This article was also published by the American Bar Association’s Section of Litigation, Alternative Dispute Resolution Committee.
In Tirreno v. The Hartford, 2015 WL 8132972 (Conn.App. Dec. 15, 2015), the parties had agreed to resolve a dispute through binding mediation, by which they meant that the parties would first work with a jointly selected mediator to try to reach a settlement, but if no settlement were reached, the mediator would decide the claim and determine damages. These terms were agreed to orally and then memorialized in a series of emails between the parties. Pursuant to this agreement, the parties first attempted to reach a voluntary settlement but, when that failed, the mediator issued a written decision summarizing the mediation evidence and making a damage award. The Plaintiff refused to accept the damage award, however, and opposed Defendant’s motion to enforce it. The trial court granted the Defendant’s motion to enforce the mediator’s decision. Plaintiff appealed.
On appeal, Plaintiff reiterated its argument that the procedure the parties had used effectively was an arbitration, and that a Connecticut arbitration statute required any agreement to arbitrate to be reduced to writing. Plaintiff concluded that, inasmuch as the parties had never reduced their dispute resolution agreement to writing, the mediator lacked jurisdiction to decide the parties’ dispute. The appellate court had to decide whether the binding mediation procedure was the equivalent of arbitration and, if so, whether the mediator’s decision was enforceable.
The appellate court noted that there are no particular words required to form an agreement to arbitrate, but that there must be a clear manifestation of the parties’ intent to arbitrate. Here, the court found that the parties consistently referred to the submission of their case to a mediator who, if the parties could not reach a voluntary settlement, would take on the additional responsibility of assigning a final damages number. The only use of the word “arbitration” was by the mediator in the caption of his final decision. The court further noted that in emails between the parties, counsel stated that this method of dispute resolution would be “similar to arbitrating the case, but would not be as time-consuming and less expensive.” The court also found that the parties conduct was inconsistent with the proceeding being arbitration. For example, the Plaintiff complained that the proceeding was not a regular arbitration with each side presenting witnesses, and the defendant filed a motion to enforce a settlement, not a motion to confirm an arbitration award.
Based on all of this evidence, the appellate court concluded that there was no clear and direct manifestation of an intention to resolve their dispute through arbitration. Accordingly, the court ruled that the Connecticut arbitration statute was not applicable and confirmed the trial court’s decision to enforce the mediator’s decision as the parties’ settlement agreement.
Practice Pointers: This decision shows that binding mediation may be something quite different from an agreement to mediate plus an agreement to refer to arbitration any issues that the mediation does not resolve. Instead, when the parties give a mediator the authority to resolve any disputes not settled by the mediation, the resulting decision or award may be regarded by the court as a settlement agreement and enforced accordingly. As the Connecticut court stated in its final comment: “Our arbitration statutes may not be used as a sword to subvert a mutually agreed upon adjudication procedure or as a weapon of further court litigation.”