Ecuador’s Plea for Mediation in the Assange Standoff

By Ginsey Varghese

In early January, Ecuador Foreign Minister Maria Fernanda Espinosa indicated interest in mediation by a “third country or personality” to resolve the asylum case of Julian Assange, the founder of WikiLeaks.

Assange has been living in Ecuador’s embassy in London since June 2012, avoiding extradition to Sweden on a rape charge. Paulina Dedaj, “Assange asylum ‘not stable,’ Ecuadorian embassy says,” Fox News (Jan. 9) (available at http://fxn.ws/2DX3Vaq).

The Swedes are no longer pursuing the case, but the United States still may want Assange extradited in connection with the WikiLeaks publication of U.S. military information.

Today, a U.K. court denied Assange’s request to invalidate the arrest warrant for him, after his lawyers argued that there was no need for extradition since the original charges in Sweden had been dropped.  “Julian Assange arrest warrant still stands, court rules,” BBC News (Feb. 6)(available at http://bbc.in/2GT7obb). The request was denied.

The BBC earlier reported that Assange’s current arrangement is unsustainable. “A person cannot live in those conditions forever,” Espinosa said. “Julian Assange: Ecuador seeks mediator in ‘unsustainable standoff,’” BBC News (Jan. 9) (available at http://bbc.in/2DZYc3S).

Assange earned notoriety in 2010 when WikiLeaks released confidential materials about U.S. military activity in Iraq and Afghanistan, which included helicopter video of civilians being killed in Iraq, diplomatic correspondence of underground negotiations and classified documents about the war in Afghanistan and Iraq. Liam Stack, Nick Cumming-Bruce & Madeleine Kruhly, “Julian Assange: A Legal History.”  N.Y. Times (Updated Jan. 26)(available at http://nyti.ms/2mZAywg).

There are rumors of a secret U.S. arrest and extradition warrant for his connection to exposing U.S. state secrets if he leaves the embassy. Maggy Ayala & Steven Erlanger, “Ecuador Gives Assange Citizenship Worsening Standoff with Britain.” N.Y. Times (Jan 11) (available at http://nyti.ms/2EzDfvk).

Assange fears prosecution by the United States, and British officials have not provided any assurances that he would not be extradited. Alexandra Valencia, “Ecuador says exploring mediation to solve Assange standoff,” Reuters (Jan. 9)(available at http://reut.rs/2DHNEpB).

CNN earlier reported that the British police maintain an arrest warrant for Assange because he jumped bail after the British Supreme Court denied his extradition appeal. Jason Hanna, “Swedish court refuses to revoke Julian Assange’s arrest warrant,” CNN (Nov. 20, 2014) (http://cnn.it/1r0v79Y). See also Ana Melgar, Jamie Grey, and Kara Fox, “WikiLeaks founder Julian Assange granted Ecuadorian citizenship,” CNN (Jan 11) (http://cnn.it/2D3H4wT).

Assange described the situation since his arrest as a “terrible injustice.” Robert Booth, “Julian Assange’s stay in London’s embassy untenable, says Ecuador,” Guardian (Jan. 9) (available at http://bit.ly/2CLUs4B).

When Ecuador initially granted asylum to Assange, he was viewed as a political hero by many for opposing “US imperialism”; but today, with his interference in the 2016 U.S. presidential election, Assange’s supporter base has shifted to “hard-right nationalists,” according to the Guardian‘s James Ball, “The only barrier to Julian Assange leaving Ecuador’s embassy is pride,” Guardian (Jan. 10)(available at http://bit.ly/2DguTtu).

Reuters earlier quoted Espinosa, who stated, “No solution can be reached without international cooperation and without cooperation from the United Kingdom.”

The Guardian noted that Assange’s lawyer appeared to welcome Ecuador’s mediation proposal, and emphasized that the U.K should “respect[] its human rights obligations and commitments to the United Nations.”

But UK government countered that Assange should leave the embassy and face justice.

The diplomatic standstill has only worsened with Ecuador’s grant of citizenship to Assange last month, a decision that Ecuador Foreign Minister Espinosa explained was made after careful review of Ecuador’s obligations under Ecuadorean law and international law, according to the New York Times.

Ecuador’s “mediation” pitch may be a route to resolution, but so far, the stalemate continues.

The author is a CPR Institute 2018 intern. She is a law student at Pepperdine University’s School of Law in Malibu, Calif.  

Roundup: Legislation with Mediation or Arbitration…Maybe for the future?

By Elena Gurevich

According to Congress.gov, the official website for U.S. federal legislative information, and Govtrack.us, an organization that tracks legislation and votes, several bills have been introduced in the U.S. House of Representatives and the Senate this year that touch upon arbitration or mediation.

Out of five bills introduced, only one deals with mediation as well as arbitration. Although (according to Govtrack) it is highly unlikely that these bills will be passed by the present Congress, they might get a shot in the future under a different Congress.

H.R. 156—Labor Relations First Contract Negotiations Act of 2017. The bill, introduced on Jan. 3 by Rep. Gene Green, D., Texas, has a prognosis of passage of 1%, according to Govtrack, whose projection estimates are supplied by Skopos Labs, a New York software company. The bill amends the National Labor Relations Act to address initial contract negotiation. Specifically, the bill requires mediation if an employer and a newly certified union have not reached a collective bargaining agreement within 60 days. “Either the employer or the union may request binding arbitration if the parties have not reached an agreement within 30 days of selecting a mediator.”

See https://www.congress.gov/bill/115th-congress/house-bill/156.

H.R. 832—Arbitration Transparency Act of 2017, with a 3% chance of passage, requires that an arbitration proceeding between a consumer and a financial institution, in a dispute involving a consumer financial product or service, must be open to the public. It was introduced Feb. 2 by Rep. Michael Capuano, D., Mass.

See: https://www.congress.gov/bill/115th-congress/house-bill/832?r=10

H.R. 1374—Arbitration Fairness Act of 2017 was introduced on March 7. The bill prohibits a predispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute. The bill, sponsored by Rep. Hank Johnson, D., Ga., has a 3% chance of passing, according to Govtrack.

See: https://www.congress.gov/bill/115th-congress/house-bill/1374?r=7

  1. 542—Safety Over Arbitration Act of 2017 was introduced on March 7, with a current prognosis of 9%. The Congress.gov summary says the bill “prohibits the use of arbitration whenever a contract between an individual and another party requires arbitration to resolve a claim or controversy alleging facts relevant to a hazard to public health or safety unless all parties to the controversy consent in writing after the controversy arises.” The sponsor is Sheldon Whitehouse, D., R.I.

See: https://www.congress.gov/bill/115th-congress/senate-bill/542?r=22

  1. 647—Mandatory Arbitration Transparency Act of 2017. The bill has only a 2% chance of passing in this Congress, according Govtrack and Skopos Labs. The bill amends U.S.C. Title 9 on arbitration. According to the Congress.gov summary, the bill “prohibits predispute arbitration agreements from containing a confidentiality clause regarding an employment, consumer, or civil rights dispute that could be interpreted to prohibit a party from: (1) making a communication in a manner such that the prohibition would violate a whistle-blower statute; or (2) reporting or making a communication about tortious conduct, unlawful conduct, or issues of public policy or public concern. But the prohibition shall not apply if a party can demonstrate a confidentiality interest that significantly outweighs the private and public interest in disclosure.” Richard Blumenthal, D., Conn., is the sponsor.

See: https://www.congress.gov/bill/115th-congress/senate-bill/647

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The author is a CPR Institute 2017 Fall Intern.

Updating the Global Pound Conference: A Survey on Mediation in Cross-Border Disputes

By Angela Cipolla

The recent Report on International Mediation and Enforcement Mechanisms found that, while mediation survey respondents believe in the necessity of using the process for cross-border disputes, a lack of education about how mediation works is a problem.

The report’s results also strongly boost calls for an international mediation enforcement mechanism.

The recent report was issued by the Institute for Dispute Resolution, at New Jersey City University’s School of Business in Jersey City, N.J., to the International Mediation Institute for the benefit of delegates attending the UNCITRAL Working Group II (Dispute Settlement) 67th Session, on dispute settlement, which was held last month in Vienna. For more information, see www.imimediation.org.

The report follows and incorporates results of surveying done at the Global Pound Conference, which concluded a year of face-to-face meetings with practitioners worldwide in July. See http://globalpound.org; for a wrap-up of the GPC series, see CPR Speaks blog post at http://bit.ly/2vxV2P1.  The IMI and NJCU IDR surveys received responses from users in various fields and professions that represented, according to respondents who identified their locations, 24 countries.

The information was collected in the 28 GPC events held in 22 countries, as well as through online voting. Votes were categorized by stakeholders.

The report, written by David S. Weiss, director of the Institute for Dispute Resolution and a visiting scholar at the New Jersey City University’s business school, and New Jersey attorney Michael R. Griffith, analyzed views on establishing an international treaty for the enforcement of mediated settlements collected online from June 2016 to March 2017; it also analyzed responses from the Global Pound Conference Survey, which was available at IMI Global Pound Conference gatherings and online from March 2016 to September.

The report also expands upon how the international legal and business communities use mediation.  See S.I. Strong, “Use and Perception of International Commercial Mediation and Conciliation: A Preliminary Report on Issues Relating to the Proposed UNCITRAL Convention on International Commercial Mediation and Conciliation,” U. of Missouri School of Law Legal Studies Research Paper (Nov. 17, 2014)(available at http://bit.ly/2yAzUhp).

Overview

Weiss and Griffith gathered the opinions of “those who are most likely affected by the adoption of any prospective drafts or proposals by Working Group II (Dispute Settlement) with emphasis on the users.” The views, reflecting 103 survey responses, reflect the “wider business community, their advisors, providers, and those that may influence the mediation space,” they write. The GPC conference and online surveying produced responses from about 2,500 stakeholders.

The report follows the same pedagogical and methodological process as Strong’s article, presenting research “gathered by an international quantitative-qualitative study of users’ assessments of the enforcement of international commercial settlement agreements resulting from conciliation.”

The Report’s Findings

With regard to the report’s own survey questions, the study brought to light a lack of education regarding the benefits and uses of mediation in cross-border disputes. It found that 40% of the respondents said they use or have been advised to use mediation in a cross-border dispute as a best practice in business “infrequently,” and 24% answered “not at all.”

When users were asked why they thought parties do not resolve their commercial cross-border disputes through mediation, the most frequent answer at 57% of the responses was that “they are unfamiliar with mediation.”

The study called the result “a surprisingly [sic] lack of knowledge about mediation among users.”

These results demonstrate a need for more education about mediation. Interestingly, the second highest-ranked reason in response to the question was that no universal mechanism to enforce a mediated settlement exists.

While the IMI and NJCU survey also showed “a general positive direction of users to incorporate mediation clauses into cross-border contracts,” 80% of users were even more apt to participate in mediation if there was a uniform global mechanism to enforce mediation settlements in place.

This demonstrates the incentive that such a mechanism would provide and the possible positive effects it would have on mediation use in cross-border disputes.

Accordingly, the report found that the majority of users and stakeholders in both the study conducted for the report and the GPC surveying “believe that a uniform global mechanism to enforce mediation settlements would improve commercial dispute resolution.”

Some concerns regarding faith and trust in the mediation process were raised in the IMI and NJCU study’s comments, suggesting that more confidence in the process needs to be built as the use of mediation becomes more prevalent.

The report also looked to whether a treaty should include provisions similar to the longstanding Convention on the Recognition and Enforcement of Foreign Arbitral Awards, better known as the New York Convention.

This idea was well received. An overwhelming 84% of users stated that they would be “more likely” to use or increase their use of mediation in a cross-border dispute if there were a uniform global mechanism in place, similar to the New York Convention, which would ensure enforcements of settlement agreements.

The report speculates that a majority of users would like to use the uniform mechanism as a “bargaining chip;” 60% of users stated that they would prefer an “opt-in” system.

Additionally, the report examined the challenges users faced in mediation. When asked whether users faced any post-mediation challenges to settlement agreements in cross-border disputes on the grounds of capacity, duress, or fraud, the two largest recorded answers were 47%, responding “never,” and 36% responding, “sometimes.”

The report also asked users whether they would be less likely to use mediation if a uniform global mechanism of enforcement included any defenses.  The question didn’t show that defenses would have a significant impact on a user’s willingness. Forty-four percent of the users responded “no,” while 27% responded “yes.”

When asked if the users would prefer a uniform global mechanism that limited defenses, similar to the New York Convention’s Article V, 54% of users responded “yes,” while 22% responded “no.”

The report also revealed that though re-litigating settlements doesn’t occur often, the rate was high.  The study found that 35% of users answered “infrequently” when asked if they have ever were required to re-litigate on general contract defense a mediation settlement agreement that was not honored. “If this was not a problem,” the authors wrote, “we would expect to see user’s answering ‘infrequently’ at a much lower percentage.”

This indicates a problem that a global enforcement mechanism might help alleviate. Additionally, regarding the availability of mediators, the report showed that “[w]hile it is generally positive that 61% of users are generally able to find qualified mediators, there [is] a vast amount of room for improvement.”

In addition to its own questions, the report also analyzed the GPC Series Questions. The report found that just like the users in its study, a majority of GPC stakeholders “believe that a uniform global mechanism to enforce mediation settlements would improve commercial dispute resolution, with 51% [of users concurring.]”

Overall, the GPC Series Questions had a positive view of taking action on mediation settlement enforcement.  Those conference and web survey questions found 51% of users “clearly supporting a uniform global mechanism to enforce mediation settlements as their first preference.”

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The report concludes that global enforcement of mediation settlement agreements is a “necessary tool for encouraging mediation,” and that such an enforcement mechanism should be “congruent with the methodological approach that was adopted by the arbitration community through the New York Convention.”

The report further emphasizes that “practical certainty” in mediated settlement agreements will (1) improve access to justice and (2) “increase efficiency for the wider business community,” and that both of these benefits are crucial to advance trading systems and aide businesses.

UNCITRAL’s Working Group II’s 68th session, expected to consider a mediation enforcement convention further, is scheduled to be held in New York, from Feb. 5 – 9.

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The author is a Fall 2017 CPR Institute Intern.

The EU Mediation Blues: Is there a way to resolve the EU Mediation “Paradox”?

javierBy Javier Fernández-Samaniego

Almost ten years have elapsed since the European Union adopted the Mediation Directive (2008/52/EC) in civil and commercial matters, and four years since the European Parliament acknowledged the so-called “EU Mediation Paradox” [1] in its study “‘Rebooting’ the mediation directive”. The study drew attention to the lack of significant development of mediation, utilized only in less than an average 1% of the cases in courts of Member States in the EU, despite its high success and satisfaction rates when used.

As rightly pointed out in the Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Directive 2008/52/EC (Aug 2016)[2], due to the “unofficial” nature of mediation compared to formal court proceedings, it is very difficult to obtain comprehensive statistical data on mediation such as the profile of companies using mediation, number of mediated cases, the average length and success rates of mediation processes.

In what seems to be a fresh verse in the EU Mediation blues song, a new Resolution of 12 September 2017 on the implementation of the EU Mediation Directive (2008/52/EC) issued by the European Parliament[3] notes that certain difficulties exist in relation to the functioning of the national mediation systems in practice. These difficulties are mainly rooted in the adversarial tradition and the lack of a “mediation culture” in the Member States, the low level of awareness of mediation in most Member States, insufficient knowledge of how to deal with cross-border cases and the functioning of the quality control mechanisms for mediators.

In this Resolution, the European Parliament has made the following recommendations:

  1. EU Member States should boost awareness of how useful mediation is and step up their efforts to encourage the use of mediation in civil and commercial disputes, such as through information campaigns, improved cooperation between legal professionals and an exchange of best practices in the different local jurisdictions of EU.
  2. The Commission should assess the need to develop EU-wide quality standards for the provision of mediation services, especially in the form of minimum standards ensuring consistency, while considering the fundamental right of access to justice.
  3. The Commission should assess the need for Member States to create national registers of mediated proceedings as useful sources of information for Commission and mediators across Europe.
  4. The Commission should undertake a detailed study on the obstacles to the free circulation of foreign mediation agreements in the Union and on various options to promote the use of mediation as a sound, affordable and effective way to solve conflicts in internal and cross-border disputes in the Union, considering the rule of law and ongoing international developments in this field.

Lastly, in an apparent call for new rules, the Parliament requests that the Commission offer solutions to extend the scope of mediation to other civil or administrative matters in future regulation and highlights that, despite the voluntary nature of mediation, further steps must be taken to ensure the enforceability of mediated agreements in a quick and affordable manner.

On the brighter side, there are some less worried notes to the EU Mediation blues tune since the Parliament also welcomes the Commission’s dedication to co-financing various projects aimed at the promotion of mediation and training for judges and practitioners in the Member States. It appears that, after ten years’ investment in civil and commercial mediation since the Directive has been adopted, the perseverance will pay off.

The International Institute for Conflict Prevention and Resolution (CPR) through its European Advisory Board is working hard to fulfill the agreed-upon objectives and has recently published a guide for European corporates and organizations on the use of mediation and other ADR processes [4] that includes resources and practices to help identify disputes suitable for ADR and make the most out of them. The Guide also includes several successful case studies. There is no doubt that such efforts will eventually turn the moody blues of EU mediation into a happier upbeat melody.

FOOTNOTES:

[1] See the European Parliament’s study: “‘Rebooting’ the mediation directive”: http://www.europarl.europa.eu/thinktank/en/document.html?reference=IPOL-JURI_ET(2014)493042

[2] Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Directive 2008/52/EC of the European Parliament and of the Council on certain aspects of mediation in civil and commercial matters. Brussels, 26.8.2016 COM(2016) 542 final http://ec.europa.eu/justice/civil/files/act_part1_adopted_en.pdf

[3] http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2017-0321+0+DOC+XML+V0//EN&language=EN

[4] https://www.cpradr.org/resource-center/toolkits/european-mediation-adr-guide

 

Javier Fernández-Samaniego is the Managing Director of the IberoAmerican law firm SAMANIEGO LAW with offices in Madrid and Miami (for Latin America) and head of its Commercial, Dispute Resolution and Tech & Comms team. He regularly serves as an arbitrator and mediator of complex international disputes and he is a member of the Institute’s CPR Panel of Distinguished Neutral and of CPR European Advisory Board. He can be reached at javier.samaniego@samaniegolaw.com.

 

JAMS Disputes NJ’s Classification of its Operations as the Practice of Law

By Elena Gurevich

Earlier this month the New Jersey Supreme Court granted a cert petition request by JAMS, the nation’s largest private alternative dispute resolution provider, giving the organization a chance to argue that the retired lawyers and judges who serve on its neutrals’ panels are not practicing law, and therefore do not have to comply with all the state’s requirements for doing so.

In August 2016, JAMS filed a request for an advisory opinion from three New Jersey Supreme Court committees as to whether it could open an office to provide neutral services “without the requirements of a law office practice.”

Having reviewed the committee and Court opinions that guide New Jersey law practice, JAMS concluded that so long as its ADR office is “maintained as a business which does not offer or advertise traditional legal services where there is an attorney-client relationship, this business may be independently maintained, even though staffed by retired judges and lawyers who act as Neutrals in providing ADR services such as mediation, arbitration and the like and are held out to the public using the designation retired judge or ‘Esq.’ for lawyer neutrals.”

JAMS is a nearly 40-year-old Irvine, Calif.-based firm that focuses on mediating and arbitrating complex business and commercial cases via its panel of neutrals. See www.jamsadr.com. The ADR provider has offices in 14 states, the District of Columbia, and in London and Toronto.

JAMS agreed that its New Jersey lawyer-neutrals are subject to the Rules of Professional Conduct for lawyers, but argued that the New Jersey requirements for a traditional law practice “are not necessary for the provision of neutral services in the state.”

On May 1, 2017, three New Jersey Supreme Court advisory committees—the Advisory Committee on Professional Ethics, the Committee on the Unauthorized Practice of Law and the Committee on Attorney Advertising—responded to JAMS’ request with a joint advisory letter decision that says that the state’s ethics rules apply to the provider.

The consequences of the determination are that JAMS would need to open a bona fide office in the state, and maintain a trust account.

Predominantly relying upon ACPE Opinion 676/CAA Opinion 18 (April 1994)(available at http://bit.ly/2hRLF7E), the joint committee decision advised that, because the lawyers and retired judges at JAMS work as third-party neutrals, they are engaged in the practice of law and as such must “comply with the rules governing lawyers in private practice.”

On June 30, JAMS filed a petition to New Jersey Supreme Court seeking review of the joint decision. JAMS asserted that as a provider of “non-traditional legal services” it does not establish any attorney-client relationship.

The state’s top Court granted the petition on Oct. 4.

In the petition, JAMS cited a University of Baltimore law review article asserting that mediation “is not the practice of law because it is not illegal for non-lawyers to be mediators.” Robert Rubinson, “The New Maryland Rules of Professional Conduct and Mediation: Perplexing Questions Answered and

Perplexing Questions That Remain,” University of Baltimore Law Forum Vol. 36: No. 1, Article 2 at 12 (available at http://bit.ly/2yEf8fk).

The article also emphasizes the definition of mediation that involves mediators “who, without providing legal advice, assist the parties in reaching their own voluntary agreement.” That, according to the article, signified the fact that under Maryland law mediators are not practicing law.

In its joint answer brief prepared by the state attorney general’s office and filed Aug. 30, the Supreme Court committees reject the argument. saying that the Maryland law “carries no weight in New Jersey” since the jurisdiction uses a different analysis when it tries to determine if someone has engaged in the unauthorized practice of law. It explains that New Jersey “first decides whether an activity constitutes the practice of law; it then considers whether, if non-lawyers engage in that activity, it is in the public interest to permit them to continue.”

The joint answer also notes that the attorney-client relationship was “immaterial to the issue.” Instead, it focuses on the public interest and regulation of neutral services, saying it was “germane to the Committees ‘ analysis.”

According to the joint answer, the Court committees “sufficiently addressed” the public interest concerns in their decision, pointing out that JAMS’ “expressly markets its neutrals’ legal experience and skill through their roles as lawyers and retired judges.” The committees expressed their concern that JAMS’ prospective customers “are entitled to rely on that experience and those designations in their selection of a neutral, calling for proper regulation of “these individuals.”

JAMS filed a Sept. 18 reply brief arguing that “[p]ermission for N.J. admitted lawyers and retired judges to conduct a neutral practice under the JAMS umbrella does not diminish regulatory oversight or the public interest.”

JAMS asserted that it mentioned the Maryland law review article simply to “illustrate the shift by other courts throughout the nation towards acceptance of the provision of neutral services as not being tantamount to the practice of law.  . . .”

JAMS also underscored that it did not “seek to redefine how ADR practice in New Jersey fits into law,” asking the court to recognize that practice has evolved immensely over the past 20 years since Joint Opinion 676, discussed above, was issued.

The ADR provider drew the court’s attention to the dichotomy Joint Opinion 676 presented. According to the reply brief, “an ADR neutral’s practice is a part of law practice,” but the joint opinion simultaneously recognizes that non-admitted lawyers and other professionals also may practice in the field. JAMS opined, “It would be helpful and in the public interest for the court to address this dichotomy.”

JAMS expects to file a supplemental brief on or before Nov. 13, according to its attorney, Robert Margulies, of Jersey City, NJ’s Margulies & Wind. The joint committee’s response brief would be due on or before Dec.18.

The Court’s acceptance of the case was first reported in Michael Booth, “Justices Will Hear JAMS Challenge to NJ Ethics Rules,” N.J.L.J. (Oct. 10)(available at http://bit.ly/2hSuMdg).

 

The author, who has just completed her L.L.M. with a focus on IP law at Cardozo School of Law in New York, is a 2017 CPR Institute Fall Intern.

Changing the Rules: FINRA Eases Arbitration Withdrawal Requirements, While NY Courts Want Mediation Certification

By Angela Cipolla

There have been significant recent updates on rules regarding alternative dispute resolution mechanisms in the regulatory world and in courts. Below is a summary of a recently proposed amendment for FINRA arbitration rules, which is now open for comment, and the recently finalized ADR certification for courts in the New York Commercial Division.

FINRA Regulatory Notice 17-33

FINRA’s Oct. 18 Regulatory Notice 17-33 addresses the issue of unpaid customer arbitration awards. The goal of the proposed amendment to FINRA’s Code of Arbitration Procedure for Customer Disputes is to expand a customer’s options to withdraw an arbitration claim in two situations: (1) when a firm becomes inactive during a pending arbitration, or (2) where an “associated person” becomes inactive either before a claim is filed or during a pending arbitration. Both situations have not yet been addressed in existing FINRA rules.

The proposed amendment seeks to fill the gap of FINRA’s current rule, Rule 12202, “Claims Against Inactive Members.” Rule 12202 protects customers by allowing them an opportunity to “evaluate the likelihood of collecting on an award and make an informed decision whether to proceed in arbitration” against members that have been declared inactive prior to the commencement of the arbitration.

The proposed amendment addresses the issue of when a member firm becomes inactive during the course of an arbitration.  It seeks to give customers an opportunity to evaluate the decision to arbitrate, regardless of whether an existing pre-dispute arbitration agreement was signed.

Under the proposed change, FINRA would notify customers “if a member or an associated person becomes inactive during a pending arbitration,” giving the customer “60 days to withdraw the claim(s) with or without prejudice.”

The proposed amendment also seeks to add definitions of “inactive member” and “inactive associated person” under FINRA Rule 12100, “Definitions.” The proposal states that “inactive member” would be defined as “a member whose membership is terminated, suspended, cancelled or revoked; that has been expelled from FINRA; or that is otherwise defunct.”

“Inactive associated person” would be defined as a person “associated with a member whose registration is revoked or suspended, or whose registration has been terminated for a minimum of 365 days.”

FINRA also seeks to amend Rule 12309 on “Amending Pleadings,” which limits a party’s ability to amend its pleadings once a panel is appointed to the case. The proposed amendment would allow customers to amend a pleading, and add a new party within sixty (60) days of receiving notice from FINRA that a firm or associated person has become inactive.

This proposal is motivated by FINRA’s belief that a customer should have the right to change a litigation strategy after learning that a firm or associated person has become inactive and may pose a collection problem in the event of an award.

Regarding issues of postponement, FINRA proposes to amend Rule 12601 to allow a customer, upon notice from FINRA of a firm or associated person’s status change, to postpone the hearing date if such notice was within sixty (60) days of the scheduled hearing.

In this situation, FINRA also proposes to waive the usual postponement fee and/or additional fees per arbitrator if a customer chooses to exercise the right to postpone. To honor the arbitrators’ time, FINRA would amend Rule 12214 and would take it upon itself to pay the arbitrators’ fee if a customer postpones within ten (10) days before a scheduled hearing due to the inactive status of the firm or associated person against whom the customer has filed for relief.

FINRA has proposed to amend FINRA Rule 12801(a) to allow claimants to “request a default proceeding against a terminated associated person who fails to file an answer within the time provided in the Code regardless of the number of days since termination.”  The change would allow, for example, a customer to start a default proceeding against an associated person who left a firm, but remains active at another firm and failed to answer a claim.

Finally, FINRA’s proposed rules amendment includes a revision to Rule 12900, “Fees Due When a Claim is Filed,” which would allow for a customer to receive a full refund of the filing fee if FINRA provided notice of a status change of a firm or associated member to inactive, and the case is withdrawn within 60 days of the notification.

FINRA is receiving comments on the proposed amendments until Dec. 18; submissions can be emailed to pubcom@finra.org or mailed to FINRA’s Office of the Corporate Secretary.

The full copy of the regulatory notice can be found at http://bit.ly/2yOHQbx.

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New York Commercial Division Rule: Amendment to Rules 10 and 11 of Section 202.70(g)

On Oct. 11, New York Courts Chief Administrative Judge Lawrence K. Marks signed an order that amended Rules 10 and 11 of Section 202.60(g) of the “Rules of Practice for the Commercial Division.” (22 NYCRR 202.70).

The rule changes represent an effort on behalf of the New York state courts’ Commercial Division to emphasize the use of alternative dispute resolution procedures among litigating parties.

Rule 10, “Submission of Information,” will now include an amendment, “Certification Relating to Alternative Dispute Resolution.”  The certification, a form for which was annexed to Marks’ order, will require each party to submit to the court a certifying statement which states that counsel and the party discussed the availability of alternative dispute resolution mechanisms—including those “provided by the Commercial Division and/or private ADR providers.”

The statement also must specify whether the party is “presently willing to pursue mediation at some point during the litigation.”

Additionally, the change for Rule 11 on discovery will now require that preliminary conference orders include, where appropriate, “a specific date by which a mediator shall be identified by the parties for assistance with resolution of the action.” This requirement will take effect in cases that the parties certify their willingness to pursue mediation, pursuant to the amended Rule 10.

These amendments have been adopted by the Unified Court System’s Administrative Board and will take effect on Jan. 1, 2018.

The original proposal was explained in this April 10 memorandum: http://bit.ly/2gEmZ2n. Judge Marks’ order, with the certification form, is available at http://bit.ly/2zQhxld.

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The author is a Fall 2017 CPR Institute Intern.

Celebrate with CPR – Mediation Week: Oct. 15-21, 2017

fireworksSMALL

Celebrate Mediation Week 2017!

Of course, it’s always a good time for mediation, but CPR will be joining numerous other organizations next month to formally celebrate this effective means of preventing and resolving disputes, at Mediation Week 2017: “Mediation, Civility and the Power of Understanding, organized by the American Bar Association Section of Dispute Resolution. Please join us, won’t you?

Tuesday, October 17 – Open Forum on (In)Civility in Mediation

The CPR Institute’s Mediation Committee invites all who are interested to participate in a convenient and open-to-the-public Lunchtime Teleconference on Tuesday, October 17th, 2017 from 12:30-1:30 pm ET. Distinguished mediator and CPR panelist, Jack P. Levin, will recount some of the lessons and inevitable trials encountered in his years striving for greater civility in mediation. This dialogue will be followed by an opportunity for caller participation.

While there has been research on the cost of incivility to corporations, we will explore the effects of this behavior in the mediation process, along with strategies for promoting civility in negotiations. We hope you will join us, prepared to share any anecdotes or observations on the effects of civility (and lack thereof!) in dispute settlement. To register, contact zchanin@cpradr.org. You will be provided dial-in information and links to supplementary material upon registration.

The Mediation Committee is a consortium of CPR members throughout the world.  We are currently exploring ways to enhance the quality and effectiveness of corporate mediation practice, both domestically and internationally.  The Co-Chairs of the Committee are Erin Gleason, of Gleason Alvarez ADR, and Rick Richardson, of GlaxoSmithKline. 

Wednesday, October 18 – Mediation Settlement Day

CPR has been invited to speak on a panel as part of the Mediation Settlement Day Kick-Off Event on October 18, 2017 from 4:30 pm – 7:30 pm at New York Law School, 185 West Broadway in New York City.

The focus of this event will be “Diversity and Inclusion in Dispute Resolution, 2.0.” Following an open house and a remembrance of Margaret Shaw, panelists Maurice Robinson, Esq. (Moderator), CPR’s Niki Borofsky, Esq., John D. Feerick, Esq., Rekha Rangachari, Esq. and Maria Volpe, Ph.D. will discuss:

  • What is Diversity and Inclusion in Dispute Resolution?
  • How are bar associations, professional organizations, court-connected dispute resolution programs and community dispute resolution centers addressing diversity and inclusion in the field?
  • A New CLE Category: Diversity, Inclusion and the Elimination of Bias
  • Current opportunities for diverse mediators

The evening will conclude with the Frontline Champion Award Presentation and a Keynote address by John Kiernan, Esq. of Debevoise & Plimpton on Diversity and Inclusion. For more information and to register click HERE.

Tuesday, October 24 – CPR Webinar on Including Effective ADR Clauses in Contracts

Admittedly, this date is slightly outside of the formal “Mediation Week,” but we’re going to squeeze it in and keep on celebrating with this CPR members-only event, being hosted by the Fundamentals Task Force of the CPR Transactional Dispute Prevention and Solutions Committee on October 24, 2017, from 12:30 pm – 2:00 pm ET.

All transactional lawyers would benefit from an understanding of how various forms of dispute resolution can be included in contracts and other agreements. We help to accomplish this through our easily used online CPR Clause Selection Tool. Michael B. Keating of Foley Hoag LLP will demonstrate a method to train transactional lawyers to craft an appropriate ADR contract clause using this tool. Following this session, attendees will be able to do the same for their colleagues. The program will qualify for one hour of New York CLE credit–details to follow. 

For more information and to register for the CPR members-only event, click HERE or email Zoe Chanin at zchanin@cpradr.org.

And for more information about Mediation Week 2017, please visit the ABA event website HERE.

EU Court Backs Mandatory Mediation Referral

By Ugonna Kanu

The Court of Justice of the European Union, which rules on cases between members of the European Union often involving treaties, issued a significant opinion on compulsory consumer ADR earlier this year.

Advocate General Henrik Saugmandsgaard Øe, who prepared the ruling, supported an Italian national law that compels consumers to mediate as a precondition for bringing legal proceedings in the Italian courts.

At the same time, the opinion suggests that parties may determine their own fate without a lawyer, overruling an Italian law requiring that a litigant use an attorney to mediate their case.

The EU Court of Justice opinion was based on a request for a preliminary ruling from the District Court in Verona, Italy.  Menini v. Banco Popolare – Società Cooperativa, Case C-75/16 (February 16, 2017)(Available at http://bit.ly/2usImgu).

In the case, a dispute arose between a bank and two clients concerning the performance of a mortgage contract. The bank obtained a court order against the consumers to pay the required sum.

The consumers appealed the order to the Verona district court and sought to have its provisional enforcement suspended.  The district court found that the parties making the appeal must, in order for the appeal to be admissible, use a mediation procedure in accordance with the national law.

But questions arose whether the national law that forces consumers to mediate as a pre-condition to judicial proceedings; mandates legal representation of consumers in a mediation, or penalizes a party from withdrawing from a mediation without valid reason, was incompatible with the EU consumer ADR directives.

The District Court decided to stay its proceedings and to refer the questions to the Court of Justice for a preliminary ruling.

The EU court mostly backed the mediation requirements.

According to the 2013 EU directives, the opinion noted, consumer ADR mechanisms are voluntary.  But they do not preclude “any national rules making the participation of [parties] in such procedures mandatory or subject to incentives or sanctions or making their outcome binding on parties, provided that such legislation does not prevent the parties from exercising their right of access to the judicial system.” Recital No. 49, Directive 2013/11/EU  of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No. 2006/2004 and Directive 2009/22/EC)(available at http://bit.ly/2jv7LjA).

Accordingly, Advocate General Saugmandsgaard, in his ruling, held on one hand, that the Italian law was compatible with the EU directives to the extent it does not deny the consumers access to the judiciary and that the limitation period does not expire during such mediation process.

On the other hand, however, the ruling precludes national legislation which mandates consumers to be assisted by lawyers, or penalizes consumers who withdraw from the mediation process without valid grounds (unless the concept of “valid grounds” includes the party simply being dissatisfied with the ADR procedure).

The author is an attorney in Nigeria who has just completed her L.L.M. in Dispute Resolution at the University of Missouri-Columbia School of Law.  She is a CPR Institute 2017 summer intern.

It’s a Wrap: Global Pound Conference Concludes

By Lyn Lawrence

The Global Pound Conference Series: Shaping the Future of Dispute Resolution and Improving Access to Justice (see http://bit.ly/2v4dX4V) came to its conclusion after the last local event was held in London on July 6, 2017.

The purpose of the GPC Series was “[t]o create a conversation about what can be done to improve access to justice and the quality of justice around the world in commercial conflicts and to collect actionable data,” according to the GPC’s Singapore Report from its March 2016 kickoff event (available at http://bit.ly/2voNWfU).

The GPC Series was inspired by the original Pound Conference, held in Minnesota in 1976, and the positive effect it had on improving access to justice. At its conclusion almost 41 years after the original, the GPC Series held events in 29 cities worldwide, attended by more than 2,000 participants and supported by global sponsors (which included the CPR Institute, the publisher of this blog).

A detailed discussion on the inception of the GPC Series and the New York event can be found in the following articles published in CPR’s Alternatives, “Attempting to Define the Practice, Pound Conference Organizers Launch a Worldwide Series on ADR Common Ground,” 33 Alternatives 11 (December 2015) (available at http://bit.ly/2e1WaXW) and “A Look Back On, And Forward To, the Global Pound Conference,” 35 Alternatives 1 (January 2017) (available at http://bit.ly/2t2r4Sr).

THE DATA

The data collected throughout the GPC Series belongs to the International Mediation Institute, a nonprofit mediator accreditation organization based in the Hague, Netherlands, that founded the GPC series. After each local event, an Academic Committee processed the results, which are available at http://bit.ly/2tWPo9z.

The Academic Committee also created accumulative results as the events had been concluded. At the time of posting, the most recent results consisted of data collected at the inaugural Singapore conference up until the June 29 Johannesburg conference (available at http://bit.ly/2tWYQKp), excluding only the final event in London on July 6.

Each local event had an identical set-up with the same GPC Series core questions (available at http://bit.ly/2tVFabk), divided among four sessions, and headed by a panel of professionals in dispute resolution.

The data was gathered from participants grouped into stakeholder categories. They were asked to answer the core 20 multiple-choice questions using a GPC Series Event Application that was downloaded by participants on their own electronic devices.

Before the conclusion of each session, the stakeholders were divided into groups to answer four open text questions. Many of these questions were formulated at the 2014 London pilot event (available at http://bit.ly/2ulNsdx). The results were tallied on the spot, and then displayed on a screen and discussed by the panel and conference attendees.

WHAT WAS LEARNED?

Academic Committee Chairman Prof. Barney Jordaan was cautious in adding in the Singapore Report that, “While all care was taken to ensure the integrity of the data gathering process and rigour in the formulation of the survey questions and the analysis in this Report, the Series is not intended to be primarily an academic project nor does the data gathering process represent a pure data collection environment. Any use of the GPC data must be undertaken with these limitations in mind.”

Considering these qualifications, such as the varied number of participants in each stakeholder group, there are a few noticeable highlights from the accumulated results–particularly, where there was a split or unanimous agreement among the stakeholder groups.

All four sessions had a different focus area ranging from parties’ needs and expectations to how the current commercial dispute resolution market addressed these needs and expectations. Keeping with the theme of the event, there were also several questions on steps that can be taken to improve the current dispute resolution market for commercial disputes.

The majority of the stakeholder groups voted that financial interests were the primary consideration for parties and providers alike. This is consistent with the local events that were held in the United States, particularly the New York event. Stakeholder groups were also in agreement that “external lawyers” would be the most resistant to change in commercial dispute resolution.

There was a three-way tie when it came time to deciding where “policy makers, governments and administrators” should focus their attention when improving access to justice. Receiving 46% of the votes each were the “use of protocols promoting non-adjudicative processes,” “pre-dispute or early stage case evaluation or assessment systems using third party advisors who will not be involved in subsequent proceedings” and “making non-adjudicative processes (mediation or conciliation) compulsory and/or a process parties can ‘opt-out’ of before adjudicative process can be initiated.”

With only two percentage points separating the results on the role lawyers should play in commercial disputes, advisers and adjudicative providers voted that lawyers should speak and/or advocate on a party’s behalf, while parties, non-adjudicators and “influencers” voted that lawyers should work “collaboratively” with the parties and “may request actions” on their behalf.

Stakeholder groups were mostly in agreement when it came to answering the remaining core questions; see the aggregated results at the link above.

WHAT IS NEXT?

The data from the conferences was consistent through the local events, but it is unclear how the final report will develop these findings.

Those who were unable to attend any of the local events have the opportunity to complete the core questions online until July 31. (Available at http://bit.ly/2voPRkz).

The GPC Series website, at http://globalpoundconference.org, encourages individuals to complete the core questions online as it will form part of the GPC Series data.

Once the final report is released, it will be interesting to see the final results and the impact it will have on improving dispute resolution. In addition, this GPC Series was limited to commercial disputes—perhaps the creators will expand into other areas in future projects.

One of the event organizers indicated recently the potential importance and use of the data in growing ADR. “The core questions ask these stakeholders to provide their input on the same topics,” noted former International Mediation Institute chairman and current board member Michael McIlwrath, adding that the “answers to these questions arrive at a time in which civil justice around the world is facing a moment of transformation. And international arbitration is now experiencing changes that, in our view, would have been considered heretical or at least highly unorthodox just a decade ago.” See Michael McIlwrath and Phil Ray, “The Global Pound Conference Reaches Its Conclusion: User Focus Is Now Mainstream,” Kluwer Arbitration Blog (July 5, 2017)(available at http://bit.ly/2sGmTzX).

The author is a CPR Institute Summer 2017 Intern.

Changes to Mediation Confidentiality to Be Considered by California Legislature

By Lyn Lawrence

The California Law Revision Commission, acting under the order of a resolution by the California Legislature, last month finalized a tentative recommendation that creates an exception in the state’s Evidence Code to mediation confidentiality.

If it is passed into law it will allow disgruntled clients to use information that is currently considered confidential as evidence in attorney malpractice suits.

The final version of the CLRC proposal is available at http://bit.ly/2rIuTvF.

This week, CPR and its monthly newsletter, Alternatives to the High Cost of Litigation, continue their coverage with two extensive examinations of the moves to change mediation confidentiality—a commentary by Los Angeles neutral Jeff Kichaven (see http://bit.ly/2snQUjF), and a compilation of key debate points submitted to the CLRC during its three years examining the issue, by CPR Summer 2017 intern Lyn Lawrence.

The new July/August issue of Alternatives can be found at http://bit.ly/1BUALop. CPR Institute members can access the issue when signed into CPR’s website at http://bit.ly/2kAakxH. Kichaven’s cover story will be available at altnewsletter.com later in July.

You can read last month’s “How California Intends to Recalibrate the Concept of Mediation Confidentiality,” 35 Alternatives 93 (June 2017) at http://bit.ly/2sWyqr1.

The CLRC’s recommendation for a mediation confidentiality exception for legal malpractice was sparked by California Supreme Court Justice Ming W. Chin’s concurring opinion in Cassel v. Superior Court (2011) 51 Cal. 4th 113, 117 (available at http://bit.ly/2tOHBgV). In the case, the client accused his attorneys of coercing him into accepting a mediation settlement that was not in his best interest.

The client was unsuccessful in his claim, but Chin wrote that the court had “to give effect to the literal statutory language” prohibiting disclosure of the mediation communications. “But,” he added, “I am not completely satisfied that the Legislature has fully considered whether attorneys should be shielded from accountability in this way. There may be better ways to balance the competing interests than simply providing that an attorney’s statements during mediation may never be disclosed.”

The exception contained in the CLRC’s tentative recommendation has received mixed reviews from ADR professionals, organizations and even California state departments operating in the mediation field.

Opponents of the CLRC efforts were dealt a blow when the tentative recommendation was approved by the commission on June 8. The approved tentative recommendation is available for public comment until Sept. 1, 2017.  A press release and instructions for commenting are available at http://bit.ly/2t0UyE8.

The creation and acceptance of the tentative recommendation come as a surprise to at least some practitioners, mainly due to California’s longstanding advocacy for the protection, support and growth of mediation. At the same time, some longtime practitioners viewed the preservation of a path to attorney malpractice cases as an enhancement to the integrity of mediation practice.

Confidentiality is a cornerstone of the mediation process, and it is unclear what the effect the exception would have if it is adopted into California law.  A legislative fight looms.

But exceptions to mediation confidentiality aren’t particularly new. For example, the Uniform Mediation Act (available at http://bit.ly/2tGNrRj) has been adopted by numerous states and contains exceptions to mediation confidentiality. Jeff Kichaven expands on these exceptions in his Alternatives commentary, which strongly backs the CLRC tentative proposal.

The CPR Institute will continue to follow the CLRC’s activity, including when the commission publishes the public comments, which it stated in an email would be after the Sept. 1 comment deadline.

The author is a CPR Institute Summer 2017 Intern.