MEDIATIONARTICLE
033
The mediated arbitration:
Think outside the box the next time
you reach an impasse during mediation
AUTHOR: Mark Zukowski
EMAIL: [email protected] BIO: jshfirm.com/markdzukowski
Cases typically settle in mediation, because the parties can
control the outcome and avoid the cost of further litigation. As
appealing as that can be to both sides, it also results in some
dissatisfaction, because the case is not decided on the merits.
Sometimes cases do not settle at mediation. The next time you
reach an impasse at mediation, don’t give up. The mediated
arbitration may be an acceptable solution.
Recently, I mediated a significant construction defect case. While
the defect at issue was apparent, the parties had differing views
of what repairs, if any, were needed and the cost of those repairs.
For reasons not known at the time, the building owner was highly
motivated to complete repairs as soon as possible, even if it
meant self-performing the repairs and later suing to recap the
cost of the repairs.
At mediation, it quickly became evident a mediated settlement
was not possible. While the owner had identified the defect,
it had not offered a cost of repair. The contractor had not fully
investigated the defect or cost of repair, not wanting to bid
against itself, or set the floor for settlement to negotiations. The
dreaded and usually fatal impasse.
Sensing the parties frustration of no settlement, I proposed what
I called a mediated arbitration. After some initial resistance to
trying something new, the parties embraced my suggestion and
agreed on a way to resolve the case that would involve both
principals of mediation and arbitration.
Instead of reaching an agreed amount to settle the case, the
parties agreed to jointly retain a neutral expert who would be
tasked with identifying a reasonable scope of repair. In this case,
the parties agreed in advance to three possible repair options
which the neutral would have the sole discretion to decide: no
repair necessary, partial repair – but not replacement, or full
blown replacement.
To address the uncertainty of the final cost of repairs determined
to be necessary by the neutral expert, the parties also agreed in
advance to a reasonable cost for each repair option. The parties
also agreed in advance on who would perform and certify the
repairs. Finally, the parties agreed to allocate the cost of the
neutral expert based upon the final cost of the repairs.
The parties left the mediation with a final resolution of the case )