Professional Liability for Arbitrators and Mediators
One of the of the features of the American society is the importance of the concept of accountability. Under this principle, a person or an organization is responsible for their actions.[1] There are many ways to hold a person accountable for their actions: if a friend makes an inappropriate and offensive comment, the friendship can be terminated; if an elected official behaves in an unacceptable manner, their constituents may not re-elect him; if an individual kills, they will be tried in a court of law; if a lawyer fails to comply with the ethical obligations attached to their profession, their bar may sanction them.
We all are accountable at different levels and manners. Of course, being our society imperfect by nature, not everybody is indeed held accountable: criminals at large could never pay for their crimes; debtors may never pay their creditors; infidelity would not be discovered. Another common way to held people and corporations accountable for their damages is through civil law suits. The courts provide a natural channel to traduce accountability in a sum of money.
But the rational tendency is towards accountability. This topic is often associated to the concept of democracy itself.[2] This paper focuses in two activities left outside the scope of the scrutiny of their participants: arbitration and mediation.
Arbitrators and mediators are not usually held accountable for their actions, and therefore avoid being liable.
Part I summarizes an article of Michael Moffit dealing with the issue of immunity arbitrators. Part II summarizes an article of Maureen A. Weston about suing mediators.
I
Associate professor Maureen A. Weston wrote an article about the immunity arbitrators have.[3] Assistant professor Michael Moffitt opined about the liability mediators should have as well.[4] A summary of both articles is given in this part of the paper.
Mr. Weston’s article, Reexamining Arbitral Immunity in an Age of Mandatory and Professional Arbitration,[5] questions why arbitrators and the institutions that provide for arbitration are assumed to be immune per se from civil liability.
He sets the scenario, where arbitral immunity seems to continuing ruling in the near future. Mr. Weston acknowledges the existing federal policy favoring arbitration, and highlights that parallel to this policy, there is a lack of regulation of in the different states on arbitration. And the future does not seem to be harder for the liability of arbitrators: the Revised Uniform Arbitration Act of 2000 proposes broad immunities from civil liability for arbitrators to the same extent than judges.
Arbitral immunity derivates from the application of judicial immunity. Judicial immunity originated in English as a common law doctrine to protect the tasks of the judiciary. But even judicial immunity has its exceptions.[6]
The doctrine of judicial immunity was extended to protect administrative law judges and prosecutors. The reason to grant them this immunity is because the functionality of their office is “quasi-judicial”.[7]
Then the judicial immunity doctrine was applied to arbitrators, because the functions of arbitrators were found to be similar as those of the public judges. Arbitral immunity was applied in contemporary arbitration since the 1990s. For similar reasons, immunity was granted to some regulated institutions that provided arbitration.[8]
But Weston challenges arbitral immunity, taking into account how arbitration has commercialized in recent years. The differences between the judges and arbitrators in modern times, makes the analogy unworkable.
The adjudication proceedings of an arbitrator and a judge are significantly different: judges and magistrates are accountable for their actions; arbitrators are not. Judge’s powers derive from the mandate of the People; arbitrators from a private contract.
The author of the article proposes that the assumptions about arbitration that justified the grant of immunity are outdated: the policy favoring arbitration should also worry about integrity of the procedure; because arbitration is a lucrative career, people will continue to serve as arbitrators and assume the risk of liability –just as doctors, lawyers and architects do. And private provider institutions make a profit because of their businesses; therefore comparing them with the services of a court clerk is misleading.
Another fail that Weston finds that even though the arbitration industry has developed ethical guidelines and due process protocols, they are not enforceable in courts.
What Weston proposes is a balance where arbitrators are accountable for their actions; the author points out that no other profession is so immune. He offers three options of new regulation for arbitrator’s liability:
1. Keep the status quo, relying in self-regulation and good will of arbitrators, plus the natural forces of the market.[9]
2. Treat arbitration as any other professional activity: create a State bar of arbitrations, with oversight functions over arbitrators; and perhaps a “Better Arbitrators Bureau,”[10] and
3. Legislative enactment of statutes that provides qualified arbitral immunity, and effective and express remedy for arbitrator’s wrongdoings.
Maureen Weston concludes the article exalting the importance of accountability of arbitrators and providers institutions. Time has come, Weston says, to provide “meaningful recourse to individuals aggrieved by illegal conduct” of arbitrators.
II
Michael Moffit takes a similar path in his article Suing Mediators.[11] He points out how mediation is an exception to other professions regarding barriers to enter into practice, restrictions on practice methods and supervision.
The author of Suing Mediators explains why suing a mediator is difficult. His research produced no precedent in the official reporters of successful cases against mediators.
The principal factor for this is because liability is hard to establish: malpractice is difficult to prove because, being mediation a segmented occupation, there are no dry and cut professional standards or customary practice to compare with the actions of the individual mediator; even if there were an established standard, it would be difficult to evaluate the decisions a mediator makes. For those reasons, malpractice claims would be a complicated vehicle to establish liability.
Other tort-based actions such intentionally infliction of emotional distress, false imprisonment, tortiously interference with a party’s contractual rights or economic opportunity, or invasion of privacy. The hardness of establishing tortious liability in the preceding hypothesis lies in the fact that parties participate in mediation by their will. The mediator has no decision-making power. And the mediator is expected to pressure the parties toward settlement.
Claims for breach of contract obligations are equally hard to succeed. Mediation contracts usually provide few or no description at all of the obligations of the mediator. The broad language used in the provisions of the mediation contract are, usually more principles of purpose than specific promises. Finally, some standardized mediation contracts contain liability waivers.
Fiduciary duties do not “regularly attach to mediators”, because mediators do not “handles a transaction for the benefit of” a party to the mediation. Mediators are not empowered by the parties to make decisions on their behalf.
Another possibility is to hold the mediator liable within the context of their particular profession’s scope. For example, if the mediator is an attorney, he or she may be subject to malpractice liability under the standards of the practice of law. Or if the mediator “engages in professional activity for which she is not appropriately licensed,” she could be sanctioned regardless of the quality of the mediation. But normally the actions of mediators do not constitute the practice of a separate profession.
Another factor that makes difficult to sue mediators is that because of the confidential character of mediations, there is not much point of comparison between adequate and unacceptable mediator’s behavior.
Last, sometimes law suits against mediators cannot proceed because they can be protected with civil immunity. Quasi-judicial immunity extends some times to mediators. In some jurisdictions where this kind of protection is not available, mediators are entitled to qualified immunity.
Additionally, not only suing mediators is difficult, but damages are difficult to demonstrate. Moffitt identifies four different kinds of injuries that can result from a mediator’s misconduct: non settlement as an injury –when mediator’s misconduct prevents the parties from settling; unfavorable settlement terms as injury –a party alleging that the settlement produced in the mediation is clearly disadvantageous to his or her interests-; settlement injuring non-parties -negative effects of settlement on a non-party to the mediation-; and injuries not reflected in the mediation outcome -compensable injuries not reflected in the settlement, such tortious mediator behavior.
The big challenge in demonstrating damages within the first two categories lies in the issue of causation: the parties have the ultimate power to settle, in the terms they consent to. Regarding the third category of possible damages, mediators owe duties to the parties, and they hardly extend to non-parties. Finally, the last type of damage presents the challenge of demonstrating a often highly speculative injury, especially when the parties have always the opportunity to walk out of the mediation proceedings.
Because establishing mediator liability is difficult and uncertain, there is a cost parties, mediators and the society have to pay. Part II of Moffitt’s article analyzes them. First, harmed victims remain uncompensated; second, because of a lack of court guidance, mediators face difficulties in discerning the boundaries of acceptable behavior; and finally, the public misses its opportunity to be educated through judicial decisions regarding acceptable and unacceptable mediator’s behavior.
In part III of his article, Michael Moffitt outlines how mediator liability should be set, taking into account the uniqueness of mediation. He starts by stating that mediation parties are best positioned to judge the effectiveness of mediator’s behaviors, even preferable over experts’ opinions.
According to Moffitt, parties can terminate the mediation if they are dissatisfied with the mediator conduct.[12] Besides, as an implication of party autonomy, each party decides if they accept or reject a particular settlement.
The author of the article suggests different liability treatment, correspondent to four different claims. The author distinguishes between “custom-based claims” –mediation misconduct referred to customary mediation practice, including claims relating with inadequate managing of the mediation proceedings- and “custom-independent claims” –claims that can be demonstrated by reference to different standards, such “contractual, statutory, constitutional or tort standards.”[13]
The first scenario, when a party that walked from the mediation -a mediation party that withdrew from the proceeding previous to its completion-, that party should be able to sue recover for professional malpractice; the mere fact of the withdrawing could evidence dissatisfaction with the mediator’s behavior. But a party suing under these circumstances should have a limited recovery, because by walking out of the mediation the party prevented the mediator from causing more damages.
Second scenario: custom-independent claims should be allowed when the party withdrew from the mediation. This type of claims should not be treated different than similar claims in any other context. The fact that the party walked away from the mediation should not limit recovery, as the termination of the mediation does not per se cure or prevent the injuries.
Our third scenario: a “[c]ustom-[b]ased [c]laim [w]hen the [p]arty [r]emained in the [m]ediation,” would have a very difficult time establishing liability, because that party, by staying in the mediation, was sending a message of approval. The exception to this difficulty would come if the party demonstrates that the negligence of the mediator was not evident at the time it occurred, she could not assess the negligence when it happened, or the mediator did not let the party to withdraw from the mediation.
In the fourth and last scenario, a custom-independent claim when the party stayed in the mediation should go ahead and let the party recover. The claim will allege the violation of a right “established outside of customary practice.” But recovery may be limited by the party’s decision to stay in the mediation when the conduct was readily visible, the party retained the ability to assess the action and to terminate the mediation, and termination would have prevented future injury.”[14]
After explaining these four scenarios for mediator liability, Moffitt brings two last issues: custom-independent claims against mediators should not be considered duplicative of malpractice claims –and therefore dismissed-, because it would put an “inappropriate burden on plaintiffs bringing claims against mediators.”[15]
The author’s last proposal is that mediators should not enjoy of immunity “against custom-independent claims.” The application of quasi-judicial immunity is inappropriate for mediators, because the tasks and responsibilities they have are not comparable to those of the judges. If any, the author says, qualified immunity for certain custom-based suits against mediators could be permitted.
[1] See Accountability – Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/wiki/Accountability (stating that accountability is often used “synonymously with such concepts as answerability, responsibility, blameworthiness, [and] liability”) (last visited Dec. 1, 2005).
[2] See generally Molly Beutz, Functional Democracy: Responding to Failures of Accountability, 44 Harv. Int’l L.J. 387, (2003).
[3] Maureeen A. Weston, Reexamining Arbitral Immunity in an Age of Mandatory and Professional Arbitration, 88 Minn. L. Rev. 449 (2004).
[4] Michael Moffitt, Suing Mediators, 83 B.U. L. Rev. 147 (2003).
[5] Maureeen A. Weston, Reexamining Arbitral Immunity in an Age of Mandatory and Professional Arbitration, 88 Minn. L. Rev. 449 (2004).
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[11] Michael Moffitt, Suing Mediators, 83 B.U. L. Rev. 147 (2003).
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