Mediation, Arbitration, and the Promise of Privacy

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Resolving Conflicts with ADR

Negotiators often choose to resolve their conflicts through mediation, arbitration, and other alternative dispute resolution methods because of the privacy these methods promise. Unlike the public nature of litigation, mediation and arbitration typically give parties the freedom to hash out sensitive issues without the fear that their discussions and agreement will become public knowledge. Two new cases in the news, however, show that privacy is a nuanced issue in some alternative dispute resolution contexts.

The Lance Armstrong Case

On August 23, having lost a federal lawsuit to end a doping investigation against him, Lance Armstrong announced that he had decided not to contest charges levied by the U.S. Anti-Doping Agency (USADA) that he had taken banned substances during the peak of his storied cycling career. USADA head Travis Tygart had promised to make the arbitration against Armstrong public, as permitted by the guidelines of the American Arbitration Association, which the USADA follows in its hearings.

Delaware and Privately Adjudicated Arbitrations

Some observers speculated that Armstrong chose to end his long fight to clear his name in part because the proceedings outcome would be made public. As a result of his decision, Armstrong was stripped of his seven Tour de France titles.

Turning to another case, in 2009, the state of Delaware began allowing the Delaware Chancery Court to arbitrate private disputes confidentially without public access. Delaware judges and courts are renowned for their expertise in adjudicating the most complex business disputes in the United States, explains Steven M. Davidoff in the New York Times.

Delaware wanted to build on this prestige by attracting even more companies with the promise of privately adjudicated arbitrations. Delaware had high hopes of hundreds of companies flocking to engage in the new process. As it turns out, only six arbitrations were held, most of them brief.

Delaware Coalition for Open Goverment

In October 2011, the Delaware Coalition for Open Government sued to overturn the new proceedings, arguing they violated the First Amendment’s requirement that the public have, “qualified access to civil and criminal trials,” Davidoff writes. Moreover, as Davidoff explains, at least two of the disputes arbitrated by Delaware judges had ramifications for shareholders of the companies involved. The concern arose that companies would begin shifting claims that were not truly private from litigation to arbitration in order to hush them up and avoid possible shareholder class-action lawsuits.

On August 31, a federal court agreed and forbid the Delaware Chancery Court from holding further private arbitrations. The federal court found the arbitration proceedings to be roughly equivalent to a civil trial, using the same judges, location, and proceedings—with secrecy being the only distinction. Because civil trials cannot be secret, according to the First Amendment, the arbitrations would have to end.

As these cases suggest, arbitration, like mediation, is a highly flexible process that can be tailored to various types of disputes and used in many different settings. But what is usually an upside of alternative dispute resolution methods—their flexibility—can create confusion that, ironically, may cause parties to turn to the courts for answers.

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Related Article: Managing Conflict Outside of the Courts

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