In choosing an alternative dispute resolution mechanism for resolving a cannabis-related dispute, the nature of the case and the intentions of the parties may allow for both mediation and arbitration to be attractive options.
For instance, your dispute may involve an important industry figure in your region’s cannabis market with whom you wish to maintain a professional relationship with. In such circumstances, the restorative and collaborative nature of mediation may be the most desirable way to resolve the matter and move forward. At the same time, your dispute may be of a time-sensitive nature such that a resolution is urgent regardless of the efforts that could be made to find any common ground, which enhances the appeal of having a unilateral decision made by an arbiter.
Fortunately, you don’t have to choose between one or the other in cases like this. Mediation-arbitration (aka med-arb) is an increasingly turned-to form of alternative dispute resolution that can offer the best of both worlds, preserving the autonomy of the disputant parties while supplementing it with the finality of an arbitral ruling.
The med-arb process begins with a mediation session, where the disputants work with a neutral mediator to communicate their respective positions and interests with the aim of negotiating a mutually acceptable compromise. If these discussions result in an impasse, the parties are not left with nothing to show for their time, money, and effort. Rather, a breakdown in negotiations triggers the commencement of an arbitration, whose outcome the parties agree at the outset to be bound by.
During the arbitration component, the disputant parties will again present the evidence and arguments in support of their respective positions and attempt to persuade a neutral arbiter that the relief they seek should be granted. Upon consideration of both parties’ submissions, the arbiter may either choose an outcome proposed by one of the parties or come up with their own relief to resolve the matter within the scope of their mandate.
If you choose to go down this route, there are a number of considerations to keep in mind. Perhaps the most important is who to choose as the arbiter in the event the mediation process is unsuccessful in bringing about a resolution. While it is common for the chosen mediator to subsequently assume the role of arbiter in the event arbitration is necessary, one or more parties to your dispute may feel uncomfortable with this in light of the possibility of the mediator-turned-arbiter being improperly influenced by something that was learned during the mediation process. To avoid a situation like this from arising, it may be prudent to switch the order of the mediation and arbitration components, having the mediator/arbiter come to an arbitral ruling in the first phase of the process, which is then sealed and only revealed if the subsequent mediation phase proves unsuccessful (this is sometimes referred to as arb-med).
Further, there may be conflict-of-interest concerns if the mediator knows from the start that he/she would be tasked with becoming an arbiter and would benefit financially from prolonging the process to trigger the arbitration phase. If a suspicion of this sort serves as an obstacle to the disputant parties proceeding with med-arb, it can be overcome by choosing an outside arbiter to replace the mediator once arbitration is triggered. On the other hand, there are reasons for having just one person act as both mediator and arbiter, as the information a mediator obtains during that phase of the process may assist them in making a more informed decision during the subsequent arbitral phase. This could allow the parties to avoid the unnecessary time involved in repeating much of what they communicated during the former phase to an outside arbitrator.
At the very least, if you are considering mediation for resolving your cannabis-related dispute, choosing a med-arb configuration may serve to incentivize you and the other party to your dispute to maximize the effort put forward to resolve the matter through the mediation process. This is due to the potentially unfavorable, albeit dispositive, arbitral decision that looms as part of the completion of the med-arb process.
By Justin Hovey
(Justin is a 2nd year law student and summer student for CansultED. CansultEd is an alternative dispute resolution company that operates exclusively in the US Cannabis space.)