Sudhir Reddy recently posted about the case of an Arbitrator who had for many years run a fraudulent arbitral scheme. Sudhir was, rightly, concerned about the apparent need for specific regulation of Neutrals. It drew to my mind another case of egregious conduct by an Arbitrator, Dr Gonzalo Stampa, in the so-called Sulu Claimants arbitration against the Government of Malaysia. Sudhir's post also led me to recall that recently the State of California passed Senate Bill 940 which introduces a certification process for arbitrators, mediators, and other non-judicial ADR providers – individuals and firms, attorneys and those from other backgrounds. The new legislation expands the California State Bar’s public protection role by directing the State Bar to establish a voluntary certification program for alternative dispute resolution providers, practitioners, and firms. Whilst the certification scheme is voluntary, the Golden State's thinking is that market forces will drive all ADR Neutrals to register. In England and Wales meanwhile the Ministry of Justice UK decided it would leave regulation to the Neutrals' own regulators. This is of course a perfectly legitimate approach. In my view, that approach begins to run into trouble the moment #ADR moves from being the niche activity that it has been in England and Wales (E&W) and goes mainstream - which is exactly what is about to happen in the next 12 months. Hundreds of thousands of citizens and businesses will be experiencing ADR for the first time. I foresee complaints may rise from virtually none to more and to which of the multiple regulators will those complaints be directed? A confusing leitmotif of supervisory bodies is likely to lead to confusion which will ill-serve this new approach to cutting the Backlog in E&W. What do we think? Is stand-alone regulation West Coast style the way to go? Those unfamiliar with the Sulu Claimants Arbitration may find helpful the link, below, to the Malaysian Government's website dedicated to those arbitral proceedings. DisputesEfiling.com Limited ADR ODR International Limited Rahim Shamji DDRS Dr Victoria McCloud Civil Mediation Council (CMC) Chris Breedon BA (Hons) MCGI Margaret Doyle Henrietta (Hetti) Jackson-Stops Centre for Effective Dispute Resolution (CEDR) Ben Giaretta FCIArb CArb Chartered Institute of Arbitrators (CIArb) Andrew Miller KC Jim Diamond Clare Fowler Jim Melamed Colin Rule Jerome Glass David Hamilton Steven Jarman Farah Ziaulla Jack Simson Caird #a2j
I'm all for regulation but not if we are forced to become members of arbitrary organisations like the CMC who refuse to recognise certain qualifications
Sham Joshi
2mo
The post is salutary on the imperative need of regulation to enhance credibility and reliability of arbitration in the backdrop of arbitration scam. In India, the regulator in the form of Arbitration Council proposed in Section 43D(2) of the Arbitration Bill of 18.10.2024 and to promote institutional arbitration, to my mind, will take care of such scam. Clause (a) of sub-section (2) of Section 43D provide the Council to recognise arbitral institutions and renew, withdraw, suspend or cancel such recognition. Moreover, the Council is to specify the criteria of recognition, to call for information or record, lay down experience and norms for voluntary registration of arbitrators, provide for a model code of conduct for arbitrators, conduct examination and training, etc.
Prof Cam Wareham
2mo
Very interesting Tony. I wonder whether (in time) registration as an Arbitrator with a regulator will follow the Californian requirements - as I interpret them. It may resolve some of the grey area issues surrounding ‘who does what’ under the LSA. Acting as an Arbtrator is exempt, however conducting or bringing arbitration proceedings appears less so. Does advising and appearing in arbitration or mediation proceedings on behalf of a client constitute a reserved legal activity? If so, does one rely upon their registration with the Bar Council, SRA or CILEX when advising a client. If practicing in ‘ADR’ means simply functioning as an Arbitrator or Mediator, then registration seems less likely as it’s exempt under the LSA [2007]. If it is encompass ‘all’ ADR activity, then registration may be required. Perhaps then the CIArb (or similar) may then need to look to becoming an ‘approved regulator’ with the Legal Services Board? Not necessarily my own position, but I’ve heard it mentioned before. Thoughts?
Charlie Irvine
2mo
Thanks for highlighting this Tony. Sorry to keep banging on about this but one crucial source of mischief arises from wooly terminology. When, oh when, will we stop using hazy catch-all terms like 'neutral' and 'ADR'? Why not say 'arbitrators' when that's who we're discussing, and 'mediators' when it's that group? The regulation of those who are granted contractual powers to impose binding judgments, supported by the courts, raises quite different concerns to the regulation of those who support others to arrive at their own agreements, but have no power to impose them. This has been recognised by California and, in a more limited way, by the US Congress when it outlawed 'forced arbitration' for sexual assault and harassment cases. So - let's attempt some conceptual clarity before it is imposed by legislators.
My gut instinct is that for neutrals who are involved in and count as sufficient for compliance with mandatory ADR in the court system or before it so as to satisfy pre-action duties, one would hope for national standards within which neutrals work, and hopefully certficiation and CPD but to allow providers the freedom to use their own business models and to go further than the required standards. Obviously one element will necessarily be mandatory compliance with data packaging standards where ADR providers are working in the pre-court space and need to be able to work within the standards of data and tech necessary to integrate with the court process if the case moved forward after non-settlement.
Andrew Miller KC
2mo
Thank you Tony Guise for such an illuminating post. I think you are right in terms of regulation and control and the need of it. The feedback I get from the users of meditation (usually in my case solicitors) is that their biggest concern is the quality of mediators or to put it bluntly the lack of quality of many individuals holding themselves out as mediators. I remain positive as it is the same for all professions- you advance depending on what others think of you and say about you. Onwards and upwards!
Sudhir Reddy
2mo
Tony Guise it will be interesting to see how this discussion evolves and what measures, if any, are proposed to enhance the integrity of ADR practices. Your keen interest in this matter is shared by many who value the principles of justice and fairness in dispute resolution.
Civil Mediation Council (CMC) and others are currently in discussions with the MoJ in relation to this. I agree that we need to ensure that mediators are properly trained and regulated.
Andrew Dane
2mo
Thanks for sharing
Dispute resolution lawyer, arbitrator, law firm partner and non-executive director. Follow me for posts about arbitration, mediation, litigation, adjudication, expert determination and more.
2moThanks Tony. The issue of regulation of neutrals is of course both an important and a complex topic - especially complex when one is talking about lawyers who have an international practice. You also highlight the important conceptual question of whether a profession should be self-regulating, or be regulated from outside. In addition, there is the practical point of whether the relevant regulator (whether an internal or external regulator) has sufficient resources to be up to the job; and how can the regulator avoid expending too much of those resources on unmeritorious/misguided/nuisance complaints, so as to maintain sufficient resources for the meritorious ones?