Orlofsky ADR Services

An Interesting Mediation Clause

In Hughes Socol Piers Resnick & Dym, Ltd. V. G3 Analytics, LLC, No. 18 C 2114 (N.D. Ill. Aug. 28, 2018), Judge Aspen affirmed an arbitration award where the parties’ contract contained the following alternative dispute resolution clause:

Any disputes relating to this Agreement . . . will be resolved by alternate dispute resolution. Alternative dispute resolution means that you and our Law Firms agree to submit all disputes to an independent mediator mutually agreed upon. . . .

In the event the parties are unable to resolve their disputes through mediation, the parties agree that the mediator shall require the parties to submit their disputes to an independent arbitrator selected by the mediator. The mediator will have the right to appoint himself as arbitrator in that proceeding. The parties shall be bound by the decision of the arbitrator and such decision shall be final and not subject to review except as to the issue of malfeasance or bias on the part of the arbitrator. (emphasis added)

The interesting part is the power given to the mediator to appoint an arbitrator, and even to appoint him or herself to this role. Having the mediator appoint the arbitrator would seem both wise and non-controversial as it would save the parties the hassle of going back and forth on lists of potential arbitrators. Giving the mediator the power to appoint him or herself as the arbitrator, however, while it would likely provide some additional incentive to settle during the mediation, might also cause the parties to be less candid with the mediator during the mediation, making a settlement more difficult. A most interesting and creative ADR clause!