1. Introduction
The complex and lengthy processes of traditional
judicial remedies have led parties to settle disputes in faster, cheaper and
more party-oriented ways. New dispute resolution models are emerging with the
combination of different alternative resolution methods [1].
One of the dispute resolution methods that is formed
by the combination of these different alternative dispute resolution methods is
the Mediation Arbitration (Med-Arb) model, which is a combination of mediation
and arbitration. In the Med-Arb model, the parties agree to first resort to
mediation to resolve the dispute, and if no mutual agreement is reached during
the mediation process, to resort to arbitration, in other words, a gradual
dispute resolution mechanism. Mediation and arbitration are among the most
preferred methods in this context and have been integrated over time, leading
the way on the development of hybrid models. The Med-Arb model, which combines
these methods, has started to gain an important place in practice as it
provides both flexibility and binding force to the dispute resolution process.
The word Med-Arb is a portmanteau of “Med” standing
for mediation and “Arb” standing for
arbitration.
The mediation-arbitration method, called med-arb, is
based on the principle that if the dispute cannot be resolved at the mediation
stage, the mediator acts as an arbitrator and renders a binding decision for
the parties. [2] One of the most important advantages of this method is that
the parties can protect their relationship by keeping the resolution process
under control and resolve disputes in a shorter time and with less cost.
However, in practice, in some cases, preferences are made for the same person
to take part in both stages of the process. In other words, when this
preference is made, the mediator in the mediation phase and the arbitrator in
the arbitration agreement are the same person.
Although the same person acting as both mediator and
arbitrator provides advantages in terms of procedural efficiency, it poses
serious risks in terms of impartiality, confidentiality and fair trial
principles. One of these risks is that the mediator may not be able to maintain
his/her impartiality during the arbitration phase due to the information he/she
obtained about the parties and the dispute during the mediation process. [3]
2. Mediation,
Arbitration and the Differences Between Them
Mediation is a communication process on a voluntary
basis, which aims to bring the parties together with the help of an impartial,
independent and objective third party, to negotiate and thus to formulate their
own solutions. [4] Unlike judicial procedures that aim to distinguish between
right and wrong by focusing on past events, mediation aims to end the dispute
based on the future common interests of the parties. [5]
The basic principles of mediation, according to the Law
Nr. 6325 on Mediation in Civil Disputes, are generally as follows: freedom of
will (voluntariness), equality, impartiality, independence, confidentiality,
resolution of the dispute by the parties.
Arbitration is a special judicial procedure aimed at
resolving contentious disputes between the parties. In this process,
arbitrators use their jurisdiction to evaluate the facts of the dispute,
determine the facts according to their conscientious judgment and apply the
relevant rules of law to make decisions that are binding and conclusive on the
parties.
Pursuant to Article 407 et seq. of the Code of Civil
Procedure Nr. 6100 and the International Arbitration Law Nr. 4686, the basic
principles of arbitration are based on the primacy of the will of the parties,
the kompetenz-kompetenz principle, which refers to the arbitrators'
authority to decide on their own competence, equality between the parties, the
suitability of the dispute for arbitration, procedural freedom, independence
and impartiality of the arbitrators, confidentiality of the proceedings and the
final and binding nature of the arbitral awards.
The main difference between mediation and arbitration
is the nature of the solution offered to the parties. In mediation, the final
decision is made by the parties, whereas in arbitration, this authority belongs
to the arbitrators. Therefore, mediation is more of an “agreement” based
remedy, while arbitration is a “judgment” based remedy. In mediation, the
process is entirely voluntary, whereas arbitration is based on a prior
agreement between the parties and the arbitrator's decision is binding on the parties.
3. Concept of Med-Arb
The Med-Arb model, in which mediation and arbitration
are envisioned successively, is a preferred method, especially in cases where
the parties aim to achieve an amicable settlement and final binding effect in
the same process. In the Med-Arb model, the process starts with the application
to mediation. If the parties cannot reach an agreement as a result of the
mediation process, the parties submit the dispute to arbitration proceedings.
After the dispute is submitted to arbitration, the arbitrator renders a
decision that is binding on the parties. Thus, the model includes both a
flexible and party-oriented first stage and a second stage that conclusively
ends the dispute.
For example, under FIDIC construction contracts, the
parties first apply to a dispute board and then proceed to mediation and
arbitration. This staged structure is similar to the multi-tier dispute
resolution approach of the Med-Arb model.
Different types
have also developed in the application of the model. The most
controversial structure is the so-called “same neutral” Med-Arb, where the same
person acts as both mediator and arbitrator. Proponents of this model argue
that the integrity and efficiency of the process is enhanced and that the fact
that the parties continue the process with a person they know creates trust.
However, the same person serving in both roles is
subject to serious criticism, especially in terms of the principles of
confidentiality and impartiality. As a matter of fact, it is stated in the
doctrine that in such structures, confidential information learned during the
mediation phase may influence the arbitral award, which may both lead to the
annulment of arbitral awards and undermine the fairness of the process.
In conclusion, the Med-Arb model is a functioning
structure that systematically combines different dispute resolution methods and
offers the parties the opportunity for both reconciliation and a final
judgment. However, in order for this method to be applied in a healthy manner,
principles such as the separation of the roles of mediator and arbitrator, the
principle of confidentiality and the will of the parties should be meticulously
protected.
4. The Case of
the Same Person Being Both Mediator and Arbitrator
The most controversial application of the Med-Arb
method in practice is the joint conduct of mediation and arbitration by the
same person. In this so-called “same neutral” model, the parties agree at the
beginning of the process that a neutral third party will serve in both the
mediation and arbitration phases.
The reason why the same neutral model is preferred is
that the person involved in the process is familiar with both phases, which
allows for a faster and more effective resolution of the dispute. It is claimed
that a person who is well acquainted with the attitudes and needs of the
parties and the main elements of the dispute during the mediation process will
be able to make decisions more quickly and effectively during the arbitration
phase.
However, despite these advantages, there are serious
ethical and legal risks in having the same person at both stages. Some of these
risks are important not only for the parties, but also for public confidence in
the process, the validity and enforcement of the decision.
One of the risks is that the mediator may not be able
to act impartially when s/he becomes an arbitrator in the arbitration phase due
to the information and documents s/he has acquired about the basis of the
dispute and the parties during the mediation process.[6]
There is a risk that confidential information disclosed
by the parties in individual meetings with the mediator during the mediation
process, to which the other party does not have access, may be taken into
account by the same person acting as an arbitrator during the arbitration
phase. The mediator-arbitrator may decide on the basis of information disclosed
to one of the parties and to which the other party has no opportunity to object
or seek clarification or may use such information to the detriment of one of
the parties. [7]
Another risk when the same person is both a mediator
and an arbitrator is that the mediator-arbitrator may abuse her/his influence
over the parties. In the event that the mediation process fails, the same
person acting as an arbitrator may have the power to impose on the parties in
the arbitration process the solution that s/he found appropriate during the
mediation phase. [8]
In light of all these risks, arbitration centers have
also regulated this issue in their rules in order for the mediator to be an
arbitrator. For example, the ability of the same person to serve as both
mediator and arbitrator is clearly set out in Article 5 under the ISTAC
Mediation-Arbitration (Med-Arb) Rules. As per this article, such an appointment
is only possible with the written and express consent of the parties. [9] Thus,
ISTAC permits the “same neutral” model, but makes this permission subject to the
express and written consent of the parties.
6. Conclusion
The Med-Arb model, which combines mediation and
arbitration methods, is a hybrid structure that stands out among modern dispute
resolution approaches for its flexibility and effectiveness. Med-Arb enables
the parties to first try to reach a compromise through mediation, and if no
compromise is reached, to reach a binding solution through arbitration.
However, in the "same neutral" model, where
the same person acts as both mediator and arbitrator, there are serious
challenges to fundamental procedural safeguards such as impartiality and
confidentiality. The risk of unilateral and confidential information obtained
during the mediation process influencing the decision-making process in the
arbitration process may have significant legal consequences in terms of both
the right to a fair trial and the annulment of the award. At the same time, the
risk that the mediator, in her/his capacity as arbitrator, may impose on the
parties the settlement proposal that s/he has previously deemed appropriate may
undermine the credibility of the mediation process.
Faced with these risks, the healthy functioning of the
Med-Arb model depends, in particular, on the separation of mediator and
arbitrator, the express consent of the parties and the rigorous protection of
procedural safeguards. Arbitration centers such as ISTAC provide assurance in
practice by introducing clear rules in this regard. In conclusion, the Med-Arb
model has the potential to provide parties with a fast, flexible and effective
dispute resolution mechanism when properly structured and not in conflict with
fundamental principles.
Att. Umut Alperen Öztürk
References:
1. ŞAHİN CEYLAN, Şule: Geleneksel Toplumdan Modern Topluma Alternatif
Uyuşmazlık Çözümü, 1st Edition, On İki Levha Publishing, Istanbul,
2009, p. 308
2. ÖZBEK Mustafa Serdar, Alternatif Uyuşmazlık Çözümü, 5th
Edition, Ankara: Yetkin, 2022 p.391
3. Cemile Demir Gökyayla, Arabuluculuk ve Tahkimi Bir Arada İçeren
Uyuşmazlık Çözüm Yolu, Istanbul Law Journal, p.594
4. Özbek, ibid, 2022, p. 658
5. Beyza Saygın, p.35
6. Gökyayla, ibid, p.594
7. Gökyayla, ibid, p.594
8. Gökyayla, ibid, p.594
9. ISTAC Mediation-Arbitration Rules
