Spreading ADR Best Practices around the World

By Chris Poole

Weinstein Fellows

Chris Poole and Judge Weinstein meet with three members of the 2013 Weinstein JAMS Fellows class.

Although many countries have not developed formal ADR processes as part of their legal systems, dispute resolution practices have been in place practically since the beginning of time. These practices have taken on many forms in different societies and they continue to evolve and mature. While many of us think of ADR only in a legal and commercial context, some of the most effective systems in the world exist in some of the least developed economies. Systems like conciliation, negotiation and adjudication are already built into many community structures.

In more developed nations there has been a lot of progress over the past several years aimed at increasing the use of mediation and arbitration in legal disputes. This is often driven by inefficient court systems or perhaps just to reduce the cost of disputes. In some countries the time it takes to get to court and achieve a litigated resolution can stretch over many years and when settlements are reached outside of court, the courts are not always willing or able to enforce them. Consumers in many countries don’t have access to alternatives to long and sometimes expensive legal proceedings.

While governmental bodies in the European Union, India, Singapore and elsewhere continue to use their influence to make ADR more accessible and attractive in settling disputes, the JAMS Foundation has taken a more creative approach. Through its Weinstein JAMS International Fellowship program, the foundation has brought more than 50 individuals from 44 countries to the U.S. since 2009 to learn more about the best practices in the American ADR system so that they can return to their home countries to “spread the word.” Judge Weinstein conceived of and funded the Fellowship Program to provide opportunities for ADR professionals from throughout the world to learn more about dispute resolution in the United States. Now in its fifth year, the current class of 2013 includes 11 Fellows from various countries including Egypt, Mexico, Iran, Israel, Afghanistan and Turkey.

These individuals come from all walks of life. Some are judges, many are lawyers and others just want to pursue a life of dispute resolution. Their goals may be to improve the efficiency in their home court system, set up a commercial ADR business or – in the case of one former Fellow from Bhutan, to “educate communities of the existence of our traditional dispute resolution system known as Nangkha Nangdrik.” Each of these individuals function as a sort of “Johnny Appleseed” to spread the word of conflict resolution and to promote more effective practices in their home countries.

Recently, Judge Weinstein and the Foundation partnered together to continue administering the Fellowship program. The funding provided by Judge Weinstein and the JAMS Foundation will provide a minimum of $6 million over the next 20 years. By that time, hundreds of Fellows from scores of countries will potentially have done more to promote ADR around the world than any regulation or law. It is a refreshing and inspiring approach.

PG&E to Settle San Bruno Pipeline Explosion Claims

Utility giant Pacific Gas & Electric Co. will pay out $565 million in legal settlements and other claims stemming from the 2010 natural gas explosion in San Bruno, Calif., that killed eight people and devastated a neighborhood, company officials said.

The explosion, one of the worst pipeline disasters in U.S. history, occurred when a 30-inch steel underground natural gas pipeline owned by PG&E ruptured under San Bruno’s Crestmoor neighborhood. The explosion was caused by faulty welds in the pipe federal investigators later concluded, and created a fireball up to 1,000 feet high, blasting a crater 167 feet wide and measuring as a magnitude-1.1 earthquake.

A spokesperson for PG&E said settlements were reached with 347 victims of the incident on Friday and Monday, and the company had previously reached settlements with 152 others. Two cases remain.

The $565 million includes $455 million that the utility had already pledged and $110 million in recent settlements and claims.

Altogether, 499 people will share the money, ranging from the families of residents who were killed, to people who suffered serious burns and families with minor property damage. The exact amounts per victim vary widely, and were not made public due to confidentiality clauses in the settlement agreements.

For more information on the settlement, click here for LA Times coverage; here for San Jose Mercury News coverage and here for Bloomberg.

A Rose by Any Other Name

By Richard Birke

Richard Birke

Richard Birke

Most of the leading law school textbooks explain arbitration by describing a case where a party suffers a loss and there is a dispute between the insurance company and the insured.  The insured typically places a high value on the subject of the loss, while the insurance company places a lower value.  A third party is called in to offer an opinion about the value of the loss and the parties agree to be bound by that third party’s opinion. Sometimes the parties each choose an appraiser and the two appraisers choose a third. While the contract binding the parties may refer to the process as appraisal, courts look past the name and treat the process as if it were arbitration.

For example, in the 1935 case of Fireman’s Insurance Company v. Blount, the Georgia Court of Appeal ruled that arbitration and appraisal could be thought of interchangeably. They wrote, “The purpose of an appraisal and arbitration being to fix the amount of the loss, and this having been done by agreement by the parties here…the award fixed the amount of the loss, and in this case the voluntary agreement fixed the amount of the loss. There is no substantial difference in the two propositions.”  The lesson is that you might call something an appraisal, but if the process has the characteristics of arbitration, a court will treat it as if it were arbitration.

But not always.

Recently in Citizens Prop. Ins. Corp. v. Mango Hill |6 Condo. Ass’n, Inc., the Florida Court of Appeal announced that an appraisal is not an arbitration and the two should not be confused.  In that case, an HOA and its insurer agreed to an appraisal process that was employed to determine the amount of loss associated with a hurricane. The trial court allowed the HOA to submit the appraisal in court as an arbitral award. The Court of Appeal had a different take.  That court found three significant differences between arbitration and appraisal. “First and foremost, while an agreement to arbitrate ordinarily encompasses the disposition of the entire controversy between the parties, an agreement for appraisal extends merely to the resolution of the specific issues of actual cash value and amount of loss. Second, the appraisal process is an informal one. Appraisers generally are expected to act on their own skill and knowledge relating to the matters being appraised. There is no obligation for appraisers to give formal notice of their activities to the parties, counsel or to hear evidence. Finally, all issues other than those contractually assigned to the appraisal panel are reserved for determination in a plenary action.”

In contrast, with respect to arbitration, the Court wrote, ““Arbitrations, on the other hand, are quasi-judicial proceedings. Under the Florida Arbitration Code, each party is entitled to a full hearing in the presence of every other party, unless such right is waived by agreement or conduct. The arbitrators must meet together in each session, and may not engage in independent investigation of the thing in issue. The Arbitration Code guarantees to each party not only the right to notice of each hearing session, but also the right to counsel, the opportunity to present evidence and the right to cross-examine witnesses. Finally, unlike appraisal, the arbitration panel may adjudge the case only on what is presented to them in the course of the proceeding.”

The Court reversed the judgment of the trial court and the case was sent back down for further proceedings.

So it seems that while some courts and some casebooks look past labels to substance, other courts care deeply about the label.  What lesson is there for lawyers and their clients?  Draft your arbitration clauses carefully because language sometimes matters a lot.  A rose by another name may be treated like a daisy, despite its thorns and alluring scent.

The New Chair for Mediation?

Here’s a new approach on the best way to get parties together. Take a look at the new design from Dutch furniture designer Peter Sas.

According to Mr. Sas, sitting always serves a particular purpose. He designed this chair in which three people can take a seat and resolve a conflict. The visual result: a tête à tête in mirror image.

In an interview with Annemarie van der Weert in the Living section of the Telegraaf newspaper, Mr. Sas said:

“The chair is highly functional, and clearly designed with [Dutch designer Gerrit Thomas] Rietveld’s archetype in mind. The way you in which you sit is also really important. You always sit constrained in a group discussion. The chair, because of its zigzag construction, forces you to always look straight ahead and you can always get up and walk away. That gives the feeling of freedom.”

The ideal spot to use this: “Places where conflicts need to be resolved, the court house, or a human resources department. If there are disagreements, those concerned can set down together with an intermediary and try to solve the problem. That will save a lot of money and fuss!”