Conference on Mediation

March 29, 1996, Geneva, Switzerland

 

Discussion

The Use of Commercial Mediation in Europe
and
Confidentiality in Mediation


Robert Badinter (Chairman)

Thank you, Mr. Gurry, for those very interesting observations on the complex problem of confidentiality. I think that perhaps there will be some questions, since I believe that, in the application of the principle, things are difficult, more difficult than when one describes the principles, particularly since one can wonder about the limits of confidentiality in relation to the parties themselves, which, after all, for reasons of their own interest, might consider it to be necessary to reveal one document or another or one element or another that has entered into the mediation. Who wishes to ask questions to our two speakers?

 

Ikbal Al Fallouji (Geneva, Switzerland)

In relation to the excellent intervention of Mr. Gurry I take the lesson that confidentiality is, in fact, intimacy, and intimacy is the cornerstone of confidence. But I have a precise question. Do you think that to use this full confidence a mediator could present propositions which are in fact propositions of one party, but which he makes in order to protect that party? That is a precise question, but I wish also to pose another question to the first speaker. The first speaker spoke of recourse to mediation in Europe. And there also, I should like to ask a precise question, because we are in a world that can be as universal as a commercial operation is. I understand that there is a geographical Europe, but I do not understand a commercial Europe and a Europe of mediation. In a concrete case, when you train mediators, how do you train them in a European way and how do you train them in an international way? I shall conclude with a little commentary. I return to the question of lawyers, because I understood it being said that the lawyer was aggressive. Mr. Chairman, across decades, I have seen mostly lawyers as gentle as lambs, more gentle than a mad cow.

 

Robert Badinter (Chairman)

In any case, less dangerous.

 

Karl Mackie (London, United Kingdom)

On the question of how to train international mediators, I think what you will find, if you go to mediation programs, is that the emphasis and the concentration is on the process and mediation skills and those are fairly universal. The difference, where we run specialist courses, is really a question of emphasis. For instance, the role plays, the case studies that are used on a course may draw on a specialist sector. Certainly it seems to me from the experience that I have had that, for instance, if you look at United States programs, one finds a far greater proportion of evaluative mediation taking place than currently you would in European training, which is stressing more facilitative mediation. But the reality, I think, is that mediation works because you get into a dialogue with the parties that is frank and confidential. If you come because you have specific knowledge of international laws, specific knowledge of intellectual property, in a sense your dialogue is enriched by that specialist background. Rather than merely being an exploring and probing and listening dialogue, it becomes a dialogue of understanding of law or understanding of culture, which influences outcomes.

 

Nàbila Mezghani (Mutuelleville, Tunisia)

I am a Professor at the Faculty of Law of Tunis and, particularly in this capacity of Professor, I am very appreciative of all the information that has been given. We have learned a great deal this morning, thanks to the brilliant speakers and the light cast by the discussions. I have much sympathy for preliminary definitions. At the outset, I was wondering where the definitions were, and, in the following parts, little by little, we learned what was meant by mediation. A mediator is, at the same time, a conciliator, an expert, he could equally be a counsel, an arbitrator, perhaps everything at the same time, perhaps a specialist of a particular institution like, in the area of intellectual property and, more particularly, computer programs, the Agency for the Protection of Programs, a member of the national industrial property office, a member of an audiovisual institute or a copyright society. If he is a lawyer bound by professional secrecy, the question of confidentiality is preserved. If he is skilled in a certain area, an engineer or technician, skilled in advanced technology, in intellectual property, technology has such importance that I think that a person skilled in the art would equally be bound by professional secrecy. The question of confidentiality is very important and it is both a legal and an ethical question.

The choice of mediator is important. By whom is the mediator chosen? If it is by the parties, this is very important; if the choice is imposed, this can influence the solutions and the termination of the conflict. You have said that mediation accelerates the resolution of conflict. It could equally slow down such resolution, as is said for conciliation. Preliminary conciliation, it is said, can slow down the solution of a dispute. It is the same for mediation, which can have a slowing influence, but, in the end, it is a solution that should not be neglected and that is important.

I come from an Arabic-African country and I think that our colleagues, Messrs. Kemicha and Al Hejailan, are going to speak presently, so that I shall not open up too much this question. Arab countries, African countries and Arab-Islamic countries have known the institution of mediation since the beginning of time, a mediation more or less formal. Islamic law favors mediation to justice rendered by a judge. My colleagues will describe this better than I. On the international level, it is better to try what I think is the first objective of this meeting, namely, to harmonize mediation; perhaps not to institutionalize it, but to harmonize it and to harmonize the resolution of disputes within the framework of a harmonization which has already been achieved on a basic level, thanks to GATT, by the TRIPS Agreement. Mr. Al Fallouji was shocked in saying "I understand geographical Europe, but I do not understand commercial Europe or Europe of mediation," but we are reaching, indeed we are obliged to reach, commercial Europe. Even on the international level, we no longer speak of Europe, as there are no longer boundaries, there is the information superhighway, the international commercialization of all products and, unfortunately, counterfeiting is international. It is necessary, therefore, to unify and harmonize rules on the international level, since boundaries have fallen. It is necessary also that sanctions be applied in all countries. I do not have a particular question to ask, but I have learned a great deal and I am grateful.

 

Robert Badinter (Chairman)

Thank you for those clarifications and observations.

 

Felix Addor (Berne, Switzerland)

I have a question for Francis Gurry concerning how to ensure confidentiality. At least from the legal point of view, it seems to me important to know what to do if a party does not respect the confidentiality agreement. I am not thinking of the future litigation, but of communicating trade secrets or sensitive details which might arise especially in the intellectual property field during a mediation case. To be more concrete, would it be wise to include in the confidentiality agreement a clause agreeing on punitive damages in the event of breach, which you would not get in civil-law countries without such a clause. Or would such a clause on punitive damages be counter-productive to the whole mediation procedure and perhaps illegal. But as soon as one party does not respect the confidentiality agreement, everything will collapse.

 

Francis Gurry (WIPO)

The mediation rules that are adopted at the outset, if you happen to have the mediation administered by an institution, for example, the WIPO Mediation Rules, are designed to cover all persons and all information, unless the parties wish to agree to the contrary. The mediator has to ensure that anyone coming into the mediation is subject to the same obligations of confidentiality and signs a confidentiality undertaking to this effect. As to your concrete example of whether it would be wise to include a clause about punitive damages, if there is a trade secret of great sensitivity involved in the mediation, then the first thing to do would be to see whether it is possible to proceed without revealing the trade secret. If that is not possible, other measures of protection can be adopted such as the appointment of a confidentiality advisor. In any case such measures should be discussed with the parties as part of the process of contracting and establishing the ground rules of process.

 

Johannes Trappe (Hamburg, Germany)

Mr. Chairman, my name is Johannes Trappe from Hamburg in Germany. I am a barrister and, from time to time, an arbitrator and a mediator. I should like to make a brief remark. It was quite rightly observed that, in order for a mediation to succeed, it is necessary to create an atmosphere of confidence. Consequently, it is for the mediator to create or, at least, to assist in creating this atmosphere. Up until now, we have spoken of a mediator, that is, a sole mediator. Certainly it is convenient and appropriate to have a sole mediator for a dispute which exists between two parties coming from the same country or, in any case, from the same philosophical or legal culture. On the other hand, I wonder if this procedure of having a sole mediator is appropriate in disputes where the parties come from different countries or different cultures and different parts of the world. I would propose in such cases to consider having two mediators, each party nominating its own mediator. This could assist in deepening the confidence of the parties in this procedure of mediation. In particular, in such a procedure, the possibility exists to consider disputes on two levels, on two scenes between the mediators alone and between the parties with or without the mediator. Very often it is extremely useful for one of the mediators to discuss the matter with the party that has nominated the other mediator, explaining to that party the philosophy, culture and way of thinking of the other party. In any case, this joint conciliation, as experience shows, can enjoy, and has indeed enjoyed, much success.

 

Karl Mackie (London, United Kingdom)

I think the guiding principle of the mediation is what sort of individual or team will have the greatest impact on the negotiations that are taking place. That is really the only major guiding principle in terms of designing the mediation team. I think there is a danger in going down the route of automatically assuming that each party will nominate its own mediator, because in a mediation you are working at a very sensitive and very intuitive level quite often. If you bring together a mediation team who, say, who have not met each other before, who speak different languages, what you are moving towards is actually close to a quasi-arbitration, rather than mediation. Generally, I would say one would be against an automatic assumption that that rule should apply.

What is true is that there are many cases where it is helpful, because it is a multi-party dispute, because of different skills, to appoint a team of mediators who can work together. We have certainly used the model, for instance, where we have an expert in a particular substantive area working alongside an expert in the process of mediation. But the expert is reporting to the mediator, rather than it being a joint team effort. Co-mediation can work, but I think you need co-mediators who are very aware of each other’s style and know when to intervene and when to hold back. You would not have that in a formal appointment system across cultures.

 

Johan Erauw (Ghent, Belgium)

I have a question for Mr. Mackie. Based on your abundant experience, do you think there is a taboo against using elements of pressure on the parties and, if not, could you discuss some of the useful incitements to compromise or to negotiate. More particularly perhaps, what do you think is, if not an ideal, a good relation between mediation and arbitration.

We always hear that mediation is a kind of a first try and a first phase, possibly to be followed by arbitration, but I have a double experience that makes me put that question. In the first place I was a company lawyer for a long time, and I think that in the commercial field parties do talk and do negotiate and compromise, but then we see that at one point the situation blocks. Now what can really incite them to compromise? Now, my other experience is as an arbitrator. I have experienced that, if an arbitration starts moving really rapidly, people tend to start negotiating and to compromise.

 

Karl Mackie (London, United Kingdom)

What the mediator is working within is the emotions, the interests, the needs of the parties. One of the hardest things in getting mediation going is actually persuading people to mediate, in many ways much harder than persuading them to settle once they are in a mediation. The incentives are usually a question of what degree of pain and reward each party is experiencing and the balance between those. In many cases, for instance, parties come to mediation because the alternative is another several months of delay or costs, and both parties are equally concerned about that. There are other incentives, such as an indication of goodwill or an indication of corporate policy.

In the corporate sector now there is increasing emphasis on partnership sourcing and partnership relations with one’s suppliers in order to compete globally and in an effective way. So, even though you have a major difference with a supplier there may be great advantage in, as a matter of course, going into a more formal procedure than our normal head-to-head negotiations, because of its additional dynamic and its extra pressure.

The other incentives tend to arise during the process and differ very much according to the parties’ particular needs. Stephen Goldberg described some earlier. I mediated one case, for instance, and I discovered afterwards, but I did not know this and the parties’ advisors did not know this, that it was a case where liability was in dispute and there was a counter-claim. In a sense, both parties came into the mediation and it could have gone in favour of one side or the other in terms of compensation. Now one of the parties was dealing in relation to a subsidiary and it was about to sell that subsidiary to a bidder. So any settlement that was in its favour, even a quite small sum of money would be multiplied as far as the accounts were concerned and in terms of the value of the company. Now that company did not reveal to the mediator, or even its own legal advisors, that that incentive was part of the process. At the same time, all they really wanted was a settlement where they got a plus sum of money, rather than to have to pay the other side money. As it happened, various other pressures on the other side in terms of arbitration costs meant they were willing to do that. So there was a small sum of money paid at the end of the mediation. But it was a multiplied sum of money as far as the party was concerned. So, in mediation there can be all these kinds of agendas taking place for personal reasons: "I want to get rid of this project, its a big problem for me on my commercial agenda." One does not always know, as the mediator, what they are, although one hopes one can detect them from listening and at least detect where the parties want to go.

As to the relation between mediation and arbitration, at the moment they are very distinct, very separate processes. There is a lot of theoretical argument against Med-Arb as a process, as Francis Gurry described, in that you may inhibit the parties from revealing confidences if they think their mediator is going to turn into an arbitrator. It may be against the rules of natural justice in that the mediator may hear confidential information and yet not give the other party an opportunity to discuss it and to respond to it. Having said that, in practice there are many cases where the parties are much more robust about the dispute and they just want an end to it. They are quite ready to hear from the mediator if they cannot reach an agreement, for instance. They are ready to receive a report from the mediator. This does often happen in public authority and government cases, where it is important to have something on paper that can be part of an audit trail for the public authority. They may want a report from the mediator outlining the case and recommending terms of settlement. So one is getting close to arbitration, but generally in the mediation settlement agreement those terms are described as reasonable terms of settlement in all the circumstances, rather than the terms than a court would order.

These are the kinds of debates and issues that are arising in relation to the link and it will take much more experience to know exactly where mediation and arbitration will ultimately run alongside each other.

 

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