Sander Gibson is a business law attorney specializing in entertainment law with Gascon & Associates LLP in Montreal, and acts as an arbitrator and mediator in entertainment and commercial matters in Canada.

In a previous edition of Playback, I examined the principal advantages and disadvantages of using traditional private commercial arbitration as an alternate method (that is, rather than court litigation) of dispute resolution in the Canadian entertainment industry.

However, there are several other methods of managing and resolving disputes, including those explained below – in increasing order of intensity of complexity, contestation and cost. These methods can also be used to help the parties overcome negotiation hurdles blocking their conclusion of new agreements.

Mediation

Also called ‘conciliation,’ mediation is both a dispute- and risk-management mechanism as well as a dispute resolution mechanism, whereby a neutral person, the mediator, is engaged to facilitate the negotiation and communication among the parties, but makes no determinative decision.

The mediator leads and structures the negotiations, and helps them brainstorm so that they themselves might create what they believe is a fair solution to their particular dispute. While the mediator’s chargeable time is a function of the complexity of the issue and the number of sessions agreed upon by the parties, his/her hourly rate is typically shared by the parties.

Mediation’s principal forms are ‘pure’ or ‘facilitative,’ and ‘evaluative,’ although many mediations combine elements of both. In facilitative mediation, the mediator helps the parties and counsel negotiate and work with each other in a manner that induces them to devise solutions to their own dispute, but does not give his/her own opinion or suggestions.

In evaluative mediation, the parties and counsel do not work together to find a solution, but rather argue their cases to the mediator, who evaluates them, questions the parties and counsel as to the strengths and weaknesses of their arguments so that they do reality checks of their positions, then tries to persuade them of his/her own non-binding solution, possibly giving them his/her opinion as to the amount that should be paid or other appropriate settlement.

Facilitative mediation is more ‘rights-based,’ whereby the mediator focuses on the parties’ legal positions, whereas evaluative mediation (also called ‘principled mediation’) is more ‘interest-based,’ whereby the mediator focuses on getting each party to understand the interests underlying, and the motivation for, the position of the others, and focuses on each party’s needs as opposed to its demands.

Through mediation, the parties might then be able to reach agreement on the disputed grant of rights, residual/royalty and net profits payments, whether consent was unreasonably withheld, and what is, or is not, a standard or customary industry practice.

Mediation is well-suited to disputes concerning the termination of key creative personnel, with or without just cause, and disputes among coproducers or shareholders concerning their rights, obligations, services and contributions. Mediators often assist volatile and widely divergent parties to conclude collective bargaining agreements with a term of several years.

A mediator can similarly do so for single-transaction or multi-stage industry agreements. The neutral’s presentation may transform stalled or terminated deal negotiations into signature of an agreement. This new agreement might well lead to a successful production, as well as a profitable ongoing relationship between a producer-distributor, producer-private investor or a producer-book or script author. The one-time cost of the neutral is thus rendered minimal.

‘Documents only’ arbitration

When the only issue is the interpretation of the contract and no witnesses need to be heard, an arbitrator may be engaged to render an award based solely upon his/her study of documentation submitted by the parties, with or without written and/or legal argument by counsel. This method is particularly cost- and time-effective for disputes about waterfall payments pursuant to a collection and disbursement agreement, deductibility of distribution expenses, pure delivery issues, completion bond coverage exclusions, and ranking of security pursuant to an inter-creditor agreement.

Equitable arbitration

If the arbitrator is either expressly appointed as an ‘amiable compositor’ or authorized to decide ex aequo bono, that is, ‘according to what is right and good,’ he/she is thereby empowered not to apply the strict letter of the law or to strictly interpret the contract, but must, of course, hold a hearing and apply the rules of natural justice. The arbitrator may then render an award based upon the principles of fairness as well as upon the spirit of the contract.

The parties’ continuing relationship may well be enhanced as a result of this process and its award. An amiable compositor may also be authorized to prospectively amend the contract, thus changing the parties’ rights and obligations on a going-forward basis. This method lends itself to such disputes as those concerning ‘droit moral’/moral rights, as well as long-existing business manager and talent agent relationships. Time, cost and win-lose risks are reduced.

An equitable arbitrator can fix the various payments for an above-scale writer agreement and the commissions payable to agents and managers for services rendered prior to termination and results thereof occurring after termination.

(This article contains general comments only. It is not intended to be exhaustive and should not be considered as advice in any particular situation.)

Bibliography

Getting To Yes – Roger Fisher and William Ury, 1991; The Arbitration Practice Handbook, Arbitration and Mediation Institute of Canada Inc., 1996; The Mediator’s Handbook – John W. Cooley, 2000; Alternative Dispute Resolution Practice Manual – Allan J. Stitt, 2003; Mediating Commercial Disputes – Allan J. Stitt, 2003; Nelson on ADR – Robert M. Nelson, 2003; Commercial Arbitration in Canada – J. Kenneth McEwan & Ludmila B. Herbst, 2004; The Arbitrator’s Handbook – John W. Cooley, 2005; La Médiation: préparer, représenter, participer – Serge Roy, Avi Schneebalg, Eric Galton, 2005; Program Book, Arbitration Training Institute, Section of Dispute Resolution, The American Bar Association, 2005.