MEDIATING DISPUTES IN BANKRUPTCY

CD: Could you provide an overview of how mediation is different from other methods of alternative dispute resolution?

 Dobbs: Other methods of ADR include arbitration, pre-trial settlement conferences, neutral evaluation and mock trials. While an arbitrator has the authority to render binding decisions in an arbitrated dispute, a mediator has no adjudicative authority. In a pre-trial settlement conference, a judge prods the litigants to reconsider their positions and to settle within a risk-assessed range that the judge may assist the parties in defining. In a neutral evaluation, the evaluator analyses the facts and applicable law relevant to the dispute, provides an opinion of the strengths and weaknesses of each disputant’s case, and forecasts a range of likely litigation outcomes. A mock trial provides the parties with an opportunity to test their case before volunteers serving as a judge and jury. A mediator attempts to assist the disputants in resolving their conflict, in a confidential and supervised settlement conference setting, by focusing upon each side’s needs and interests.

 CD: What are the sources of rules governing bankruptcy mediations?

 Dobbs: By the Alternative Dispute Resolution Act of 1988, Congress directed each federal district court to adopt local rules for the use of ADR in civil cases, including adversary proceedings in bankruptcy. Since then, most of the 90 bankruptcy court districts have enacted local rules for court-annexed mediations, including the establishment of a panel of mediators, court referral of matters to mediation, confidentiality requirements, mediator compensation and conduct of the mediation. Prior to the ADR Act, bankruptcy courts based their authority to assign matters to mediation upon Section 105(b) of the Bankruptcy Code and Bankruptcy Rule 7016, which incorporates by reference Rule 16 of the Federal Rules of Civil Procedure. The confidentiality of mediations is protected by local bankruptcy rules, Rule 408 of the Federal Rules of Evidence, and case law recognising a federal mediation privilege.

Jan-Mar 2014 issue

Parker, Hudson, Rainer & Dobbs LLP