The U.S Government has today again raised the estimate of the amount of oil spilling into the Gulf of Mexico. The estimated rate now stands at 60,000 barrels per day. As of yet, there are no estimates of the cost of the flood of litigation to follow.
Perhaps in an effort to stave off some claims, BP has declared on its website that:
Appointing an Independent Mediator is a recognized practice to strengthen claims processes and resolve disputes. BP is working to appoint the best possible person to fill this important role.
In those cases in which a claimant and BP cannot agree on resolution of a claim, the claimant can seek review from the Independent Mediator. The Independent Mediator then will make an advisory decision on the claim.
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- If the claimant feels the advisory decision is unreasonable, he or she retains all rights under OPA either to seek reimbursement from the Oil Spill Liability Trust Fund or to file a claim in court.
- If BP feels the advisory decision is unreasonable, the company may choose not to accept it, but the claimant then may use the Independent Mediator's decision in claiming against the Oil Spill Liability Trust Fund or in a subsequent court action.
I am, obviously, all in favor of voluntary dispute resolution processes that might reduce some of the litigation costs to come from this catastrophe. But BP's "ADR" plan misses the mark and risks giving mediation undeserved bad name.
Mediation, as the term is used by everyone except apparently BP, involves (i) dialogue and negotiation between the parties with the help of an independent and impartial facilitator (or mediator) agreed upon by both parties, (ii) decision-making by the parties themselves, and (iii) confidentiality. A company may provide a list of mediators with whom it is willing to work to facilitate selection and initiation of the mediation, but a unilateral appointment of a supposed "Independent" Mediator does little to instill confidence in the fairness of the process. Further, the goal of mediation is to enable the parties to reach their own agreement on a fair settlement, not to replace their assessments of the disputes with the Mediator's "decision."
While BP's plan has nothing to do with mediation, it is akin to non-binding arbitration. Arbitration, again as commonly understood, refers to the appointment of an impartial, independent, and disinterested person (the arbitrator or neutral) to consider the parties' arguments and evidence and then decide the dispute. Again, however, a critical hallmark of, and requirement for, fairness of arbitration is the parties ability to jointly decide on who will serve as the "neutral" or arbitrator.
Finally, BPs offer of an incentive to participate in its process--the right to use the "Independent Mediator's" decision in claim in subsequent lititgation--may not be of great benefit to the claimants. Over the past twenty years, research on negotiations has shown that numbers are, in a sense, "sticky"--once a number has been thrown out, the number ultimately agreed upon by the parties will gravite to that number. If the matter ends upon in court, the "Independent" Mediator's decision will likely stand somewhere between BP's proposal and the claimant's demand. If introduced into evidence, whlle it might imply that BP has been unreasonable, it might do the same to the claimant. In the end, I suspect such decisions would work to moderate any payouts.
Perhaps I'm being too cynical, but there is little doubt that BP knows the differences between mediation, arbitration, and what it has offered. Using the term "mediation" for this process strikes me as being more about marketing than substance, and ultimately may serve only to further undermine BP's credibility.
