Hybrid Processes: Med-Arb, Arb-Med and Arb-Med-Arb

A hybrid process combines a settlement stage with an adjudicatory one, so that the parties get the chance to settle and the certainty of an outcome if they do not. The attraction is obvious. So is the difficulty: a neutral who has heard in private what one party would accept cannot fairly decide the case afterwards. Indian law has no general provision for hybrids, but Section 30 of the Arbitration and Conciliation Act, 1996 permits a tribunal to use mediation during the reference, and two statutes already require the same body to conciliate and then decide.

The three combinations, the risk they share, and the safeguards against it

1. The Three Forms

Med-arb. The parties mediate first. If the mediation fails, the dispute goes to arbitration, either before the same neutral, which is the classical form, or before a different one. The advantage is that the neutral already knows the case; the objection is that he knows too much of it.
Arb-med. The arbitration is heard in full and the award is written and sealed, but not delivered. The parties then mediate, sometimes before the same neutral, knowing that a decision already exists. If the mediation fails, the sealed award is opened and released. The knowledge that the case has already been decided is itself a strong pressure to settle.
Arb-med-arb. The arbitration is commenced and then stayed while the parties mediate before a different neutral. If they settle, the settlement is placed before the tribunal and recorded as an award on agreed terms, which makes it enforceable as an award. If they do not, the arbitration resumes. This is the model adopted in institutional protocols, and it is the safest of the three.

⚠ Why arb-med-arb is preferred

It keeps the functions in separate hands, so the objection of a compromised decision-maker does not arise. It converts a mediated settlement into an award on agreed terms, which travels under the New York Convention where an ordinary settlement does not. And it preserves the arbitration, so a party that mediates in good faith loses nothing if the other side does not.

2. The Objection of Principle

The difficulty with med-arb and with arb-med in their classical forms is structural, not a matter of the neutral's integrity. In a mediation he holds private sessions and learns what each side will accept, what it fears and where it is weak. None of that is evidence, and none of it has been tested or disclosed to the other side. If he then decides the case, the award is made by a person who has received material from one party behind the back of the other, which is precisely what Section 18 forbids and what founds a challenge under Section 34(2)(a)(iii). Section 80 of the Act, as it stood before the substitution of Part III, expressed the same rule by providing that a conciliator shall not act as arbitrator in a dispute that was the subject of the conciliation.

3. The Safeguards

Safeguard	How it works	Limitation
A different neutral	One person mediates, another arbitrates	The second neutral must learn the case afresh, which costs time
An institutional protocol	The arbitration is stayed, a separate mediator is appointed, and a settlement is returned to the tribunal for a consent award	Requires an institution and a clause adopting its rules
No private sessions	The same neutral may mediate, but only in joint session, so nothing is heard behind the back of a party	Removes the most useful technique the mediator has
Express written waiver	The parties agree in writing, after the dispute has arisen, that the neutral may continue	Cannot cure a breach of Section 18; and where the Seventh Schedule applies, the proviso to Section 12(5) sets the form
A sealed award	The award is made before the mediation begins, so nothing learned in mediation can affect it	The neutral may still be influenced in any supplementary decision, and the sequence is unfamiliar in India

4. What Indian Law Provides

Section 30 of the Arbitration and Conciliation Act, 1996. It is not incompatible with an arbitration agreement for the tribunal to encourage settlement, and with the agreement of the parties it may use mediation, conciliation or other procedures at any time during the proceedings. A settlement is recorded as an award on agreed terms. This is the statutory basis of arb-med-arb in an Indian-seated reference.
Section 18 of the MSMED Act, 2006. The Facilitation Council must conciliate and, on failure, must itself arbitrate or refer the dispute. The statute expressly displaces the objection, and the arrangement was upheld in Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods (P) Ltd., (2023) 6 SCC 193.
Section 22C(8) of the Legal Services Authorities Act, 1987. A Permanent Lok Adalat attempts conciliation and, failing agreement, decides the dispute on the merits.
The Mediation Act, 2023. Section 16 requires the mediator to act impartially and to impose nothing, and Section 17 provides that he shall not act as an arbitrator or as counsel in a proceeding on the same dispute, or be presented as a witness. A med-arb in which the same person continues is therefore contrary to the mediation statute unless the parties have displaced it.

5. Drafting a Hybrid Clause

State the sequence and the trigger for moving from one stage to the next, with a definite period for the settlement stage.
Say whether the same neutral may act at both stages. If he may, say so expressly and record the parties' informed consent; if he may not, provide how the second neutral is appointed.
Provide that a settlement reached during the arbitration shall be recorded as an award on agreed terms under Section 30, so that it is enforceable as an award.
Name the seat and the institution, since a hybrid depends on machinery to administer the change of stage.
Preserve the right to interim relief under Section 9 or Section 17 during the settlement stage, so that the mediation does not become an opportunity to dissipate assets.
Avoid a clause that makes the settlement stage a condition precedent without a period, which converts the hybrid into a device for delay.

6. Related Topics and Provisions

Topic or provision	Connection
Types of ADR Mechanisms	The hybrids among the wider family
Arbitration and Mediation Compared	The two processes a hybrid combines
MSME Conciliation and Arbitration	A statutory med-arb
The Permanent Lok Adalat	A statutory conciliation that ends in a decision
Sections 18, 30 and 34(2)(a)(iii), A&C Act, 1996	Equal treatment, settlement during arbitration and the ground of challenge
Sections 16 and 17, Mediation Act, 2023	The mediator's role, and the bar on his acting as arbitrator