ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms
In a med-arb process, the same person acts first as mediator and then, after mediation fails, as arbitrator. Mediation involved private caucus sessions where Kestrel Ltd disclosed confidential commercial weaknesses. What is the principal concern with this arrangement?
The main concern is bias or unfairness. A neutral who heard confidential information in private mediation sessions may be influenced by it when later deciding the dispute as arbitrator, even though the other party never had the chance to respond to it.
- AThe arbitrator may be unable to make any award at all
- BThe arbitrator may be influenced by confidential information learned in private sessions, creating a risk of biasCorrect
- CMediation outcomes become binding on third parties
- DThe arbitration award would lose all enforceability under the New York Convention automatically
Explanation
The key criticism of using one person in both roles is that confidential information learned in private sessions may affect the arbitral decision, and the other side has not had a chance to answer it. This raises fairness and bias concerns. It does not automatically remove the power to make an award or enforceability, though the risk may be challenged.
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