The Arbitrator’s Mandate To Facilitate Settlement
Klaus Peter Berger J. Ole Jenseny
Copyright c 2017 by the authors. Fordham International Law Journal is produced by The Berkeley Electronic Press (bepress). http://ir.lawnet.fordham.edu/ilj
Mandate To Facilitate
Klaus Peter Berger* & J. Ole Jensen** ABSTRACT
The discussion whether an international arbitrator’s mandate
includes the facilitation of settlement between the parties is not new.
For the past decades, it has unfolded between those who believe in
settlement facilitation as an efficient means to end the parties’ dispute
and those who consider such activities incompatible with the
arbitrator’s judicial role as a “private judge.” Up to now, this
discussion has remained deeply rooted in domestic conceptions of
what the arbitrator’s role should and should not be. This Article
argues that it is past time to throw these culturally shaped beliefs
overboard. In the interest of the much-debated quest for increased
efficiency in the arbitral process, international arbitrators should
realize and appreciate that settlement facilitation is not incompatible
with their mandate and can be a highly useful tool to resolve the
parties’ dispute in a time- and cost-efficient manner. To further this
understanding of the arbitrator’s mandate, this Article offers tried and
tested tools that allow international arbitrators to facilitate settlement
without overstepping their mandate or risking a challenge by the
“Procedural efficiency,” “case management,” and “proactivity” –
these buzz words currently dominate the realm of international
arbitration. Most stakeholders have realized that a considerable
decrease of the time and costs an international arbitration requires is
vital to its future success. There is widespread agreement that crucial
to ensuring procedural efficiency is a decisive and proactive arbitral
tribunal.1 There is less agreement regarding another important means
of increasing efficiency: settlement facilitation by the arbitrator.
Whether an arbitrator can and should take a proactive approach
and get involved in the parties’ settlement efforts has been the subject
of a controversial debate throughout the past decades.2 To a large
* Professor of Law and Director of the Center for Transnational Law (CENTRAL) at the
University of Cologne School of Law and Board Member of the German Institution of
Arbitration (DIS). E-mail: .
** Research Fellow and PhD candidate with Professor Berger. E-mail:
1. Cf. Klaus Peter Berger & J. Ole Jensen, Due Process Paranoia and the Procedural
Judgment Rule: A Safe Harbour for Procedural Management Decisions by International
Arbitrators, 32 ARB. INT’L 415, 416 (2016) with further references.
2. See generally Michael E. Schneider, Combining Arbitration with Conciliation, in
INTERNATIONAL DISPUTE RESOLUTION: TOWARDS AN INTERNATIONAL ARBITRATION
CULTURE 57–100 (Albert Jan van den Berg ed., 1998); Michael Hwang, The Role of
Arbitrators as Settlement Facilitators – Commentary, in NEW HORIZONS IN INTERNATIONAL
COMMERCIAL ARBITRATION AND BEYOND 571–81 (Albert Jan van den Berg ed., 2005); Pierre
Lalive, The Role of Arbitrators as Settlement Facilitators – A Swiss View, in NEW HORIZONS
IN INTERNATIONAL COMMERCIAL ARBITRATION AND BEYOND 556–64 (Albert Jan van den
Berg ed., 2005); Fali S. Nariman, The Role of Arbitrators as Settlement Facilitators –
Introduction, in NEW HORIZONS IN INTERNATIONAL COMMERCIAL ARBITRATION AND
BEYOND 531–32 (Albert Jan van den Berg ed., 2005); Arthur L. Mariott, Arbitrators and
Settlement, in NEW HORIZONS IN INTERNATIONAL COMMERCIAL ARBITRATION AND BEYOND
533–46 (Albert Jan van den Berg ed., 2005); Christian Bühring-Uhle, Gabriele Scherer & Lars
Kirchhoff, The Arbitrator as Mediator, in TOWARDS A SCIENCE OF INTERNATIONAL
ARBITRATION: COLLECTED EMPIRICAL RESEARCH 135–43 (Christopher R. Drahozal &
extent, this debate has not yielded definitive answers. At its core lie
differing perceptions of the arbitrator’s mandate. Is his or her role
limited to deciding the parties’ dispute by rendering an award or
should he or she endeavor to resolve it, which may include getting
involved in settlement discussions between the parties? The answer to
that question still markedly depends on the legal backgrounds of those
who participate in the debate. While common law arbitrators are more
inclined to view their role solely as decision-makers, lawyers with a
civil law background follow a more liberal approach and advocate a
proactive arbitral role in the parties’ settlement attempts.3
Historically, such clashes of the civil law and common law
traditions have existed in many areas of international arbitration.
Today, in a world in which all stakeholders have realized and
accepted the need for efficiency and predictability, most of these
clashes have been resolved in a more or less pragmatic fashion.4
Instead of the legal background influencing an arbitrator’s procedural
conduct, there is an “increasing convergence of approaches used by
chairpersons in international arbitration [which] increases the
predictability of the international arbitral process.”5 Indeed, it can be
considered a hallmark of the modern international arbitrator that he or
she is able to adopt different styles of procedural conduct, depending
on the specificities and intricacies of the case: “By drawing on a
variety of legal traditions but wedding themselves to none, truly
transnational arbitrators can promote the effective resolution of
disputes by offering unique procedural solutions tailored to the
There is no reason why settlement facilitation by international
arbitrators should be an exception. This Article argues that what
should guide the arbitrator who is faced with the question whether to
facilitate settlement between the parties are not his or her legal
upbringing and cultural convictions. Neither should misconceptions
about what settlement facilitation actually is deter arbitrators from
exploring that option.7 Rather, the arbitrator should solely be guided
by what the parties and the intricacies of the case require. Recent
surveys and developments indicate that parties in many cases require
their arbitrators to facilitate settlement between them.8 This Article
advocates that this need should not be discarded as incompatible with
the arbitrator’s mandate. Rather, it is compatible with the arbitrator’s
judicial role as a decision-maker that he can get involved in
settlement discussions with the parties.9 By elaborating on the
approaches currently employed in practice, this Article offers the
transnational arbitrator tried and tested procedural tools to enhance
the efficiency of international arbitration by facilitating settlement
between the parties.10
II. TO ENCOURAGE, PROMOTE OR FACILITATE SETTLEMENT?
THE ARBITRATOR ROLE CONTINUUM
To a considerable extent, the debate regarding the arbitrator’s
role in parties’ settlement efforts can be traced back to inconsistent
terminology and fundamental misunderstandings.11 The terms “to
encourage,” “to promote,” and “to facilitate” settlement are often used
interchangeably.12 At other times, they are used to indicate differing
degrees of arbitral involvement in the parties’ settlement
discussions.13 Such terminological ambiguity acts as a catalyst for the
ongoing controversial debate. If there is no uniform understanding of
what settlement facilitation is and means, there is a danger that any
discussion about this issue results in little more than two ships passing
in the night. This makes it imperative to develop a clear
understanding of the differing degrees of arbitrator involvement in the
parties’ settlement efforts before moving on to discussing its details.
However, rather than getting hung up in abstract definitions, the focus
should be on what it is that international arbitrators do or can do in
their attempts to help the parties settle the case.
A similarly pragmatic approach has been suggested to avoid
misunderstandings caused by the use of different terminology in the
context of international business mediation.14 While some strictly
distinguish between “facilitative,” “evaluative,” and “transformative”
mediation styles, others emphasize the “nature of mediation as a fluid
and dynamic process.”15 To avoid such terminological quarrels, it has
been suggested to view the mediator’s role as a continuum.16 The
mediator should not be chained to one particular style and adhere
slavishly to an abstract role model, but should adopt a pragmatic
approach. He or she should be ready to take the role of a facilitative,
evaluative or transformative mediator, or adopt a blend of these
styles, depending on what the parties and the dispute require.17
Applied to international arbitration, the arbitrator’s role in the
parties’ settlement efforts may also be viewed as a continuum – a
spectrum of how far the arbitrator becomes involved in the parties’
settlement efforts. At one end of that arbitrator role continuum is the
lowest possible degree of involvement: none. A large number of
arbitrators, especially from the common law world, believe that they
should not even mention the possibility of settlement to the parties, let
alone become involved in any meaningful way. They perceive it as
belittlement to tell sophisticated commercial parties, who will likely
have considered their options beforehand, that they are free to settle
the dispute.18 In their opinion, the fact that parties initiate an
international arbitration means that they want a binding decision on
their dispute.19 If anything, these arbitrators assume that the parties
will take up the issue of settlement among themselves outside the
hearing room, without the need for the arbitral tribunal to assist them
in their efforts.
The next step on the continuum is the arbitral tribunal’s abstract
proposal that settlement may be an option. Section h(i) of Appendix
IV to the ICC Rules 2017 suggests that arbitral tribunals inform the
parties “that they are free to settle all or part of the dispute either by
negotiation or through any form of amicable dispute resolution
methods.”20 Most international arbitrators seem to accept this as part
16. Riskin, supra note 14, at 44.
17. See id. at 44-45; cf CHRISTIAN DUVE, HORST EIDENMÜLLER & ANDREAS HACKE,
MEDIATION IN DER WIRTSCHAFT 88 (2d ed. 2011).
18. KARTON, supra note 3, at 106 (discussing reports of English and Australian
arbitrators who state this as the reason why they are reluctant to mention settlement at all).
19. Cf. id. at 106 (quoting an Australian arbitrator: “International arbitration is expensive
and time consuming. Invariably, the parties try to negotiate. It would be outstanding if they
didn’t try to negotiate. Arbitrations are a last resort. It’s pretty naïve to say to the parties, ‘Have
you considered trying to resolve this amicably?’ You know they got big law firms involved. Of
course they know the ropes. It is very, very occasionally appropriate to say something.”).
20. App. IV, Sec. h (i), Rules of Arbitration of the International Chamber of Commerce,
in force as from 1 March 2017, in ICC, ARBITRATION RULES AND MEDIATION RULES 62, 63
(2017); see also ICC COMM’N ON ARB. AND ADR, TECHNIQUES FOR CONTROLLING TIME
AND COSTS IN ARB. 11 (2d ed. 2012); THE AAA CODE OF ETHICS FOR ARBITRATORS IN
of their mandate.21 Indeed, there is little that would speak against
simply informing the parties that they might consider settling the
case. On the other hand, this information alone may not go a long
way to actually encourage settlement. As indicated above, parties will
almost always be aware of the option to negotiate a settlement.
The part of the continuum where the arbitral tribunal actually
contributes in a meaningful way is laid out in Section h(ii) of
Appendix IV to the ICC Rules 2017, which states that “where agreed
between the parties and the arbitral tribunal, the arbitral tribunal may
take steps to facilitate settlement of the dispute.”22 This provision
acknowledges the intrinsic value of facilitating settlement between the
parties. However, it does not provide any concrete examples of what
these “steps to facilitate settlement” may look like. One of those steps
is provided for in Article 2(3)(a) IBA Rules of Evidence 2010: “The
Arbitral Tribunal is encouraged to identify to the Parties . . . any
issues that the Arbitral Tribunal may regard as relevant to the case
and material to its outcome.” Such an early evaluation can be an
important step to stimulate settlement between the parties as they
realize their chances to succeed in the arbitration.
Another step further on the continuum is for the arbitral tribunal
to conduct a full-fledged settlement conference with the parties. The
Centre for Effective Dispute Resolution (“CEDR”), an independent
British commercial ADR provider, has published a helpful soft-law
instrument in that regard. The CEDR Rules for the Facilitation of
Settlement in International Arbitration 2009 (“CEDR Rules”)23 clarify
that in a settlement conference, the arbitral tribunal not only discusses
the chances of a possible settlement with the parties, but also its
COMMERCIAL DISPUTES, Canon IV.F (2004), available at http://www.americanbar.org/
21. Kaufmann-Kohler, supra note 2, at 188; Draetta, supra note 2, at 493; cf. Matthias
Pitkowitz & Marie-Therese Richter, May a Neutral Third Person Serve as Arbitrator and
Mediator in the Same Dispute? 225–30, 227, GER. ARB. J. (SCHIEDSVZ) (2009); cf. OLIVER
FROITZHEIM, DIE ABLEHNUNG VON SCHIEDSRICHTERN WEGEN BEFANGENHEIT IN DER
INTERNATIONALEN SCHIEDSGERICHTSBARKEIT 666 (2016).
22. See ARB. RULES OF THE GERMAN INSTITUTION OF ARB. Section 32.1 (1998) (“At
every stage of the proceedings, the arbitral tribunal should seek to encourage an amicable
settlement of the dispute or of individual issues in dispute”); see also, COURT OF INNOVATIVE
ARB. RULES. Art. 13.4 (2015) (“After consulting the parties and if neither party objects, the
Arbitrator is authorized to attempt to bring about a settlement to the dispute”).
23. CEDR RULES FOR THE FACILITATION OF SETTLEMENT IN INT’L ARB. Art. 5
(1.1)(1.4) (2009), available at https://www.cedr.com/about_us/arbitration_commission/Rules.pdf.
potential contents.24 The arbitral tribunal thus becomes immediately
involved with the parties’ settlement efforts and discusses with them
in a dialectic manner how the case is best to be settled.
Finally, on the far end of the continuum, there is caucusing. The
practice of caucusing involves separate meetings by the arbitral
tribunal with each party in order to get a better understanding of the
background of the dispute and the parties’ respective interests, thus
increasing the options for settlement.25 This approach is gleaned from
mediation practice and is intended to “overcome the ‘negotiator’s
dilemma’, which makes parties withhold information because they
cannot be sure that the other side does not behave
opportunistically.”26 While potentially very effective, such caucusing,
when used in arbitration, raises important due process issues in regard
to the parties’ right to be heard and the prohibition of ex parte
communications with the arbitral tribunal.27
It is here where the lines between arbitration and mediation start
to blur. Parties may have Kafkaesque feelings about an
arbitrationturned-mediation without them becoming entirely aware of it at the
time.28 To avoid any confusion, the use of mediation techniques in the
arbitration must be strictly distinguished from ADR proceedings
which are conducted separately from the arbitration. Such separate
proceedings may take place before, during or after the arbitration.
If they are conducted before the arbitration the entire process is
often referred to as “Med-Arb.”29 Under the “Med-Arb” approach,
arbitration is only initiated if the prior mediation has not led to a
settlement between the parties. If the parties have so agreed, the same
individual that has acted as mediator may then also act as arbitrator in
the subsequent arbitration.30 Nevertheless, the proceedings remain
formally separate and the arbitration constitutes an entirely new
process. Similarly, some arbitration laws explicitly allow the arbitral
tribunal to conduct mediation or conciliation during the arbitration,
provided the parties consent.31 Article 5(3.1) of the CEDR Rules
clarifies that for that purpose “[t]he Arbitral Tribunal shall insert a
Mediation Window in the arbitral proceedings,” resulting in what is
often referred to as “Arb-Med-Arb.”32 Even though these proceedings
are conducted during the arbitration and sometimes by the same
individuals that are serving as arbitrators—which, in itself may pose
considerable problems—such dispute resolution processes are strictly
separate from the arbitration. The same is true for ADR proceedings
conducted after the arbitration. In processes like “Arb-Med”33 the
arbitration ends with a non-binding award, giving the parties a basis
to negotiate a settlement in subsequent mediation proceedings.
Contrary to such separate proceedings, this Article focuses on
what an arbitral tribunal may legitimately do in an arbitration without
changing the process into something else. For the present purposes,
“settlement facilitation” shall refer to any aspect on the arbitrator role
continuum, from mentioning the possibility of settlement in an
abstract way to conducting caucus sessions.
III. A GROWING USER APPETITE FOR SETTLEMENT
FACILITATION IN INTERNATIONAL ARBITRATION
It is a truism that international arbitration provides the parties
with the freedom to tailor the proceedings to their specific needs and
to select arbitrators accordingly. Sociological studies have found that,
for a long time, parties have not exercised this freedom in terms of
appointing arbitrators specifically for their settlement facilitation
skills.34 In these studies, whether the arbitrator had the “[a]bility to
encourage settlement between the parties” was seen as one of the least
relevant criteria for arbitrator selection.35 That data has supported the
traditional common law view that arbitrators should be reluctant to
get involved in the parties’ settlement efforts.36 Today, it appears
more difficult for opponents of settlement facilitation to rely on
empirical data. Indeed, newer data suggests that parties’ selection
patterns have significantly changed over the past years. The
candidate’s approach to settlement facilitation and his or her abilities
in this regard have become an important aspect in the selection
process of arbitrators.37
The reasons for this change are connected to a global shift in
how parties to international commercial contracts prefer to resolve
their disputes. Historically, the growth and success which arbitration
has witnessed since the 1960s was mainly caused by the procedural
straightjackets, particularities and limits to party autonomy in
domestic procedural laws. Because of these pitfalls, commercial
parties regarded international arbitration as a highly attractive
alternative to state court litigation. Today, the tide appears to be
turning. Now that the “alternative” international arbitration has
become the norm for cross-border disputes, the process is faced with
ever increasing competition from other means of dispute resolution,
such as negotiation, conciliation and mediation. These processes are
34. Thomas Schultz & Robert Kovacs, The Rise of a Third Generation of Arbitrators?
Fifteen Years after Dezalay and Garth, 28 ARB. INT’L 161, 167 (2012); cf. QUEEN MARY
UNIVERSITY & WHITE & CASE, 2010 INTERNATIONAL ARBITRATION SURVEY: CHOICES IN
INTERNATIONAL ARBITRATION 26 (2010), available at http://www.arbitration.qmul.ac.uk/
docs/123290.pdf (which does not mention the arbitrator’s approach to settlement facilitation as
one of the “influences on choice of co-arbitrators”).
35. Schultz & Kovacs, supra note 34 at 167.
36. Cf. KARTON, supra note 3. See also Draetta, supra note 2, at 493; Siegfried H.
Elsing, Procedural Efficiency in International Arbitration: Choosing the Best of Both Legal
Worlds, GER. ARB. J. (SCHIEDS VZ) 114-23, 117-18 (2011); BORN, INTERNATIONAL
COMMERCIAL ARBITRATION, infra note 59, at 2007; FROITZHEIM, supra note 21, at 665; cf.
McIlwrath, infra note 37, at 908.
37. Ema Vidak-Gojkovic, Lucy Greenwood & Michael McIlwrath, Puppies or Kittens?
How To Better Match Arbitrators to Party Expectations, in AUSTRIAN YEARBOOK ON
INTERNATIONAL ARBITRATION 2016 61, 64–65 (Christian Klausegger et al. eds., 2016); cf.
Michael McIlwrath, Selecting Arbitrators for Commercial Oil & Gas Industry Arbitrations, in
THE LEADING PRACTITIONERS’ GUIDE TO INTERNATIONAL OIL & GAS ARBITRATION 901,
908 (James M. Gaitis ed., 2015).
viable “alternatives to the alternative” and thus become increasingly
attractive for the users of international arbitration.38
The Global Pound Conference Series 2016-17 provides valuable
insights in this regard.39 This series of more than thirty conferences
across the globe asks its participants (commercial parties, counsel,
arbitrators, mediators and other stakeholders) for their experience and
needs regarding alternative dispute resolution. The result is an
unprecedented set of data, indicating how parties to international
commercial contracts prefer to resolve their disputes today and in the
future. Once all conferences have been concluded, this data will be
published as “The GPC Series Final Report” at the end of 2017. The
conferences that have taken place in 2016 already indicate what the
final results may look like.40
In the seven conferences that have taken place in 2016,41 more
than 600 stakeholders have answered important questions in regard to
their dispute resolution preferences. One question they were asked is
what role they want their dispute resolution providers (i.e. arbitrators,
mediators and judges) to take.42 A clear majority answered that, while
they initially do not have a preference, they “seek guidance from the
providers regarding optimal ways of resolving their dispute” when
such a dispute arises.43 This indicates that parties are in principle open
to settlement suggestions beyond the specific dispute resolution
process they are in at that moment.
In terms of dispute resolution policies, the participants indicated
that currently the most effective commercial dispute resolution
processes were those that combined adjudicative with
nonadjudicative elements.44 This indicates a growing user-interest in
settling disputes during adversarial proceedings in an amicable way,
ideally with the assistance of the adjudicator. In line with that, there
was a clear majority who thought that “[g]reater emphasis on
collaborative instead of adversarial processes for resolving disputes”
is going to have the most significant influence on the future of dispute
resolution.45 Looking at the combination of these results, it becomes
clear that parties increasingly seek dispute resolution methods that are
not purely adversarial. Rather, they appreciate the possibility of
combining adjudicatory with non-adjudicatory mechanisms.
This trend is also reflected in the growing number of escalation
or multi-tier (“cascade”) dispute resolution clauses that are being
included into international commercial contracts.46 These clauses
foresee the mandatory completion of a negotiation and/or mediation
stage before arbitration proceedings may be initiated. Their purpose is
that only a very limited number of disputes arising between the
parties remain to be settled in adversarial arbitration proceedings,
while the majority of them will have been settled amicably without
the need to initiate arbitration.
Two other surveys indicate that parties may be increasingly
interested in arbitrators with the skill to facilitate settlement. The first
was conducted with more than 200 internationally active US
arbitrators.47 It indicates that throughout the past five to ten years, the
number of cases settled in the course of international arbitrations has
been increasing significantly.48 Thus, there is a clear trend to seek a
collaborative solution to disputes even if they have already resulted in
adversarial proceedings. The second survey involved in-house
counsel of Fortune 1,000 companies and concluded that saving time
44. Id. That option received a popularity ranking of 57%. It was followed by the
adoption of “[p]re-dispute or pre-escalation processes to prevent disputes” (42%) and
“[n]onadjudicative dispute resolution methods (mediation or conciliation)” (39%).
45. Id. at 104 (“What innovations/trends are going to have the most significant influence
on the future of commercial dispute resolution?” That option received a total popularity
ranking of 60%. It was followed by “[c]hanges in corporate attitudes to conflict prevention”
(53%) and “[h]armonisation of international laws and standards for dispute resolution
46. See Klaus Peter Berger, Law and Practice of Escalation Clauses, 22 ARB. INT’L 1
47. Stipanowich & Ulrich, supra note 2, at 2. The survey was conducted by the College
of Commercial Arbitrators and Straus Institute for Dispute Resolution in 2013.
48. Id. at 17–18.
and money are the most important reasons why parties turn to
alternative dispute resolution.49 While there are many ways in which
time and money can be saved, settlement facilitation goes a long way
towards that end.
First and foremost, settlement facilitation provides efficiency to
the resolution of the parties’ dispute. Instead of going through the
entire process of an international arbitration, the parties conclude their
dispute at an earlier stage, often after the taking of evidence. In
addition, parties do not have to appoint a new individual to conduct a
mediation to arrive at a settlement. Rather, arbitrators are already at
the parties’ disposal and are familiar with the facts of the case as well
as the commercial background of the dispute.50 Second, arbitrators are
in a far better position than the parties to pick the right moment in
which to provide settlement facilitation. While the parties can only
choose unilaterally when to put that option on the table and often feel
a disadvantage in the mere fact that they propose settlement, the
arbitral tribunal can evaluate the right moment from a neutral
perspective.51 Third, a settlement in the course of an arbitration
provides security and predictability to the parties as the settlement
contract may be turned into a consent award or award on agreed
terms.52 Thus, the result parties take away from a collaborative
resolution of their dispute is as enforceable as that of adversarial
arbitral proceedings. Finally, if an ongoing business relationship is at
stake, parties will in many cases prefer an amicable settlement over an
adversarial outcome.53 This not only saves the short-term legal costs
for conducting the arbitration, but may create large revenues in the
medium and long term if parties can continue their business
relationship. For these reasons, parties from civil law jurisdictions
sometimes even expect the arbitral tribunal to suggest a reasonable
49. Id. at 8 (“Respondents to a 2011 survey of corporate counsel in Fortune 1,000
corporations identified each of the following goals as among the reasons companies choose
ADR (alternative or appropriate dispute resolution) over litigation: saving time (70.9% of
respondents); saving money (68.7%); allowing parties to resolve disputes themselves (52.4%);
limiting discovery (51.5%); preserving privacy and confidentiality (46.8%); and preserving
good relationships (43.5%). Each of these goals is likely to be effectively served—indeed,
perhaps best served—by a negotiated settlement of disputes occurring as early as possible after
a dispute arises.” [footnotes omitted]).
50. Kaufmann-Kohler, supra note 2, at 197.
52. See id. at 197; see also Draetta, supra note 2, at 487.
53. See Draetta, supra note 2, at 491; see also JEFFREY WAINCYMER, PROCEDURE AND
EVIDENCE IN INTERNATIONAL ARBITRATION 105 (2012).
settlement when the time is ripe.54 For them, there is no doubt that
this is part of the arbitrator’s mandate. In China, for instance,
approximately fifty percent of parties explicitly request settlement
facilitation from the tribunal during their arbitration.55
Globally, all of this indicates the parties’ growing appetite for
more collaborative elements in the arbitral process.56 Parties from
both civil and common law jurisdictions acknowledge the benefit of
ending adversarial processes in an amicable way. Settlement
facilitation provides an efficient, cost- and time-saving option to
achieve that goal. Accordingly, many parties now require the skill
from their arbitrator to be able to facilitate settlement between them.57
If those parties do not find what they are looking for in international
arbitration, there is a possibility that they will turn to other methods of
ADR such as mediation or conciliation.58
IV. RECONCILING SETTLEMENT FACILITATION WITH THE
ARBITRATOR’S JUDICIAL ROLE
If parties require settlement facilitation, what is there to stop
arbitrators from providing it? The answer to that question depends on
one’s conceptual understanding of the arbitrator’s mandate. Today, it
is largely undisputed that the arbitrator’s mandate has a hybrid
nature.59 On the one hand, it is defined by the parties’ contract with
the arbitrator (receptum arbitri) in which parties are free to shape the
arbitrator’s mandate in any way they see fit. In that sense, the
arbitrator is a service provider to the parties. On the other hand, the
arbitrator’s role also has a judicial dimension. Arbitrators perform a
‘quasi-judicial’ function and must adhere to the mandatory rules of
the applicable lex arbitri.60 The combination of these two aspects to
the arbitral mandate make the international arbitrator a “private
In regard to settlement facilitation, some focus on the party
autonomy aspect of the arbitrator’s mandate and consider that
mandate to comprise anything that helps the parties to resolve their
dispute.62 If parties are best served with a settlement conference, this
is what the arbitrator will provide. The opponents of settlement
facilitation have a narrower understanding of the arbitrator’s mandate
and focus on its judicial side. They see it as the arbitrator’s sole task
to decide the parties’ dispute, not to settle it.63 To them, arbitration is
about winning and losing, not about discussing options for an
Conventional wisdom ascribes the latter view to the common
law tradition.64 However, even some civil law jurists are convinced
that “prodding parties towards settlement is not part of the arbitrators’
mandate.”65 If these voices acknowledge any arbitral role in
settlement facilitation, it never extends beyond the very beginning of
the arbitrator role continuum, i.e. proposing settlement to the parties
in an abstract way.66 Anything beyond such a simple proposal is
incompatible with their conception of the arbitrator’s mandate. To
them, the arbitrator’s role as a private judge means that his or her
mandate is limited to providing a binding decision on the parties’
It is true that a final decision on the parties’ dispute is the
arbitrator’s main and original mandate.68 However, contrary to the
opponents of settlement facilitation, the arbitral mandate is not
confined to decision-making. Even with a focus on the arbitrator’s
judicial role, such a narrow understanding of that role does not reflect
contemporary practice before most domestic courts around the world.
Rather, a comparative analysis of different procedural laws indicates
that it is an important aspect of the role of judges in many
jurisdictions to facilitate settlement between litigating parties. This
has traditionally been the case in jurisdictions of the “Germanic”
background, i.e. Austria,69 Germany,70 and Switzerland71. It is also the
approach of other civil law jurisdictions, such as Belgium,72 France,73
Italy,74 and the Netherlands75.
However, most opponents of settlement facilitation in
international arbitration fail to acknowledge that even in the main
common law jurisdictions judges are now encouraged to facilitate
settlement between the parties. In England and Wales, Section 1.4 (1)
and (2)(f) of the Civil Procedure Rules (“CPR”) provides that the
court must “help . . . the parties to settle the whole or part of the
case.” In the United States, the efficacy of this approach has also been
In this business-like system of civil procedure the tradition is
strong that the court promotes compromise. The judge who
gathers the facts soon knows the case as well as the litigants do,
and he concentrates each subsequent increment of fact-gathering
on the most important issues still unresolved.76
Accordingly, US federal district judges are encouraged to
facilitate settlement between the parties before them.77 In fact, state
courts in many common law jurisdictions frequently facilitate
settlement, which may go as far as conducting caucuses.78 Thus, the
argument that settlement facilitation is incompatible with the
arbitrator’s judicial role does not reflect judicial reality in many
jurisdictions. Rather, it is a hallmark of civil procedure rules around
the world that it is part of the judge’s mandate to help the parties
before him or her to arrive at a settlement.
Another concern some have in regard to settlement facilitation is
that arbitrators might abdicate their mandate to decide the parties’
case by using settlement between the parties as a short cut.79 They
fear that parties may feel coerced into settling even though they
would prefer an award.80 Of course, arbitrators “should never give the
impression to the parties that they are more interested in the parties
engaging into a settlement agreement than they are to decide the
dispute through a final award.”81 An arbitrator employing settlement
facilitation as a way to enhance the efficiency of the proceedings must
be very conscious of the parties’ wants and needs. Under no
circumstances should the arbitrator force settlement negotiations upon
parties who are not interested in them. But as long as the arbitral
tribunal obtains the “informed consent” of the parties prior to taking
any settlement facilitation measures,82 there is no room for the
concern that the measure is forced upon them. In any case, this
concern is met by the opposing observation that some arbitrators do
not facilitate settlement simply because they cannot or do not want to
sacrifice the hours of arbitrating that an early settlement would
At the end of the day, whether settlement facilitation is
compatible with the hybrid nature of the arbitrator’s mandate comes
down to a simple question: where is the harm of providing it, if (a)
this is what the parties want in a given case; (b) their legitimate
expectations with respect to the scope of the tribunal’s initiative are
met; and (c) their mandatory due process rights are preserved? Just as
party autonomy allows the parties to tailor their dispute, the
contractual nature of arbitration allows them to shape the arbitrator’s
mandate. This makes the arbitrator’s mandate a flexible creature, to a
large part defined by what parties want it to be. If the parties require
active involvement by an arbitrator in their settlement efforts,
settlement facilitation becomes part of the arbitrator’s mandate.
Indeed, as party expectations change and develop,84 the general
concept of the arbitrator’s mandate may evolve accordingly.85 In light
of the civil procedure rules outlined above, it is not surprising that
“there is generally no blanket prohibition even in [common law]
systems against arbitrators proposing settlement of the parties’
dispute.”86 Quite to the contrary:
Many arbitrators, arbitration practitioners and scholars are now
recognizing that the traditional paradigm of the arbitrator as
single-minded adjudicator must be refined to incorporate a
broader concept of the arbitral role, including active case
management at all stages of the proceeding, early resolution of
82. Cf. IBA, IBA GUIDELINES ON CONFLICTS OF INTEREST IN INTERNATIONAL
ARBITRATION 11 (2014) (“Informed consent by the parties to such a process prior to its
beginning should be regarded as an effective waiver of a potential conflict of interest.”).
83. Cf. Stipanowich & Ulrich, supra note 2, at 7.
84. See supra Part III.
85. Cf. Agrimex Ltd v Tradigrain SA  EWHC 1656 (Comm), para 31.
86. BORN, INTERNATIONAL COMMERCIAL ARBITRATION, supra note 59, at 2007.
some or all issues, and activities that set the stage for
This broad understanding of the arbitrator’s judicial role is now
acknowledged in many modern arbitration laws,88 arbitration rules89
and soft law instruments90. These laws and rules explicitly endow the
arbitral tribunal with the power to facilitate settlement, should the
parties require it. Particularly noteworthy in this regard are the CEDR
Rules, which provide a transnational standard and have already
received a good amount of attention by commentators.91 Significant
are also the changes made to the UNCITRAL Rules of Organizing
Arbitral Proceedings. These Notes restate the current practice of
conducting international arbitrations and reflect the views of the civil
and common law practitioners who were part of the Working Group
preparing the Notes. While the 1996 version of these Notes merely
stated that “[a]ttitudes differ as to whether it is appropriate for the
arbitral tribunal to bring up the possibility of settlement”,92 the
updated 2016 version now acknowledges that “[i]n appropriate
circumstances, the arbitral tribunal may raise the possibility of a
87. Stipanowich & Ulrich, supra note 2, at 29; cf. Elsing, Procedural Efficiency in
International Arbitration, supra note 64, at 118 (“Th[e] objections raised against the
involvement of arbitrators in settlement attempts cannot, and must not, prevail over the
obvious advantages that emphatic promotion of settlements brings, in particular, time and cost
efficiency and greater acceptance by the parties.”).
88. The Arbitration and Conciliation Act, 1996, No. 26 of 1996 (India), Section 30(1)
(“It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage
settlement of the dispute”); [Japanese Arbitration Law], Law No. 138 of 2003, art. 38(
(Japan) (“An arbitral tribunal or one or more arbitrators designated by it may attempt to settle
the civil dispute subject to the arbitral proceedings, if consented to by the parties”); Art. 1043
Dutch Arbitration Law 2015 (“at any stage of the proceedings the arbitral tribunal may order
the parties to appear in person for the purpose of attempting to arrive at a settlement”); the
arbitration laws of Singapore and Hong Kong are to the same effect. See supra note 31.
89. Schiedsgerichtsordnung [DIS] [Arbitration Rules], July 1, 1998, DIS Rules, Section
32(1); Court of Innovative Arbitration [CoIA], October 1, 2015, CoIA Rules, Section 13(
90. CEDR RULES; Canon IV (F) AAA CODE OF ETHICS 2004; Art. 8 IBA RULES OF
91. Cf. Nappert and Flader, supra note 2; Draetta, supra note 2, at 495 n.7; Ehle, supra
note 2, at 86–87; Elsing, Procedural Efficiency in International Arbitration, supra note 64 at
118; Greenwood, supra note 2, at 206–07; Stipanowich & Ulrich, supra note 2 at 1 fn 4;
Andrey Panov & Sherina Petit, Amicable Settlement in International Arbitration, in THE
EUROPEAN, MIDDLE EASTERN AND AFRICAN ARBITRATION REVIEW 2015 (GAR ed., 2015).
92. UNCITRAL, UNCITRAL NOTES ON ORGANIZING ARBITRAL PROCEEDINGS 1996
12 para. 47 (1996), http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1996Notes_
settlement between the parties.”93 Though this is still a rather cautious
approach, it reflects the general perception that the arbitrator’s
judicial mandate is, in principle, compatible with becoming involved
in the parties’ settlement efforts.
In light of all these considerations, an arbitrator should no longer
be viewed as a one-dimensional decision-maker. Rather:
An arbitrator, is an arbitrator, is an arbitrator, whose function it
is, not merely to adjudicate the dispute, but also to help resolve it
amicably with the co-operation of the parties. . . . ‘Arbitration’
must never be considered as excluding from its purview the
settlement of a dispute before the arbitrator: because this is of the
essence of the spirit of arbitration.94
Thus, whether arbitrators may facilitate settlement between the
parties is not the decisive question anymore. The decisive question is
how specifically international arbitrators may be involved while at the
same time complying with the judicial part of their mandate to
safeguard due process between the parties. This is what the following
section is concerned with.
V. AVAILABLE TOOLS FOR THE FACILITATION OF
This last section will address certain methods and techniques
international arbitrators can employ at different stages of the
arbitration to facilitate settlement between the parties. Along the
arbitrator role continuum,95 the present section will consider the
concerns opponents of settlement facilitation may have regarding the
parties’ due process rights. It is hoped that thus, regardless of their
cultural background, international arbitrators will acknowledge that
settlement facilitation can provide valuable efficiency without
sacrificing due process.
93. UNCITRAL, UNCITRAL NOTES ON ORGANIZING ARBITRAL PROCEEDINGS 2016
12 para. 72 (2016),
94. Nariman, The Spirit of Arbitration, supra note 58, at 267 (emphasis in original).
95. See supra Part II.
A. Mentioning settlement to the parties
Most arbitrators agree that, at any stage of the proceedings, they
can suggest that the parties may attempt a settlement.96 For some
arbitrators, this has become a routine question at the initial case
management meeting. Arbitrators opposing even mentioning
settlement at this stage of the proceedings assume that parties are
sophisticated enough to negotiate a settlement without the arbitrator
making them aware of that option.97 Their approach is based on the
assumption that parties do not want to waste more time and money on
settlement attempts. Rather, they seek a definitive outcome of their
dispute. Neither will they be interested in saving their business
relationship as they would not have initiated arbitration if that
relationship could be saved. This makes those arbitrators reluctant to
even mention settlement to the parties.
Indeed, whether mentioning settlement facilitation to the parties
makes sense may well depend on what the parties have been through
before they have initiated arbitration. If they have already
unsuccessfully completed several steps of an escalation clause and/or
tried to mediate the dispute, there is less chance that they will be
interested in settlement facilitation. In all other cases, there is little
that speaks against at least mentioning the possibility of settlement to
B. Providing an early neutral evaluation
A technique that is not immediately aimed at bringing about a
settlement, but often leads to it, is providing an early neutral
evaluation. In an early neutral evaluation, the arbitral tribunal shares
its preliminary views on the entire case or individual issues with the
parties at an early stage of the proceedings. This allows the parties to
tailor their submissions to what the arbitral tribunal considers the
crucial points of the case and can thus help to expedite the
proceedings considerably. In addition, once the parties know the
arbitral tribunal’s tendency in regard to specific issues, settlement
efforts are usually more successful as each party is aware of the
strengths and weaknesses of its case.98 This is reflected in one Swiss
96. See supra note 17.
97. See supra notes 14-15.
98. Cf. Kaufmann-Kohler, supra note 2, at 188.
I think that it is helpful after the first or second exchange of
briefs, that you sit together with the parties and that the
arbitrators—but generally only if the parties agree to it—present
their preliminary opinions on the basis of the evidence that has so
far been produced ... I call them preliminary views conferences.99
This approach has also been adopted in the CEDR Rules. Art. 5
(1.1) CEDR Rules allows the tribunal to:
provide all Parties with the Arbitral Tribunal’s preliminary views
on the issues in dispute in the arbitration and what the Arbitral
Tribunal considers will be necessary in terms of evidence from
each Party in order to prevail on those issues.100
Before the arbitrators provide their preliminary views, it is
essential to obtain all parties’ consent.101 Under no circumstances may
the arbitral tribunal’s views be imposed upon a party that, for
whatever reasons, does not want to hear them. Even with such
consent, some arbitrators are hesitant to provide an early neutral
evaluation. For example, Chinese arbitrators, known for their
traditional sympathy for settlement facilitation, do not provide an
early evaluation “because they consider that expressing an opinion on
the outcome would be improper and would put their impartiality in
jeopardy.”102 Other international arbitrators have similar concerns:
As one put it, if the arbitrators were to share their preliminary
opinions on any point of fact or law: “In my view you could
overturn the award. You can’t indicate that you’ve made up your
mind until the end of the arbitration.” Another interviewee, a
former judge, said: “You have to be careful because you don’t
know enough about the case, you have to do it very cautiously. I
came closest to it as a judge, and people then say ‘He made up
his mind against us.’”103
These concerns about the appearance of bias are overrated. An
early neutral evaluation does not lead to the arbitrator making up his
or her mind before the conclusion of the case. Rather, arbitral
decision-making is a long and continuous process.104 Having
indicated their preliminary views to the parties at a certain point in
99. KARTON, supra note 3, at 107.
100. Cf. Art. 2 (3) IBA RULES OF EVIDENCE, supra Part II.
101. Schneider, supra note 2, at 76.
102. Kaufmann-Kohler, supra note 2, at 197.
103. KARTON, supra note 3, at 106; cf. Gill, supra note 2, at 159.
104. Schneider, supra note 2, at 76; cf. FROITZHEIM, supra note 21, at 668.
time during the proceedings will not deter international arbitrators
from arriving at diametrically opposed final conclusion in the award
in case a thorough review of all submissions and evidence so requires.
Nevertheless, to avoid any appearance of bias, arbitrators should
expressly reserve their right to reconsider their position and make it
very clear to the parties that the arbitral tribunal is still open to all
submissions and views after having provided an early evaluation.105
In addition, arbitrators should obtain a waiver from each party of its
right to challenge the impartiality of the arbitrators due to them
providing an early neutral evaluation if settlement fails and the
proceedings continue. If these safeguards are in place, there is no
reason for concern regarding the parties’ due process rights in
connection with an early neutral evaluation.
Finally, a practical concern about early neutral evaluation by
international arbitrators may be that it is too early for the arbitral
tribunal to have thoroughly reviewed the case file: “the principal risk
for an arbitrator [providing preliminary views] is not the appearance
of bias or pre-judgment but the revelation of the arbitrator’s ignorance
of the [f]ile.”106 Such considerations may well lead some arbitrators
not to suggest an early neutral evaluation. However, the perceived
extra-effort of reviewing the case file at an early point in the
arbitration should not be misunderstood as wasted time if the parties
do not reach a settlement. Quite to the contrary, an early evaluation of
the issues at stake is an ideal way to take charge of the process and
may be critical for streamlining the proceedings and providing a
bespoke procedure for the individual dispute.107 Thus, if an early
evaluation does not lead to settlement, it will in any case greatly assist
the parties and the tribunal to focus on the key issues at stake.
C. Conducting a settlement conference
A measure that is more directly aimed at facilitating settlement
than an early neutral evaluation is a settlement conference between
the arbitral tribunal and the parties. Often, such settlement
conferences are referred to as the “Germanic” approach to facilitating
105. Ehle, supra note 2, at 82; Schneider, supra note 2, at 76.
106. Schneider, supra note 2, at 76 (quoting Alain Hirsch).
107. Berger & Jensen, Due Process Paranoia and the Procedural Judgment Rule, supra
note 1, at 431.
settlement.108 Section 32.1 DIS Rules 1998 serves as a proxy for this
approach.109 It states that “[a]t every stage of the proceedings, the
arbitral tribunal should seek to encourage an amicable settlement of
the dispute or of individual issues in dispute.” This provision is rooted
in Section 278 (1) German Code of Civil Procedure which includes a
similar provision for state court judges.110 To better understand its
significance, three points deserve mentioning. First, the reference to
“every stage of the proceedings” means that it is a continuing task of
the arbitral tribunal to evaluate the case and propose a settlement
conference whenever it considers the moment to be right. Second,
Section 32.1 DIS Rules 1998 is not formulated as an obligation
(“should” rather than “shall”). It thus makes settlement facilitation a
nobile officium of the arbitral tribunal, while at the same time
protecting the arbitrators against the accusation of partiality if they act
under the provision.111 Finally, that the arbitral tribunal should “seek
to encourage” settlement means that a settlement conference must not
be imposed on the parties against their will. Nevertheless, some
understand this requirement as “empowering the arbitral tribunal to
present propriu motu its own settlement proposals” without the need
“to obtain the parties’ approval in advance.”112 That understanding is
in line with the fact that, in many cases, Section 32.1 DIS Rules 1998
only reflects the parties’ pre-existing expectations.113 However, there
will always be parties that are either not familiar with settlement
conferences or who have their reasons for not wanting them in a given
case. Thus, before conducting a settlement conference, arbitral
tribunals must always—and in practice usually do—obtain the
parties’ express consent to this process, including under Section 32.1
DIS Rules 1998.114
In the settlement conference, the arbitral tribunal explores and
discusses the chances for and the possible content of a settlement
agreement with the parties in a dialectic and interactive process.
108. Raeschke-Kessler, The Arbitrator as Settlement Facilitator, supra note 2, at 525;
Berger, Promoting Settlements in Arb., supra note 2, at 46.
109. See DEUTSCHE INST. FÜR SCHIEDSGERICHTSBARKEIT, ARBITRATION RULES
(1998), sec. 32.1, available at http://www.disarb.org/en/16/rules/dis-arbitration-rules-98-id10.
110. Cf. supra note 70.
111. See ELSING, ARBITRATION IN GERMANY, supra note 54, at 3; see also Favalli &
Hasenclever, supra note 2, at 22.
112. Elsing, Procedural Efficiency in International Arbitration, supra note 64, at 118.
113. See ELSING, ARBITRATION IN GERMANY, supra note 54, at 1.
114. See id. at 3.
Often, the party-appointed arbitrators play an important role in these
discussions because a party may be more likely to understand (and
accept) the arguments of the tribunal if they are presented to it by the
arbitrator it has appointed.115 The ideal result of such a conference is a
settlement agreement concluded by the parties, either with the
assistance of the arbitral tribunal or outside the hearing room.
Significantly, despite their common-law origin, the CEDR Rules
also adopt this “Germanic” approach in Art. 5 (1):
Unless otherwise agreed by the Parties in writing, the Arbitral
Tribunal may, if it considers it helpful to do so, take one or more
of the following steps to facilitate a settlement of part or all of the
1.2. provide all Parties with preliminary non-binding
findings on law or fact on key issues in the arbitration;
1.3. where requested by the Parties in writing, offer
suggested terms of settlement as a basis for further
1.4. where requested by the Parties in writing, chair one or
more settlement meetings attended by representatives of the
Parties at which possible terms of settlement may be
The main concern about such settlement conferences is that
arbitrators make themselves vulnerable to challenges. A settlement
proposal may be regarded as a sign of bias towards one party, as such
a proposal will usually point out a weakness in at least one party’s
case.117 However, actual bias because of a participation in settlement
conferences is very infrequent.118 Indeed, anecdotal evidence suggests
that instances in which parties divulge sensitive information during
settlement negotiations which they have not presented in their
submissions are “extremely rare.”119 In any case, this concern can be
rebutted by acquiring all parties’ consent before conducting a
settlement conference. If all parties give their informed consent and
waive any right to challenge the arbitral tribunal because of its
participation in a settlement conference, the parties are barred from
any challenges on these grounds.120
Under the DIS Rules, such a waiver may be dispensable as the
existence of Section 32 DIS Rules 1998 already protects the
arbitrators against any challenges.121 A waiver may also be
dispensable where the DIS Rules do not apply, but the seat of the
arbitration is in Germany. Even without an express waiver of the right
to challenge an arbitrator, German courts have repeatedly denied
challenges because of an arbitrator’s involvement in a settlement
conference to which the parties had previously consented:
The fact that an arbitrator has participated in settlement
negotiations with the parties and has supported a settlement
proposal which is far away from the expectations of the party that
challenges him, does not justify, in and of itself, doubts as to his
independence and impartiality. Rather, from the perspective of a
reasonable party, this would be the case only if that party could
have the legitimate impression that the conduct of the arbitrator is
based on bias or arbitrariness. If a settlement shall be reached
during settlement negotiations, the arbitrator must be granted
considerable leeway for his [or her] own proposals. The
considerations which the arbitrator makes in such a context must
not be regarded as final determinations of the legal issues at
stake, but as mere thought-provoking impulses for the parties’
settlement negotiations. If one of the parties discovers errors in
the tribunal’s arguments and proposals, it may always argue
against them and reject a settlement based on those arguments or
proposals and may, through further submissions and motions for
the taking of evidence, try to make the arbitrators change their
120. See Kaufmann-Kohler, supra note 2, at 198; see also Theune, supra note 68, at 263;
Berger, Promoting Settlements in Arb., supra note 2, at 47.
121. ELSING, ARBITRATION IN GERMANY, supra note 54, at 3; Favalli & Hasenclever,
supra note 2, at 3-4.
122. Oberlandesgericht [OLG][Highest Regional Court] Jan. 3, 2008, ZEITSCHRIFT
SCHIEDSVERFAHREN [SCHIEDSVZ]102, 104, (2008) (Ger.) (authors’ translation; citations
omitted); cf. Oberlandesgericht [OLG][Highest Regional Court] Apr. 27, 2006, ZEITSCHRIFT
SCHIEDSVERFAHREN [SCHIEDSVZ]329, 331, (2006) (Ger.).
In all other cases, the significance of obtaining such a waiver is
expressed in the official explanation of General Standard 4 (d) of the
IBA Guidelines on Conflict of Interest 2014:
[T]he arbitrator should receive an express agreement by the
parties that acting in such a manner shall not disqualify the
arbitrator from continuing to serve as arbitrator. Such express
agreement shall be considered to be an effective waiver of any
potential conflict of interest that may arise from the arbitrator’s
participation in such process or from information that the
arbitrator may learn in the process. If the assistance by the
arbitrator does not lead to final settlement of the case, the parties
remain bound by their waiver.123
Indeed, in light of the ever-increasing number of challenges and
the misuse of that right by some parties,124 the arbitral tribunal should
always obtain the parties’ informed consent and waiver of any
challenges connected to the tribunal’s settlement efforts before it
conducts a settlement conference. Once this consent and the waiver
are obtained, there is nothing that would speak against conducting a
D. Using mediation techniques, in particular caucusing
Finally, at the far end of the arbitrator role continuum is the use
of tools borrowed from mediation.126 The classic example is
caucusing.127 Caucusing is the most controversial settlement
facilitation technique on the arbitrator role continuum. As caucusing
occurs in the arbitration itself, not as a separate Arb-Med or
ArbMed-Arb process,128 the parties’ due process rights are in full force.129
Of particular concern in regard to caucusing is the parties’ right to be
heard. If the arbitral tribunal holds private sessions and listens to what
one party has to say in the absence of the other, that party may reveal
facts to the members of the tribunal the other party is unable to
rebut.130 Such an ex parte conversation is a textbook example for a
violation of the right to be heard and usually constitutes a ground to
vacate the award.131
Some are of the opinion that this concern can be alleviated by
obtaining all parties’ consent that caucusing may be conducted:
Since flexibility is the main advantage of the arbitral process,
separate meetings with the parties should therefore not be
definitely ruled out, for example in order to overcome final
obstacles in the way of a settlement. Any initiative for unilateral
caucusing during settlement negotiations in which the arbitral
tribunal participates should come from the parties and all parties
have to agree on this method.132
Indeed, if it is true that the parties are free to shape the
arbitrator’s mandate in any way they see fit,133 why should party
autonomy not allow them to contract out of their right to be heard and
validly agree that the arbitral tribunal may conduct caucuses?
This is where the second prong to the arbitrator’s mandate comes
into play, namely his or her judicial mandate to safeguard the parties’
mandatory due process rights. In light of the paramount importance of
the parties’ right to be heard as a core due process (or natural justice)
right, it is doubtful whether state courts would confirm an agreement
to waive the right to be heard. Indeed, courts have been hesitant in
allowing parties to waive other due process rights. In the famous
Dutco case, for instance, the French Cour de Cassation has declared
that parties cannot waive their right to each select an arbitrator.134
Similarly, the Ninth Circuit Court of Appeals has held that mandatory
provisions, such as the parties’ right to a judicial review of the arbitral
award in set aside proceedings, cannot be waived by party
agreement.135 However, both courts have emphasized that this only
applies to waivers in the parties’ arbitration agreement, i.e. before the
dispute has arisen. Since the question of caucusing usually only
comes up in regard to settlement facilitation when the arbitration is
already on the way, it may be possible for parties to waive their right
to be heard in that respect and provide their informed consent to
conduct caucuses. Indeed, when confronted with a specific situation
in which the arbitral tribunal considers caucusing key to arriving at an
amicable solution, the parties are in a position to determine the
specific impact of a waiver of their right to be heard in exchange for
the increased possibility that they achieve a settlement.
However, caucusing also raises concerns regarding the
arbitrator’s impartiality (the second core natural justice requirement).
It is the purpose of a caucus session that parties feel free to disclose
information they otherwise would not have revealed. Accordingly, the
arbitrator will learn facts in caucusing which are not contained in the
case file of the arbitration.136 In some cases, these facts may indicate a
different outcome to what the case file would require. While the
arbitrator will be conscious to ignore all information obtained in
caucusing when deciding on the merits, there is a non-negligible risk
that the arbitrator will not be able to entirely exclude these facts from
his or her intellectual decision-making process.137 This risk alone
suffices to create the appearance of bias. Therefore, caucusing should
be avoided even if all parties’ consent has been obtained.138 This is in
135. In re: Wal-Mart Wage and Hour Employment Practices Litigation 737 F.3d 1261
(9th Cir. 2013).
136. Raeschke-Kessler, The Arbitrator as Settlement Facilitator, supra note 2, at 525;
Ehle, supra note 2, at 83; Elsing, Procedural Efficiency in International Arbitration, supra
note 64, at 118; cf. Gill, supra note 2, at 158–159.
137. The influence of the unconscious on arbitral decision-making has been discussed to
a considerable extent. See, e.g., Christopher R. Drahozal, Behavioral Analysis of Arbitral
Decision Making, in TOWARDS A SCIENCE OF INTERNATIONAL ARBITRATION: COLLECTED
EMPIRICAL RESEARCH 319–337 (Christopher R. Drahozal & Richard W. Naimark eds., 2005);
Lucy Reed, The 2013 Hong Kong International Arbitration Centre Kaplan Lecture: Arbitral
Decision-Making: Art, Science or Sport?, 30 J. INT’L ARB. 85–99 (2013); Edna Sussman,
Arbitrator Decision-Making: Unconscious Psychological Influences and What You Can Do
About Them, 24 AM. REV. INT’L ARB. 487–514 (2013); Rebecca K. Helm, Andrew J. Wistrich
& Jeffrey J. Rachlinski, Are Arbitrators Human?, 13 J. EMPIRICAL L. STUD. 666–692 (2016).
138. Kaufmann-Kohler, supra note 2, at 204; Berger, The International Arbitrator’s
Dilemma, supra note 6, at 224.
line with the CEDR Rules which state in Art. 5 (2.1) that “[t]he
Arbitral Tribunal shall not meet with any Party without all other
Parties being present.” Fortunately, the prohibition of caucusing does
not constitute a real threat to the success of arbitrators’ initiatives to
foster a settlement between the parties as the success rate of the other
methods on the arbitrator role continuum is already high.139
For more than fifty years, there has been a debate whether it is
appropriate for international arbitrators to facilitate settlement. The
recent tectonic shift in the dispute resolution landscape towards more
collaborative methods of ADR suggests that now the time has come
to put that debate to bed and embrace settlement facilitation as an
efficient way to end the parties’ dispute. The growing interest in
resolving disputes amicably puts international arbitrators at a
crossroads. Either provide what the parties require and offer
settlement facilitation within the limits of the parties’ legitimate
expectations and due process rights – or lose them to competitive
alternatives such as mediation, conciliation and similar collaborative
methods of ADR. In terms of settlement facilitation, there is no reason
to bow down and leave the field to these “alternatives to the
alternative.” While it is true that, first and foremost, it is the
arbitrator’s mandate to decide the parties’ dispute, that mandate is not
limited to decision-making. Rather, settlement facilitation has become
a genuine additional part of the modern arbitrator’s mandate. In line
with that change, most practitioners have overcome the common
law/civil law divide. They facilitate settlement where the parties and
the case so require – regardless of their cultural background and legal
upbringing. This is reflected in the CEDR Rules which, it is hoped,
will grow to become the “IBA Rules of Evidence” for settlement
facilitation by international arbitrators. It is also reflected in a show of
hands at the Fordham International Arbitration and Mediation
Conference 2016, which has indicated that a surprising number of
common law practitioners do see a role for international arbitrators in
the facilitation of settlement in international arbitration proceedings.
Today, it seems to be understood that the preferable approach,
also in this area of international arbitration law, is pragmatic rather
than dogmatic. The question is not whether arbitrators should or
139. Raeschke-Kessler, The Arbitrator as Settlement Facilitator, supra note 2, at 535.
should not facilitate settlement from a conceptual point of view. It is
how they can best assist the parties to resolve their dispute: either by
rendering a final award or assisting them in achieving a negotiated
settlement if and to the extent that they so wish. Hence, techniques to
facilitate settlement of the dispute should belong to the arsenal of
every international arbitrator in order to diversify the services which
the arbitration community is able to provide to its users.
4. A prominent example is the success of the IBA Rules on the Taking of Evidence in International Commercial Arbitration 2010 . INT'L BAR ASS'N [“ IBA ”], IBA RULES ON THE TAKING OF EVIDENCE IN INTERNATIONAL ARBITRATION ( 2010 ), available at http://www.ibanet.org/Publications/publications_IBA_ guides_and_free_materials .aspx.
5. Albert Jan van den Berg, Organizing an International Arbitration: Practice Pointers, in LEADING ARBITRATORS' GUIDE TO INTERNATIONAL ARBITRATION 415 ( Lawrence W. Newman & Richard D. Hill eds., 3d ed. 2014 ).
6. Donald Francis Donovan , The International Arbitrator as Transnational Judge, 7 WORLD ARB. & MED . REV. 193 , 198 ( 2013 ) ; cf. Klaus Peter Berger, The International Arbitrator's Dilemma: Transnational Procedure versus Home Jurisdiction - A German Perspective, 25 ARB . INT'L 217-38 ( 2009 ).
7. See infra Part II.
8. See infra Part III.
9. See infra Part IV.
10. See infra Part V.
11. Cf . Ehle, supra note 2, at 83; Berger, The International Arbitrator's Dilemma, supra note 6 , at 223; Berger, Promoting Settlements in Arb., supra note 2 , at 46.
12. Cf . Mariott, supra note 2, at 533-37; Ehle, supra note 2, at 79; Draetta, supra note 2, at 487-91; Berger, Promoting Settlements in Arb., supra note 2 , at 46-47.
13. See Hwang, supra note 2 at 572.
14. Leonard L. Riskin , Understanding Mediator's Orientations, Strategies and Techniques: A Grid for the Perplexed, 1 HARV . NEGOT L. REV. 7 , 9 ( 1996 ) (“[A]lmost every conversation about mediation suffers from ambiguity, a confusion of the 'is' and the 'ought .'”).
15. See generally KLAUS PETER BERGER , PRIVATE DISPUTE RESOLUTION IN INT'L BUS.: NEGOTIATION , MEDIATION , ARB. 11 - 25 (3d ed. 2015 ).
24. Id . at art. 5 ( 1 .3).
25. Schneider , supra note 2 , at 90.
26. BERGER, PRIVATE DISPUTE RESOLUTION supra note 15 , at 12-3.
27. See infra Section V.D.
29. See Dona Ross , Med-Arb/ Arb-Med: A More Efficient ADR-Process or an Invitation to a Potential Ethical Disaster?, in CONTEMPORARY ISSUES IN INTERNATIONAL ARBITRATION AND MEDIATION: THE FORDHAM PAPERS 2012 352, 359 (Arthur W. Rovine ed., 2013 ); Edna Sussman, Developing an Effective Med-Arb/Arb-Med Process, 2 NY DISP . RES. L. 71 , 72 ( 2009 ).
30. BERGER, PRIVATE DISPUTE RESOLUTION supra note 15 at 15-11.
31. See , e.g., Arbitration Ordinance , ( 2014 ) Cap. 609 , 13 , Section 33 ( 1 ) (H.K .) (“If all parties consent in writing, and for so long as no party withdraws the party's consent in writing, an arbitrator may act as a mediator after the arbitral proceedings have commenced .”); Singapore International Arbitration Act ( Cap 143A , 1994 ), Section 17 ( 1); The Arbitration and Conciliation Act , 1996 , No. 26 of 1996 (India), Section 30 ( 1) (“[W]ith the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement .”).
32. See Dilyara Nigmatullina , The Combined Use of Mediation and Arbitration in Commercial Dispute Resolution: Results from an International Study , 33 J. INT'L ARB . 37 ( 2016 ).
33. See Ross , Med-Arb/Arb-Med, supra note 29; cf. Stipanowich & Ulrich, supra note 2 , at 10, 25 - 28 .
38. Cf. Klaus Peter Berger & J. Ole Jensen , It Takes Pressure to Form Diamonds: The Changing Landscape of Dispute Resolution and Its Implications for International Arbitration, KLUWER ARB . BLOG (May 23 , 2016 ), http://www.kluwerarbitrationblog.com/ 2016 /05/23/.
39. See GLOBAL POUND CONFERENCE, http://www.globalpoundconference. org [hereinafter GPC].
40. See Cumulated Data Results: March to December 2016 , GLOBAL POUND CONFERENCE 2016 - 17 , http://www.globalpoundconference.org/Documents/Aggregated%20 Data% 20Report%20GPC_28Dec.pdf (showing the aggregated results of 2016 ).
41. The conferences that have taken place in 2016 were the GPCs in Singapore (March 17-18, 2016 ), Lagos (June 30 , 2016 ), Mexico City ( August 29 , 2016 ), New York ( September 12 , 2016 ), Geneva (September 29 , 2016 ), Toronto ( October 15 , 2016 ) and Madrid (October 20, 2016 ).
42. See GPC , supra note 39, at 13. Session 1, Question 4 : “ What role do parties involved in commercial disputes want providers to take in the dispute resolution processes?”
43. Id . That option received a total popularity ranking of 63%, followed by “[t]he providers decide on the process and the parties decide how the dispute is resolved” (38%) and “[t]he parties decide how the process is conducted and how the dispute is resolved (the providers just assist)” (34%) .
54. SIEGFRIED H. ELSING , ARBITRATION IN GERMANY 690-92 ( Karl-Heinz Böckstiegel , Stefan Michael Kröll, & Patricia Nacimiento eds., 2d ed. 2015 ).
55. Kaufmann-Kohler, supra note 2 , at 196.
56. Stipanowich & Ulrich, supra note 2, at 28-29.
57. See supra note 37.
58. See Berger & Jensen, It Takes Pressure to Form Diamonds, supra note 38; cf. Fali S. Nariman, The Spirit of Arbitration: The Tenth Annual Goff Lecture, 16 ARB. INT'L 261 , 267 ( 2000 ) (“[U]ntil the resolution of a dispute by settlement is considered once again to be a constituent function of arbitration, ADR will take over and displace it as a pragmatic and workable alternative .”).
59. JULIAN D. M. LEW , LOUKAS A. MISTELIS & STEFAN M. KRÖLL , COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 5-26 ( 2003 ) (“The mixed or hybrid theory has become the dominant world-wide theory as elements of both the jurisdictional and the contractual theory are found in modern law and practice of international commercial arbitration.”); cf . GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 1991 (2d ed. 2014 ) ; FOUCHARD, GAILLARD, GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION 1122 (Emmanuel Gaillard & John Savage eds., 1999 ).
60. Cf . RG, Judgment of 29 November 1904  RGZ 59 , 247 , 249; Jivraj v. Hashwani  UKSC 40 , [para. 41] (appeal taken from EWCA) .
61. Cf . Jan Schäfer, The Arbitrator as a Private Judge, in WALKING A THIN LINE: WHAT AN ARBITRATOR CAN DO, MUST DO OR MUST NOT DO: RECENT DEVELOPMENTS AND TRENDS 19 , 22 (Guy Keutgen ed., 2010 ).
62. Ehle , supra note 2; cf. YVES DEZALAY & BRYANT G. GARTH, DEALING IN VIRTUE: INTERNATIONAL COMMERCIAL ARBITRATION AND THE CONSTRUCTION OF A TRANSNATIONAL LEGAL ORDER 40 n . 17 ( 1996 ) (“Pierre Lalive . . . hardly ever decided a case. They would all be settled at some point. And that takes a lot of skill . . . from the chairman .”).
63. Hwang , supra note 2 at 571; Collins, supra note 2 at 343; cf. Abramson, supra note 2 at 2.
64. Draetta , supra note 2 at 493; Siegfried H. Elsing , Procedural Efficiency in International Arbitration: Choosing the Best of Both Legal Worlds, GER . ARB. J. (SCHIEDSVZ) 114 - 23 , 117 - 18 ( 2011 ); BORN, INTERNATIONAL COMMERCIAL ARBITRATION, supra note 59 , at 2007 ; FROITZHEIM, supra note 21, at 665; cf. McIlwrath, supra note 37 , at 908.
65. Berlin event considers arbitrator and counsel ethics , GLOBAL ARB. REV. (Oct. 17 , 2016 ), http://www.globalarbitrationreview.com/article/1069407/berlin-event -considersarbitrator-and-counsel-ethics.
66. Collins, supra note 2, at 343; BORN, INTERNATIONAL COMMERCIAL ARBITRATION, supra note 59 , at 2006; Catherine A . Rogers & Jeffrey C. Jeng , The Ethics of International Arbitrators, in LEADING ARBITRATORS' GUIDE TO INTERNATIONAL ARBITRATION 175 , 204 - 05 (Lawrence W. Newman & Richard D. Hill eds., 3d ed. 2014 ) ; cf. JEFFREY WAINCYMER, PROCEDURE AND EVIDENCE IN INTERNATIONAL ARBITRATION 105 ( 2012 ).
67. Cf . Stipanowich & Ulrich, supra note 2 , at 6.
68. Ulrich Theune , DIS Rules, in INSTITUTIONAL ARBITRATION: ARTICLE-BY-ARTICLE COMMENTARY 203, 262 (Rolf A . Schütze ed., 2013 ) ; cf . PATRIK SCHÖLDSTRÖM , THE ARBITRATOR'S MANDATE 324 ( 1998 ) ; LEW , MISTELIS & KRÖLL, supra note 59, at 279; BORN, INTERNATIONAL COMMERCIAL ARBITRATION, supra note 59 , at 1985 .
69. ZIVILPROZESSORDNUNG [ZPO] [ CODE OF CIVIL PROCEDURE] Section 204 ( 1), sentence 1 (Austria) (“At the oral hearing, the court may, either at the request of a party or ex officio, attempt an amicable settlement of the entire dispute or certain aspects thereof .”). (authors' translation) . This provision applies to arbitrators by analogy . Cf. Ehle, supra note 2 at 81; BORN, INTERNATIONAL COMMERCIAL ARBITRATION, supra note 59 at 2006 .
70. ZIVILPROZESSORDNUNG [ZPO] [CODE OF CIVIL PROCEDURE] , Section 278 ( 1 ), translation at https://www.gesetze -im-internet .de/englisch_zpo/englisch_zpo. html (Ger.) . (“At every stage of the proceedings, the court is to act in the interests of arriving at an amicable resolution of the legal dispute or of the individual points at issue .”).
71. SCHWEIZERISCHES ZIVILGESETZBUCH [ZGB] [CIVIL CODE] Dec. 19 , 2008 , art. 197 (Switz.) (“Litigation shall be preceded by an attempt at conciliation before a conciliation authority” .).
72. CODE CIVIL [C. CIV. ] art. 731 (Belg .).
73. CODE CIVIL [C. CIV. ] [CIVIL CODE] art. 21 (Fr .). (“To conciliate parties is part of the mandate of the judge .”).
74. CODICE CIVILE [C.C. ] art. 185 (It .).
75. DUTCH CODE OF CIVIL PROCEDURE art . 87 ( 1 ) (“The court may, at the request of the parties or one of them or ex officio, in all cases and at any stage of the proceedings, order an appearance of the parties at the hearing in order to attempt a settlement.”) (authors' translation).
76. John H. Langbein , The German Advantage in Civil Procedure , 52 U. CHI. L. REV . 823 - 66 , 831 - 32 ( 1985 ) (citations omitted).
77. See D. MARIE PROVINE , SETTLEMENT STRATEGIES FOR FEDERAL DISTRICT JUDGES ( 1986 ) ; cf . DEZALAY AND GARTH, supra note 62 , at 168 (“ The [US] judge serves as a case manager [and] settlement adviser .”).
78. Kaufmann-Kohler, supra note 2 , at 191-92; cf. Harris, supra note 2, at 89.
79. Hwang , supra note 2, at 572; Elsing, Procedural Efficiency in International Arbitration, supra note 64, at 118; Theune, supra note 68, at 262.
80. Kaufmann-Kohler, supra note 2 , at 200.
81. ELSING, ARBITRATION IN GERMANY, supra note 54, at 2.
115. Hilmar Raeschke-Kessler, Making Arbitration More Efficient: Settlement Initiatives by the Arbitral Tribunal, 30 INT'L. BUS . LAW 158 , 161 ( 2002 ); Berger, Promoting Settlements in Arb., supra note 2 , at 46.
116. See supra note 23.
117. See Bernardo M. Cremades , Overcoming the Clash of Legal Cultures: The Role of Interactive Arbitration, 14 ARB . INT'L 157 , 162 ( 1998 ); Kaufmann-Kohler, supra note 2 , at 197-98; ELSING, ARBITRATION IN GERMANY, supra note 54, at 3.
118. Elsing , Procedural Efficiency in International Arbitration, supra note 64, at 118.
119. Id .
123. IBA, supra note 82, at 10.
124. Cf . GUERRILLA TACTICS IN INTERNATIONAL ARBITRATION 33-34 (Günther J. Horvath & Stephan Wilske eds., 2013 ).
125. Kaufmann-Kohler, supra note 2 , at 198.
126. See generally Klaus Peter Berger, Integration of Mediation Elements into Arbitration: “Hybrid” Procedures and “Intuitive” Mediation by International Arbitrators, 19 ARB. INT'L 387-403 ( 2003 ) ; cf . Cremades, supra note 117, at 162; Berger, Promoting Settlements in Arb., supra note 2 at 48; Olík and Čáp, supra note 2 at 252.
127. See supra Part II.
128. Ehle , supra note 2, at 82; cf. supra Part II.
129. Berger , Promoting Settlements in Arb., supra note 2 , at 48.
130. Kaufmann-Kohler, supra note 2 , at 198; Gill, supra note 2, at 159; cf Olík and Čáp, supra note 2 , at 252.
131. NIGEL BLACKABY ET AL., REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 6 . 192 (6 ed. 2015 ); GARY B . BORN, INTERNATIONAL ARBITRATION : CASES AND MATERIALS 1236 (2 ed. 2015 ). Compare to the ex parte conversations by a partyappointed arbitrator in the maritime boundary arbitration between Croatia and Slovenia which have become known as the “Sekolec Scandal .” See Alison Ross, Poisoned Waters?, 10 GAR 5-14 ( 2015 ).
132. Raeschke-Kessler , Making Arbitration More Efficient, supra note 115 , at 161; cf. Reinmar Wolff, Verzicht auf rechtliches Gehör im Schiedsverfahren , in PRIVATAUTONOMIE UND IHRE GRENZEN IM WANDEL 171-82 , 180 ( Michael Nueber , Dominika Przeszlowska, & Michael Zwirchmayr eds., 2015 ).
133. See supra Part IV.
134. BKMI Industrienlagen GmbH & Siemens AG v. Dutco Construction, Cour de Cassation (1er Chambre Civile) , Pourvoi N ° 89 - 18708 89- 18726 , Jan. 7, 1992  Rev de l' Arb 470 ; cf Klaus Peter Berger , Schiedsrichterbestellung in Mehrparteienschiedsverfahren: Der Fall “ Dutco Construction” vor französischen Gerichten , RIW 702-07 , 703 ( 1993 ).