Given the shortage of judges, backlog in the system and the rash of new judges, alternative dispute resolution has been coming more and more prevalent in the divore cases. For as long as I can remember, custody and parenting time mediation and Early Settlement Panels have been mandatory in New Jersey. For the last decade, give or take, there has been mandatory economic mediation too. Throw in Intensive Settlement Conferences (ISCs), Intensive Settlement Panels (ISPs), Blue Ribbon Panels, Blitz Weeks, etc. and the message is clear – do everything you can to avoid a trial and settle your case.
But what if you cannot settle your case but for a variety of reasons, tax, or otherwise you need a decision? What do you do? An alternative is arbitration, where the case is presented to a private judge in a manner determined by the parties and decided with relative finality. What often happens once you select your arbitrator? The settlement process oftens picks up again with that person. Maybe even that person begins to serve as a mediator, either formally or informally. Can that person then serve as an arbitrator? Yesterday (9/25/13), the Appellate Division said no in the case of Minkowitz v. Israeli and concluded that "... once the arbitrator functioned as a mediator, he may not then conduct arbitration hearings."
The facts of that case, while interesting, are not that important for this discussion other than to know that at some point, the arbitrator that was selected morphed into a mediator – although he didn't believe so. Plaintiff asserted that the:
arbitrator "committed misconduct and exceeded his powers by acting as botha mediator and an arbitrator." She further explains the arbitrator aidedmediation of the disputes, then, when she sought underlying documentation, he"enforced the [agreements] that he had written [as a mediator] as if they were the result of an actual arbitration," converting the result to a binding arbitration award.
The Appellate Division noted that this was an issue of first impression. The Court then noted:
While we recognize the Act envisions a need for flexibility to
meet a wide variety of situations presented in arbitration
proceedings, we are not persuaded the Act intended an appointed
arbitrator may first assume the role of mediator then switch back
to conduct final arbitration hearings. As noted, an effective
mediator gains each party's confidence and offers advice to
steer them toward settlement. Those confidential
communications gained in mediation are precluded from being
considered in a court contest, Isaacson v. Isaacson, 348
N.J.
Super.
560, 577 (App. Div.), certif. denied, 174 N.J. 364 (2002), and
would similarly be precluded from consideration in an arbitration
hearing. See also
Willingboro Mall, supra, ___ N.J. (slip op. at 9)
("Communications made during the course of a mediation are
generally privileged and therefore inadmissible in another
proceeding.").
The court went on to hold:
Based on our review of the distinctly different proceedings of arbitration and mediation, we conclude the positions of arbitrator and mediator are in conflict. An arbitrator must "maintain 'broad public confidence in the integrity and fairness of the [arbitration] process.'" Barcon, supra, 86 N.J. Super. at 190 (quoting Holtzmann, The First Code of Ethics for Arbitrators in Commercial Disputes, 33 The Business Lawyer 309, 312 (1977)). If the same person acts as a mediator, obtains party confidences or offers opinions on the issues in dispute, a conflict arises were he or she to then switch roles to act as an arbitrator, making the final call. We find the need for an arbitrator's complete objectivity bears heavily on the integrity of the arbitration process. This concern becomes even more problematic when arbitrating matrimonial disputes between already suspicious adverse parties.
In the family law context, we could envision parties agreeing in writing to allow one person to perform these roles regarding separate issues; for example, mediation of custody matters and arbitration of financial issues. However, this should be the parties' choice. Absent a specific agreement clearly defining and accepting the complementary dispute resolution rofessional's roles, dual roles are to be avoided.
So the court made clear that a dual role is still permissible, but only if the parties agree to it, in writing, in advance. The court then noted the better practice, as follows:
It is advisable for parties to exhaust all applicable dispute resolution alternatives, including settlement conferences and mediation before undertaking arbitration. Once these available courses are exhausted and arbitration is chosen, the arbitrator should promptly commence hearings and resolve mattersexpeditiously. (Emphasis added).
The court went on to discuss how arbitration should proceed and how the trial court should be out of that process. That will be the subject of another blog
Query how the rationale of this holding holds up when juxtaposed against the fact that judges hold Intensive Settlement Conferences and otherwise try to assist in settlement all of the time. In fact, there was another unreported decision yesterday that said recusal of a judge who was involved in settlement discussions was unnecessary because that is part of the judicial role. Do not judges serving in these roles her things they would not hear during a trial? Do they not hear confidential settlement positions? Perhaps that will be a discussion for another day.
That said, the takeaway here is that if you want your arbitrator to assist in settlement, then you have to put it in writing that she/he can do so. If you want the arbitration process to be pure, then then do all that you can to settle before the arbitration starts, but when it starts, call your first witness.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
