Many thanks to Art, Andrea, and the other hosts for giving me the chance to report back on the conference recently hosted by the Carey Center at St. John’s titled ADR Meets Bankruptcy: Cross-Purposes or Cross-Pollination.  This is clearly an emerging field, with UNLV’s Saltman Center hosting a conference raising some of the same issues in February.  Our conference featured scholars from the worlds of ADR and bankruptcy, including Nancy Welsh, Ralph Peeples, and me from the ADR world, Judge Elizabeth Stong, Alan Resnick, Bill Woodward, and Marianne Culhane from the bankruptcy world, and Steve Ware, who manages to straddle both worlds.  Panels addressed mediation in bankruptcy and arbitration in bankruptcy.  I’ll start with the mediation takeaways.

A couple of things struck me from mediation panel.  The first comes from Ralph Peeples’ empirical study on the use of mediation in Chapter 11 bankruptcies.  He found that most bankruptcy judges have used mediation and like it, but that they use it very infrequently.

Why is that?  Judge Stong suggested two likely reasons.  First, bankruptcy judges are under constant pressure to move matters quickly to resolution.  Without a structure in place to make mediation easy to use, it may simply seem too time-consuming to refer matters to mediation.

Second, Judge Stong posited that the disputants are probably not asking for mediation.  She said she would use mediation more, but nobody asks for it.  That seems likely to be the product of a culture in the bankruptcy bar that is not comfortable with mediation.  I think we are all familiar with the pattern in which attorneys resist mediation until they see it work, at which point they become more open.  That process is clearly in its infancy in the bankruptcy world.

The second point that struck me came from Nancy Welsh’s paper evaluating the approaches to mediation used in bankruptcy courts and comparing mediation in family cases.  She found that bankruptcy courts are using processes that they call mediation but that diverge in fundamental ways from what we in the ADR world consider mediation.  For example, she found cases in which:

• a mediator was given authority to order discovery;
• a mediator issued a binding declaration that negotiations between creditors and debtor were not at impasse; and
• a mediator was apparently tasked with determining the “mediability” of the matter, much as an arbitrator can decide arbitrability.

Clearly these are courts confused—at a minimum—about the distinction between arbitration and mediation.  Nancy expressed concern both over what those processes entail for the parties in bankruptcy (who may lose the process control that is central to the mediation principle of party-autonomy) and for mediation in general (which will not long survive as a party-directed process if courts fail to recognize the party-autonomy principle that distinguishes it from arbitration).

As Nancy suggested, there seems to be an interest and need for exploring hybrid dispute resolution processes in bankruptcy.  I like that idea, and I hope to pursue it through the Hugh L. Carey Center for Dispute Resolution and the Bankruptcy Policy Institute here at St. John’s.

In a second post, probably after the holiday, I’ll report on the Piper Aircraft bankruptcy mediation described by Bill Woodward, which could serve as a useful dispute systems design model.