What is 'Arb-Med'?
Under the FDR Centre "Arb-Med" process, the parties agree to refer their dispute to arbitration, but as a preliminary and mandatory step in the process, the arbitration is stayed following the appointment of the arbitrator to allow the parties the opportunity to try and resolve their dispute by mediation with the appointed arbitrator acting as mediator.
If a settlement is reached in respect of any of the matters in dispute during the mediation phase, the arbitration is resumed and the settlement is recorded as a Final Award on Agreed Terms.
The advantage of this approach is that unlike a Settlement Agreement which must be enforced as a contract where there is a subsequent breach, an arbitrator’s award may be enforced by entry as a judgment in the High Court, or by action, and enforced in terms of the award. The process is relatively simple and straightforward.
If on the other hand the parties are unable to settle the whole of the dispute by mediation, the mediation is terminated and, so long as no party withdraws its consent, the arbitration will continue with the arbitrator who was acting as the mediator then acting as arbitrator to make an award that finally determines the dispute.
If following the mediation a party withdraws its consent to the arbitrator who was acting as mediator continuing to hear and determine the dispute, a replacement arbitrator will be appointed by FDRC.
The primary advantages of Arb/Med are first, that the parties are required to mediate in the context of a formal arbitration process with its attendant costs and resourcing implications that will immediately resume if they are not successful, and second, that if a settlement is not reached in the mediation, the arbitrator who was acting as mediator will have been informed as to the issues in dispute and the facts of the case which can be carried over into the arbitration with potentially significant time and cost savings for the parties. It is conceivable that the resumed arbitration may involve nothing further than the arbitrator making an award based on the evidence provided during the mediation.