal also contained language that “all disputes arising from this transaction shall be decided solely by the Badatz Rabbinical Court of Lakewood, in accordance with the standard arbitration agreement of the Rabbinical Court, which is hereby incorporated into this agreement.”

In determining “the validity and enforceability of the arbitration agreements,” the Appellate Division relied upon New Jersey Supreme Court’s 2014 Atalese opinion, which invalidated an arbitration agreement between an individual consumer and a debt adjustment firm on the ground that the term “arbitration” was not explained. The absence of express language advising the consumer that “arbitration” meant that the consumer had waived the right to sue in court was, to the Atalese Court, evidence of the lack of a meeting of the minds, and thus resulted in no enforceable agreement.

Those many of us who were alarmed by Atalese and its progeny took some solace in the fact that it and subsequent cases were in the settings of consumer or employment disputes. It was a case (we told ourselves) of well-meaning paternalism disguised as legal principle. But the Itzhakov Court dispelled even that faint hope by holding that “the principle that a person must knowingly waive the right to sue in court applies to any contracting party,” even commercial parties. “[E]ven a sophisticated party, or one represented by counsel, will not be deemed to waive his or her rights — whether constitutional, statutory, or common-law — without clear and unambiguous language.” Because the agreement at issue “does not explain with sufficient clarity that the parties waived their right to sue in civil court… [or] clearly contrast arbitration with litigation,” the court below correctly declined to compel the parties to arbitrate, absent “extrinsic evidence that illuminates the meaning of the arbitration provision.”

Thus, pursuant to this interpretation, the law of the State of New Jersey is that any contract containing an arbitration clause between any two parties — of any level of sophistication — must feature an “explanation” of what arbitration is, and “clear and unambiguous language” that agreement to arbitrate constitutes a waiver of the right to sue. And the required clarity of this required language — whatever the standard — is not satisfied by “under no circumstances shall any dispute between us come to the civil courts, G-d forbid “

Auto supply dealers, credit card companies, e-commerce enterprises, banks, national wholesalers, suppliers and retailers of business-to-business commerce, international internet service providers, take note. Your arbitration clauses may be enforceable in 49 states and the District of Columbia. But in New Jersey? G-d forbid.

I have been teaching negotiation for nine years now, and the gratification never ends.

For the past several years, I’ve made a final assignment called the “Blue Paperclip Exercise,” brought to my attention by Hal Abramson, in which a student is given a paperclip and assigned to increase initial value over the course of five trades. Almost every year there are delightful journals, but this year included a submission that was very special indeed.

New York Law School attracts a diverse student body for a variety of reasons. Often, students who are already professionals in a nonlegal field choose NYLS so they can earn legal training while continuing their own practice. Seldom have the fruits of a diverse student body been as apparent as the submission of Joseph Piacentile, which I reproduce below, unedited and with his permission.

—————————————————————————————————-

1. My Adventure

       I was so happy to hear that the final negotiation exercise was this one. As soon as I heard about it I knew how I wanted to handle it. I knew that the paper clip itself represented so much more than a paper clip. It represented the essence of what the course is about, the ability to negotiate. It is the essential skill that lawyers rely upon in every aspect of their practices. Trading, bartering, convincing, maneuvering, positioning, cajoling, hard balling, soft balling, understating, overstating, building expectations, limiting expectations, creating value, diminishing value, making the pie larger, making the pie disappear entirely, all part of negotiating. All those things and many more all represented by the simple blue paper clip. Not an ordinary clip, but a special clip, a blue clip. That was my story. That was going to be my beginning and my end.

Trade One: 11-29-19

The bank lady. I never knew her name other than “Mary” and she had a thing for music boxes, the little wind-up type that have the pop-up dancers. She knew me from being a customer at the bank, nothing more. I approached Mary with a simple proposal. “Mary”, I said, my name is Joe Piacentile and I’ve been a customer here for 20 years. I have a small favor to ask you. I have something I’d like to trade with you. It’s a Blue Paper Clip. A simple blue paper clip. I’d like to trade it for one or your give-away plastic banks, lined up here on your counter.” Mary replied, “Oh, You can have the bank only if you open an account, they’re promotional.” I said, “I know, but I have a condition that I’m going to impose on this trade. I want you to hold the paper clip in a special place for one week. At that time, I’ll come back and trade you something back for it, something worth much more than that clip to you.” Mary asked “why?”. I simply said that the clip was special to me and it was a sort of experiment that I was running, to see if I could trade back for that special clip. She checked with her manager who said it was fine. He knew me but had no idea what I was up to. We made the trade and she put the clip in an envelope in her drawer. I took the plastic giveaway bank.

Analysis:

I used my reputation of being a loyal customer to set the stage for trust, then played on the teller’s sense of curiosity to participate in my “experiment”. I think she was happy to be involved in an adventure. In a negotiation, I find it motivating for both sides to be engaged somehow, emotionally vested and intellectually intrigued.

Trade Two. 11-30-19

The next day I took my beautiful little giveaway bank to our friend’s house. She has a four-year-old son. I asked her if I could trade her son the shiny plastic bank, which he loved, for an odd little Toy Story toy that he received for his birthday but didn’t like. It looked like an odd little pencil person, it was a character toy called “Forky”. For some reason the toy scared him and I took advantage of that. His mom loved the idea of the bank because she felt it would encourage him to save his pennies and loose change. We made the trade.

Analysis:

I knew that the mom would respond to the concept of saving for her son’s future providing him his first bank played into that concept. She was trading away an “ugly’ toy and gaining a financial future for her son. I created an opportunity for both of us out of mere concepts.

Trade Three. 12-03-19

A few days later I took the “Forky” to a local Exxon super gas station, the kind that sells toys and lighters and all kinds of knick-knacks and the like.  I explained that I had traded someone for the toy but I had changed my mind and was looking for a different gift, something of equal or greater value. I explained that I was only looking to trade.

They offered me a cigarette lighter which I turned down, because I preferred some sort of toy or a bouquet of flowers, which they also sold there. I explained how sought-after this toy was and I walked out with a beautiful group of roses.

Analysis:

I knew I had a better chance of getting a trade done with a small business owner like the guys at the gas station. He was middle eastern and comes from a horse-trading culture and I think he enjoyed the opportunity. The toy was unusual and he probably kept it to give to it to of his own children. One child’s ugly toy is another’s cherished Disney item.

Trade Four. 12-03-19

Again, I went to a small strip mall, sole-proprietor. This time it was a toy store. Armed  with my fresh bouquet of roses I approached the woman who runs the shop. I explained that I was willing to trade the roses for a small plastic music box, that she had in the showcase, the kind with a little ballerina dancing in front of a mirror with a built-in wind up music box. I explained that I knew a woman who had no children but really enjoyed music boxes and had a collection of them. I explained that she worked at the local bank and I wanted to bring her a small gift for doing me a favor. The store owner was very happy to trade the ballerina music box for the beautiful roses. She even gift wrapped it for me.   She seemed happy to get the flowers. I got the sense that no one brings her flowers on a regular basis. It was a special treat for her.

Analysis:

Again, I approached a small business owner because I believe they have the authority and the imagination and the spirit to make trades. Many of them come from cultures where the currency is not so stable and trading is an acceptable form of commerce.

Trade Five. 12-04-19

I returned to the bank a day later with the music box. It was a perfect gift, wrapped in a bright flowered paper which almost telegraphed what was inside. I brought with me a small display case that I had on my memento shelf at home. It’s a shelf where I keep things that I have collected over a lifetime that hold a special meaning for me. Small things, simple things, things that hold no special value to the uninformed observer but are precious in my eyes. For example, I have a name tag that I purchased for a special man, a physician’s assistant whom I hired in 1990 to work for me. He needed a good job because he wanted to get married. He was from inner-city North Philadelphia. I hired him and ordered his new name badge. He was going to start the next week. He never showed up. Instead his fiancé called me, who I had not met, to thank me for hiring him, and how proud he was to get the job. He went out that weekend to buy new clothes so he would look good his first day. While walking home he was robbed at gunpoint and murdered, shot in the chest, by someone who stole his bag of clothes. The day she called me his nametag arrived. I cried like a child. Another item on my shelf is my service bars from when I was a second lieutenant in the uniformed service of the Public Health Service, also, the bus driver’s hat my uncle was wearing when he died driving the number 2 bus down Morris Avenue in the Bronx, or the Lou Costello’s fedora given to me by a great icon of television, Joe Franklin, or my Tony Award nomination for best revival of a play, Harold Pinter’s the Homecoming, or toy luger the Secret Service tried to confiscate from my bedroom when they kicked our door in looking for my father’s counterfeit coins. They returned the toy gun, they kept my father. On and on it goes, memento after memento.

I walked in with the gift-wrapped music box and walked up to Mary. I asked her if she still had my “Special Blue Paperclip”. She smiled, opened her drawer, pulled out the envelope and took out the clip. I asked her if she would take the gift in exchange for returning the paper clip. She smiled a big “Of course” and we exchanged our prizes. She opened the music box, wound up the spring and we both watched the little ballerina dance. I took the paperclip and placed it inside my memento frame, a clear frame in which the beautiful little clip seems to magically float. She asked me why the clip was so important. I told her the following. “I made a decision to go back to law school in my 60’s and I was in my last year, almost done. I had taken many courses, Criminal Law, Constitutional Law, Property, Civil Procedure and many others just like those. But none of those courses were as important to me as this one course, called ‘Negotiations’”. I told her that all the successes in my life and in my relationships, have come to me because I was a good negotiator. Because I paid attention to what people want and what’s important to them and what they perceive they need and what they are willing to give to get it. Because of that I would be graduating soon and I wanted something special for my memento shelf. Something little that embodied everything I wanted to remember about law school and what I take away with me in whatever future I have left. That special item was this little Blue Paper Clip. It was important to me and I wanted to have it and I would have traded away much more than I did to get it and now that I had it I had completed my task. I thanked her and told her to enjoy her music box and think of me and my paper clip whenever she winds it up. I went home and put the clip, now in its fine, clear frame in a place of honor on my memento shelf.

Final Analysis:

I knew from the beginning that I wanted that paper clip. It was my prize. It was the one thing that I could take away from my law school experience that would never mean anything to some stranger, but would secretly mean the world to me. I have owned many nice things in my life but it’s the little things, the mementos, the meaningful little oddball items with a tremendous story attached that I cherish the most. I have an office filled with a lifetime of memories, some obvious, like patents, awards, diplomas and degrees and press releases, but it’s the little items, the curious little things that mean the most. Negotiation is not a subject in law school. Negotiation is life. We all negotiate every day. Some of us are keenly aware of it, most of us are not, but we all do it every day and will continue until the day we pass. I will always remember my days at NYLS but I will have a special blue paperclip to prove that I learned something.

1. Summary of Outcome

The results were as follows:                             

Trade 1. Special Blue Paper Clip                       Plastic Give-Away Bank

Trade 2. Plastic Give-Away Bank                       Toy Story 4 “Forky”

Trade 3.  Toy Story 4 “Forky”                             Group of Red Roses

Trade 4.  Group of Red Roses                            Ballerina Wind-Up Music Box

Trade 5.  Ballerina Wind-Up Music Box             Special Blue Paper Clip

Peter Kaskell died on December 12, 2019. He was a dear friend whom I met at the CPR Institute and who taught me not just the delicate arts of demand-led commercial dispute management, but the even more delicate arts of humility, service and attention to others’ needs.

At the age of 20, Peter distinguished himself as a hero of the Italian campaign in World War II, a topic on which he was reluctant to speak at any length. He was recently (and belatedly) awarded the Croix de Chevalier dans l’Order de la Legion d’Honneur, and was very proud to show me all of the certificates and letters and medals and other accouterments that accompanied that long-delayed recognition.

Peter also served Olin Corporation for 27 years, advancing to the office of Vice President and General Counsel. Later, with James F. Henry, he helped to form what was first known as the Center for Public Resources, later named the CPR Institute for Dispute Resolution and now the International Institute for Conflict Prevention and Resolution. His interest was to assist companies to devise alternatives to litigating disputes with each other, or with stakeholders such as employees. It was in that capacity that I met Peter in 1998.

My job at CPR was, in broad strokes, to learn enough about what Peter did to take on his responsibilities sometime down the road. I watched him lead committees of company representatives in the franchise, chemical, sports, insurance and other sectors; corral initially antagonistic interests in devising protocols for managing and resolving employment disputes; serve as secretary to the nonprofit corporation; author solid reports on managing product liability exposure and other areas of legal and corporate concern; and mediate tensions within the Institute with good humor, perspective and insight.

I don’t know what it was like to be a war hero at 20, and I don’t know what it’s like to head the legal department of a major chemical company. I don’t know what it feels like to be awarded the Legion of Honor by the President of France or to be at the beginning of a nonprofit corporation that developed approaches to avoiding, managing and resolving disputes that resulted in intellectual outputs of global impact. I just followed Peter around, and found myself in room after room where everybody there was smarter than me. And I loved it.

Of the many gifts that Peter gave me, one stands out. Early in my tenure at CPR, Peter took me to a program at the City Bar Association on the (then innovative) use of mediation by corporate 100 companies as policy rather than exception. PD Villarreal of General Electric was one of the speakers and extolled the tools that had been created by CPR. He also said that, among the compelling reasons for GE’s policy of seeking to mediate nearly every dispute, was that “mediation makes me feel like a human being.” I was struck not only by the scale of achievement of the enterprise I was joining, but also by the opportunity to conform my professional work to my spiritual and ethical proclivities. I shared this with Peter on the walk back.

Peter was uncharacteristically firm. “We do not do good,” he said. “Please do not give people the impression that we are virtuous or that mediation is a way of doing the Lord’s work.” He stopped on the sidewalk and, for the first and only time in our friendship, raised a finger to me. “The responsibility of a publicly held company is to create value for its owners. Mediation is a tool for doing that. That is what we are on about, and only that.”

This was a formative, even transformative, insight for me. Peter taught me that advising enterprises on reducing cost of dispute resolution was a skilled legal service, offered — like any legal advice — to benefit the recipient of the counsel. Whether resolving a dispute early, rather than late, on these terms or that, is an exercise in virtue is irrelevant. The dispute, and the decision whether, when and on what terms to resolve it, belong to the disputant. CPR Institute was there to increase their options and to provide metrics, tools and competence on methods testing and reporting out to management on their short-term and long-term effectiveness. I have approached ADR in this context ever since. We don’t teach disputants. We listen to them.

Peter and his wife Joan were a classy couple. My wife and I joined other guests at their beautiful home in Wilton on one occasion where Joan concocted a Christmas Trifle that was so beautifully presented and so distinctively festive that I went out and bought a stemmed trifle bowl just like hers. The first time I made her trifle was the only time that our dinner guests actually clapped their hands in pleasure when I entered the dining room. I plan to make it again for this year’s Christmas dinner, the grateful recipient of an exceptional man’s guidance, kindness, wisdom and forbearance.

At the 27^th meeting pf the UIA World Forum of Mediation Centres, in Milan, Danielle Hutchinson of Melbourne Australia and Jill Goldson of Auckland New Zealand offered a provocative discussion on “Innovative Approaches to Mediation.”

Danielle introduced “MyDRHub,” an initiative in party-centric dispute resolution.  Referring to Global Pound Conference data, she proposed five party goals frequently observed in mediation – maintain relationships, maintain positions, seek third party intervention, compromise, and minimize resources – and asked the audience to gauge which are most (or least) likely to result in a resolution.  Of them, she reported that, studying a series of conflicts, relationships proved the most indicative of resolution overall, and that seeking third party intervention the least.  Contextually, she also reviewed psychometric research and suggested that certain conditions, such as a perception of threat to safety, make resolution more difficult, while others, such as a broad scope to apologize, make resolution more likely. 

Conflating these concepts, she proposed a disciplined protocol of “triage” by which consideration of both party goals and characteristics of the dispute can identify the disputes most suitable to voluntary, private mediated resolution.  This approach was validated by experience in the Dispute Resolution Centre Victoria, with higher settlement rates in disputes identified through this analytical process as susceptible to voluntary resolution.  The practice of “triage” involves interviewing parties upon introduction of the dispute process to gain an insight into the nature and complexity of both the dispute and party goals, and then using that data to direct the parties to the appropriate mechanism.

Jill reported on innovations in family mediation.  She is skeptical that the law well serves changes in social and family structure.  Conflict between separating families is best addressed not simply from a legal point of view, but from a therapeutic perspective as well.  Sorrow, resentment and commitment to children are not susceptible to healthy resolution though formal court processes.  No court order comes near the level of collaborative outcomes as the mere recognition of one parent to the legitimacy of the attachment of the other parent to a child.  She terms the process that yields this outcome “child inclusive mediation.”  When children are given a voice (not a choice) in the process of family restructure, they feel much better.  This is not therapy – it’s dispute resolution with a therapeutic outcome.  Jill’s advocacy resulted in New Zealand legislation in 2014 making mediation of parental disputes mandatory.  According to Jill, “dispute resolution between parents must have at its nucleus the intent to assist child adjustment.” The process therefore is aimed at assisting parents to recognize the primary importance of a shared effort of assisting emotional development of their child, distinct from their “adult” disputes with each other.  There has been some concern from attorneys about a process that does not involve legal representation, and the mandatory nature of these sessions may be repealed despite substantial empirical evidence of its benefit.

Brigette Bouvier and Christian Hausmann reported on recent developments in the coalition of 17 countries known as the Organization for the Harmonization of Business Law in Africa (OHADA).  Among its aims is to create uniform business laws and conventions among African nations, providing relative certainty to investors and business partners.  OHADA uniform acts include such areas as accounting, bankruptcy, accounting, road freight, arbitration and (since its adoption in November 2017) mediation.  Mediation was originally intended to be folded into the arbitration act, but the great distinction between the two processes advised that it be a separate uniform law.  Various ministries and mediation centers were consulted in the 2½-year course of the drafting, a process funded by the World Bank.  Concern was expressed not to intrude into the scope of national legislatures, and the uniform law addresses only business mediation.

The Act excludes judicial or arbitral efforts towards settlement.  Among interesting features, the acceptance of an invitation to mediate suspends the statute of limitations, allowing that process without adverse impact on a legal claim.  Mediators “may make propositions to settle the dispute” but only at the invitation of the parties.  The outcome must “genuinely reflect the parties’ will, while respecting rules of public policy” – a vague and perhaps not useful guideline.  Confidentiality is ensured “unless otherwise agreed by the parties.”  Mediators may not thereafter serve as arbitrators and the legal status of the resulting agreement – i.e., its enforceability – is left to each county’s law.

Christian referred to it as a “pledge,” and its real utility as a commercial matter is yet to be proven as the uniform law is brought to bear in actual disputes.  There are few mediation provider organizations, and few formally trained mediators, in the market.  Many existing mediation centers are inactive or ineffective.  As is the case in so many markets, the challenge remains to advise parties, legal representatives, and courts on the business advantages of privately mediated processes.

Two experts in the Milan UIA Mediation Forum addressed “Abuse in the Mediation Process.”  The speakers were Renate Dendorfer-Ditges of Bonn and Galyna Yeromenko of Kyev.  The contributions of Anne-Karin Grill of Vienna were also represented, though her illness frustrated her in-person participation.  Topics included bad-faith participation, lying by the parties or by the mediator, and what constitutes unethical behavior.

One scenario discussed was a mediator’s making a suggestion to a party that the other party asked him falsely to convey as his own idea.  Is that a lie?  Is it deceit?  Is it professionally acceptable?  (This scenario comes from the INTA/CPR video, “Resolution Through Mediation”)

A second topic involved the conduct of parties that might constitute “bad faith.”  What about refusing to mediate?  Sending a representative to mediation without authority to settle?  Entering into mediation with the objective of learning about the other party’s information, risk attitudes, testimonial evidence, or self-doubts in order to assist in litigation?  Can a court reasonably require that parties engage in “good faith” mediation, in light of the difficulty in defining that term and determining what conduct constitutes its breach?  Would a mediator’s refusal to convey a party’s offer, on the ground that it would violate public policy, itself constitute lack of good faith?

What of the impact n the promise of confidentiality?  If a mediator determines a party is behaving “in bad faith,” may a mediator report that behavior to a referring court?  Must she do so?

Finally, what if one party agrees to transfer funds to the other, while the mediator knows that such an effort would violate only laundering laws. Does the mediator have an obligation to caution? To inform? To be silent?

My first real-life experience with pandemic-forced online dispute resolution was in early April — a baptism by fire. I coached the New York Law School team at the Willem Vis International Commercial Arbitration Moot, held in Vienna annually except this year. Within about ten days’ time, the organizers created the capacity for 40 matches to take place simultaneously, each with three geographically remote arbitrators, four separate oralists, and additional team members observing. To be clear, what was happening was at least seven remote feeds per match, 40 simultaneous matches each tranche, six tranches of 40 matches each per day, for the first four consecutive days of the moot. The first tranche was admittedly a difficult birth, but within a day things were humming along like a sewing machine, on a platform created by Immediation, an Australian concern. I arbitrated four matches and became entirely comfortable serving from my office in New Jersey on a panel with an arbitrator from Berlin and a third from Rio de Janeiro, with student advocates from Mumbai and Paris. Except for some inappropriate features of a mediation platform being repurposed for arbitration (such as a chat function allowing participating parties to speak to arbitrators privately –YIKES!), the whole thing earned the highest possible accolade in the circumstances: it worked!

Since then I’ve conducted three mediations using the Zoom platform, and they have gone exceptionally well. The parties and counsel have been available; they have used the breakout room function strategically; they have expressed trust in the mediator more willingly and with better results; and they seem to have been much more willing to close the file then-and-there than they seem to be when mediations take place face-to-face.

The real zinger, though, has been the dispute resolution public events offered by New York Law School. For the past six years the NYLS ADR Skills Program has offered a series of monthly Continuing Legal Education programs for the New York City community, in the School’s well-appointed Events Center in Tribeca. A low turnout was 20, and a high turnout was 100, depending on whether it snowed, whether the subways were jammed, whether the speakers were well known, whether the topic was of interest, and so on. The March and April 2020 events were rescheduled into May and June, and were to be held online instead of in person, again on the Zoom platform. Registration for the May 14 program exceeds 400, and for the June program over 200 with four weeks to go.

Not just the numbers, either. We have registrants from the United Kingdom, from Hawaii, from California and South Carolina. We had an inquiry from Greece to determine what time it started, Athens time.

(The exact same thing happened in my weekly Quaker Meeting: on an average Sunday we might have ten or so people worshiping. Online we have almost 50% more, including visiting Quakers from Portland, Oregon or Ely, UK.)

Only an idiot would ignore the underlying tectonic shift that these data reveal — It Doesn’t Matter Where You Are Any More! So the School has started a new series of informal conversations with folks we would have killed to offer before, but who were located too far away. Not any more, they aren’t! The guests on this biweekly series of informal conversations will include folks from California, Missouri, New York, Florence, Abu Dhabi, Singapore and so on.

For those in the ADR community who seek to convene leadership, the game has abruptly and favorably changed.

Thomas Friedman made a hit a few years ago, in a book about the globalization of commerce, by observing that The World is Flat. I propose an even more paradigm-shattering reality: For those of us who hope to exchange intellectual and educational information and inspiration, the world is not only not a sphere, it is also not a flat two-dimensional plane. Indeed it isn’t even a line between two points. There is no distance, no remoteness between us any more. Whether in the mediation I conducted last week among people in Connecticut, New York, Iowa and London, or in the CLE event this afternoon with hundreds of registrants, Zoom is showing us every day that the world is a single, primordial, dimensionless point.

As a consequence of the absence of uniform adoption of the Uniform Mediation Act, the confidentiality of mediation communications in various jurisdictions often cannot be assured. Thanks to Alan Waxman, President and CEO of the International Institute for Conflict Prevention and Resolution (CPR), for bringing to our attention the most recent contributions to this confusion.

In Accent Delight International Ltd v Sotheby’s, 18-cv-9011 (S.D.N.Y. Dec 8, 2020), Judge Jesse Furman ruled on a motion seeking discovery of materials relating to a private (as opposed to court-ordered) confidential mediation that took place in an effort to settle a separate dispute between Sotheby’s and certain sellers of an artwork. In that prior mediation, Sotheby’s and the sellers entered into an agreement with the mediator that the mediation “was a settlement negotiation deemed private and confidential.” Plaintiff Accent Delight sought production in this action of the confidential settlement agreement reached in the prior litigation, as well as approximately 250 other documents related thereto, including communications between Sotheby’s counsel and the sellers’ counsel, and communications with the mediator.

The problem in the Second Circuit is the holding in In re Teligent, 640 F.3d 53 (2d Cir. 2011). There, the court affirmed the denial of a motion to compel disclosure of documents relating to a mediation, holding that a party seeking such disclosure “must demonstrate (1) a special need for the confidential material, (2) resulting unfairness from a lack of discovery, and (3) that the need for the evidence outweighs the interest in maintaining confidentiality.” One might have hoped for a more categorial assurance that confidential means confidential, but it was a welcome holding nonetheless.

The problem was that the mediation at issue in Teligent was court-ordered. One would assume that such a fact mattered as much as whether it was held on a Tuesday, but unfortunately no. In 2019, the Southern District held in Rocky Aspen Mgmt. 204 LLC v. Hanford Holdings LLC that the heightened showing required in Teligent applied only with respect to mediations that — like the one in Teligent itself — were conducted pursuant to court order. The court there reasoned that the promise of confidentiality had been extended by a government agency — the court — and not by private parties engaged in private discussions. Rather, the mere “good cause” standard of FRCP 26(c) applies to the discovery of information exchanged during mediation where there is no promise of confidentiality by a court.

In Accent Delight, by contrast, Judge Furman held that the heightened standard articulated in Teligent applied to mediation communications irrespective of whether they are court-ordered. The rationale of the confidentiality of settlement discussions — that they lead to resolution of disputes — applies equally whether the discussions take place voluntarily or by order. Making such a distinction would act as a disincentive to parties considering entering into private mediation. And such a ruling conforms to the conclusion of courts outside the Second Circuit. Some of those other rulings expressly link a “heightened standard” to FRE 408, which shields statements made during settlement negotiation for precisely the same reasons.

Things remain, as noted, un-uniform. In the Southern District a court has compelled mediator testimony to establish whether the mediator gave permission to a party and counsel to be excused from in-person attendance at a court-ordered mediation. Usherson v Bandshell Artist Management (S.D.N.Y. Dec. 9, 2019). On the other hand, the Fifth Circuit recently held that allegedly threatening statements made during mediation were inadmissible in an action to set aside a mediated settlement on the ground that the plaintiff had been coerced. Areizaga v. ADW Corp., 796 Fed. Appx. 205 (5th Cir. 2020).

Where does this leave the practicing mediator? We include in our agreements a promise of confidentiality. The parties agree that statements and other communications will be held both confidential and inadmissible. We require that they agree not to subpoena documents or testimony from the mediator, and to indemnify the mediator for any costs related to such an effort. Then, I suppose, having done all we can, we let the participants do as they deem fit.

They will anyway….

With a new CEO at the helm of Mediate.com, after a generation of loyal and visionary service by co-founder Jim Melamed, the pre-eminent online resource for mediation has now launched an initiative to offer the pre-eminent online resource for arbitration. Launched last week, Arbitrate.com looks to be a winner.

The site’s subtitle is “Everything Arbitration.” While that’s a hefty claim, you can see already that Colin Rule, Melamed’s successor, is ready to take a stab at it. Like its mediation-oriented predecessor, Arbitrate.com hosts lists of practitioners with easy links to their websites and contact information. It also maintains a home for informed threads of discussion, called “Arbitration Conversations,” and a separate group of threads called “Arbitration TNT” — shorth for “tips-and-tricks,” a place to share experiences and administrative suggestions.

Across the top banner of the home page are links to topic-specific arbitration practices: commercial, government, intellectrual property, international arbitration, and labor and employment. There is also a section for Colin’s favorite topic, “O-Arb.”

The site is intended to attract informed content contributors and one assumes that, with the passage of time, Arbitrate.com will be a repository of insights in both theory and practice as robust as its mediation sibling. Let’s welcome a new and, one expects, uniquely valuable resource for arbitration students, practitioners and end-users.

My dear friend Stefano Pavletic, a mediator from Milan Italy, has sent me this thoughtful and timely article that I hope readers will reflect upon.

A strange idea of neutrality

by Stefano Pavleti? *

It is well known that “third party status” of the mediator with respect to the parties, the dispute and the interests at stake represents a preliminary condition for a qualified conduct of mediation. Moreover, the need for the mediator to be effectively “third” in relation to the dispute nevertheless allows concepts of independence and impartiality to be interpreted with a certain flexibility.

During the current Russian-Ukrainian conflict, however, comes to the fore — with a certain brutal objectivity — a rather different conception of neutrality.

Given that the intervention of a third party is necessary, it is precisely on the methods of selecting a credible figure of mediator that obvious anomalies manifest themselves. The race for the role of mediator between Ukrainians and Russians is filled with candidates almost as much as in a U.S primary election.

Both the US and the EU immediately called themselves out for an evident condition of co-belligerence in the conflict. But there are other subjects who are proposing themselves as mediators, on the basis of alleged conditions of impartiality: France, Germany, Israel, Turkey. However, it seems that the most requested characteristic is to represent an autocracy like China or a middle ground between dictatorship and democracy, like Turkey. It is almost as if the potential mediator should resemble the Russian side as much as possible.

Turkey is anything but an indifferent and unrelated actor to the story. Turkey and Russia are anything but friends. Ankara proposes itself as a mediator but has a clear interest to defend its own supremacy over the Black Sea and, as a country with great interests, to stop hostilities; otherwise, the Russians might eat everything.

Israel has tried to accredit itself as a potential mediator, boasting objective and potentially equidistant affinities between the contending parties (Ukrainian President Zelensky is Jewish, many Israeli citizens are of Ukrainian and Russian origin, and Israel boasts a prevalent component of Russian-speaking population).

And then China. As a potential mediator, he laboriously tries to build an equidistance between the parties, not without a certain amount of ambiguity, trying to dismantle accusations and recriminations made by some players involved in the dispute.

Is there room for mediation? Can China play a role? How should the West position itself? In order to look at a negotiation you must also work on an interpretation. If you do not replace the idea of war with the prospect of a good compromise between states, it is difficult for a negotiation to commence, much less succeed.

The benefits of wearing the peacemaker’s clothes would seem huge for China but Xi must protect Putin because a failure of the autocrat would have negative consequences for the political fate of every autocrat. He would have a lot to lose but also a lot to gain.

Of course, he appears authoritative and can boast many instruments of persuasion towards Russia. Criticized for perhaps not having the agility of the mediator, China may want to be involved on an equal footing with the West. China and Russia are strategic partners and have come very close. Beijing can leverage Putin’s Russia more than the West

It is very important that China succeeds in having a role, but a positive mediation would be an extraordinary achievement for Xi who would affirm his global political power, not only economic. An important success in terms of soft power in the case of a successful management of a difficult situation out of control with potential negative effects also for Europe.

Despite having shown principled solidarity with Russia, China has enormous interests in re-establishing peaceful conditions of the world order on terms beneficial to itself. It is in a very uncomfortable position as the war has interrupted development plans for the Silk Road initiative.

Of course, a true mediator who has a chance of success must not be too strong; indeed, she should not be threatening to any of the parties, in some way not merely “neutral” but almost “neutralized.” Someone to whom one is able to say no. If the mediator is too strong, the parties find it difficult to say no. In this sense better Israeli or Turkish attempts even if they may not like it.

Because they are middle powers and since both sides will have to make concessions, it will take a sufficiently weak mediator, but up to the task.

To complete the picture, it is interesting that the U.S. is looking for an interlocution with China, a sort of recognition of its role, because everyone has understood that the only stakeholder (bearer of interests) that has a capacity to influence Moscow is Beijing. 

With a certainly rather optimistic approach, and without looking only at the short term, Chinese neutrality could also evolve over time, with a sort of “dynamic interposition” in the role of mediator. Deng Xiaoping often liked to quote Lord Palmerston: “We have no eternal allies and we have no perpetual enemies. Our interests are eternal and perpetual“.

Of course, the feeling is that to settle a difficult conflict, and perhaps to save the fate of the whole world, the raison d’état and the priorities of real-politik fatally prevail and the prospect of using effective negotiating tools brings with it a very strange idea of neutrality of the mediator.

Rather than boasting particular conditions of “neutrality” at the negotiating table, the most accredited candidates for the role of mediator — with obvious interests at stake — try to spend their own skills of pressure and conditioning on the parties.

• Mediator and arbitrator, business consultant and chartered accountant in Milan

The UIA has sponsored the World Mediation Forum every nine months since 2004. Alas, the gatherings were suspended after the meeting in Zurich in February 2020. Now it has resumed, and the 30th Forum was held in Malaga, Spain, on 16-17 September 2022, to general relief and happiness.

Created by Colin Wall and Thierry Garby, the Forum is now co-led by Fabienne van der Vleugel of Spain and Ross W. Stoddard of the United States. They offered a packed schedule, as always, and a heady mix of work and play.

So many excellent presentations were featured that it is possible only to pick some indicative highlights. It is customary for the Forum to feature an in-depth profile of dispute resolution in the country that plays the host of the event, and so we were treated to perceptive and comprehensive explanations of the status and organization of Spanish dispute resolution associations and centers, moderated by Ramon Pena Gonzalez-Concheiro. Speakers included Urquiola de Palacio del Valle de Lersundi, who is President of both the Madrid Business Mediation Center and the UIA itself; Manuel Diaz Banos, General Secretary of Mediation Center Fide (a provider, think tank and thought leader); and Fernando Bejerano, of the Madrid Bar Association‘s Mediation Center.

An insightful discussion of mediation in China was led by Milan’s Stefano Pavletic, who was joined via video by CCPIT Deputy Secretary General WANG Fang and, in-person, by Madrid mediator and arbitrator Marta Lazaro and Milan mediator Antonietta Marsaglia.

Jeff Abrams of Houston, Texas, can be relied upon to liven these affairs with his unique energy, flair and commitment. He moderated a panel of mediation experts that comprised Catherine LeClercq of Paris, Thiruvengadam BC of Bangalore, and Kim Kirn of St. Louis, Missouri. A particularly interesting discussion of “The Impact of Culture on Mediation” was moderated and organized by Susanne Schuler of London’s CEDR. Among her speakers were James South of CEDR, Sven Stuermann of Alicante, Spain, and Mona Hanna of Beirut, Lebanon.

I always look for opportunities to learn from corporate end-users about what they seek in mediation and in mediator performance, and this Forum offered a particularly insightful panel. Sophie Romaniello of Brussels moderated a discussion with three experienced lawyers: Celine Haye-Kiousis, Group General Counsel of BPCE Group in Paris; Marie-Aude Ziade, former GC of Dispute Resolution for ORANO Group in Paris; and Denis Musson, former GC of IMERYS.

This is bit a superficial indication of the genuinely engaging two days in Malaga. The next Forum is scheduled for Frankfurt, Germany, on 30 June and 1 July, 2023. I encourage all to join the UIA and plan to attend.