Christian Mediation and Arbitration: How to Keep Your Church or Non-profit Out of Court

Every year, thousands of lawsuits are filed in America against churches, schools, other non-profits, and related entities. These lawsuits range from injuries on church property to disagreements over employment, from accidents on youth group trips to cases of sexual abuse. Indeed, the recently publicized sexual abuse cases and multi-million dollar settlements within the Catholic Church should warn church leaders of the risk of such cases within their own churches. Besides human suffering, churches may find themselves paying enormous damages, attorney fees and costs in the secular courts, and finding trust and attendance eroding due to the litigation and its negative ramifications. Unfortunately, courts and juries have not ruled favorably for churches and religious nonprofits; creating unwanted media attention for issues which could have been settled privately through Christian Conciliation.

This brief article will attempt to accomplish a number of related issues: (1) outline how Christian Conciliation can effectively be used for risk management and to resolve disputes within and involving churches and other religious non-profits; (2) give an overview of how Christian mediation and arbitration works and; (3) show how secular courts will accept and enforce the determinations of Christian arbitrators when such mediation/arbitration is conducted in the correct manner, according to informed consent and due process for all parties involved. Lastly, the memo will then provide some tips as to how church leaders can construct by-laws, employment contracts and handbooks, and other third-party contracts so that secular courts will defer to member covenants, clauses in employment contracts or 3rd party agreements concerning the forum and rules of resolving such disputes and uphold the results of binding Christian arbitration.

1. What is Christian Conciliation?

“Christian Conciliation” represents the formal means of resolving disputes between Christians without going to secular courts. Thus, Christian Conciliation encompasses informal and formal mediation and arbitration, as well as the use of church discipline, if appropriate. This article will concentrate on formal mediation and arbitration because these forms are most analogous to secular courts, and will be upheld by the secular judiciary. The use of Christian Conciliation stems from Biblical mandates in Matthew 18: 15 and 1 Corinthians 6:1 –8, Paul chastises the Corinthians for taking their disputes to the courts of law.) These passages give believers a wealth of insight in determining how God wishes them to resolve their conflicts. They shows us the Biblical process: (1) try to resolve the dispute simply by discussion between the parties (Matt. 18:15); (2) if this does not work, take others along in a mediation (Matt. 18:16) and; (3) if this does not work, appoint a judge from among the faithful in arbitration (1 Cor. 6:4); and/or the church discipline final step (Matt. 18:17). Christian Conciliation is thus a multi-step process for resolving disputes between believers.

2. Validity of Arbitration Clauses.
Courts have generally upheld the validity of mediation/arbitration in the past, and have encouraged the use of arbitration to resolve personal disputes. The 11th Circuit Court of Appeals upheld the right of an employer to require workers to sign an agreement stipulating that all legal claims would be decided in arbitration in Weeks v. Harden Mfg. Corp., 291 F.3d 1307 (11th Cir. 2002). In that case, a manufacturing company distributed new employee handbooks to its employees, which included an agreement to resolve all claims against the manufacturer in arbitration. The agreement stated in part: “Harden Manufacturing Corporation and I each agree and understand that we choose arbitration instead of litigation to resolve any dispute between us. Harden Manufacturing Corporation and I each understand that we have a right or opportunity to litigate disputes through a court, but we prefer to resolve our disputes through arbitration. Each of the parties to this employment arbitration policy voluntarily and knowingly waive any right they have to a jury trial either pursuant to arbitration under this clause or pursuant to a court action by Harden Manufacturing Corporation.”

When several employees refused to sign the agreements, the employer fired them. The employees filed suit, making five counts including one for retaliation. The district court granted Harden summary judgment on all counts except retaliation.  The court also looked to various cases holding that disputes involving federal statutes can be resolved by arbitration if the contract made so stipulates. Cf. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (upholding the validity of arbitration to enforce statutes); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (enforcing arbitration agreement to decide claim in regards to Age Discrimination in Employment Act); Bender v. A.G. Edwards & Sons, Inc., 971 F.2d 698 (11th Cir. 1992) (enforcing arbitration agreement to decide Title VII claim). Moreover, the U.S. Supreme Court ruled in Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) that the Federal Arbitration Act allowed for employment contracts to stipulate that disputes would be resolved in arbitration. Circuit City, 532 U.S. at 110.

In light of these prominent rulings, the 11th Circuit held that the plaintiffs could not reasonably believe that requiring employees to sign an arbitration agreement constituted unlawful employment practice. Therefore, churches or non-profits wishing to settle employment disputes in Christian arbitration will be able to require employees to sign arbitration agreements as conditions of employment. Moreover, churches and non-profits may be successful in requiring current employees to sign such mediation/arbitration agreements, clauses in employee handbooks, and other agreements. However, church and non-profit leaders should be encouraged to offer some financial consideration or value to employees in return for signing the arbitration agreement, so that the agreements may be more likely to be found legally binding.

3. Christian Conciliation Upheld in the Courts.

Courts have specifically enforced Christian mediation/arbitration clauses in Agreements in at least many recent cases. The Federal District Court of Colorado enforced an agreement to arbitrate according to the Rules of Procedure for Christian Conciliation in Encore Productions, Inc. v. Promise Keepers, 53 F. Supp. 2d 1101. In that case, Promise Keepers, a Christian organization, had contracted with Encore Productions to provide production and consulting services for meetings and conferences. The service contract the parties signed stated, “Any claim or dispute arising from or related to this Agreement shall be settled by mediation and, if necessary, legally binding arbitration, in accordance with the Rules of Procedure for Christian Conciliation of the Institute for Christian Conciliation. Such arbitration shall be held in Colorado unless otherwise agreed to by both parties. Judgment upon an arbitration award may be entered in any court otherwise having jurisdiction … This Agreement shall be governed, construed, and interpreted under the laws of the State of Colorado. Venue on any dispute arising from this Agreement shall be at Arapahoe County, Colorado, unless otherwise agreed by the parties.” When problems arose, Encore Productions sought redress in secular courts. Promise Keepers sought to enforce the Christian mediation/arbitration clause of the contract and force the parties into Christian Conciliation. Dealing with Encore’s arguments, the court said that if the parties were not satisfied with the arbitration and sought a hearing in court, then the district court would be able to review the finding of the Christian Conciliation arbitrator within constitutional limitations. Encore also argued that allowing this dispute to move into Christian Conciliation would constitute an impediment to Encore’s employees’ right to free exercise of religion. The court said that although courts cannot use religious tribunals as an arm of the judiciary, Encore and Promise Keepers voluntarily agreed to resolve their disputes in Christian Conciliation. The court concluded, “This manifests intent to be bound by Christian Conciliation’s decree and a knowing and voluntary waiver of their rights to pursue litigation in a secular district court.” Id. at 1113. The court finally stated that problems with the First Amendment were speculative when deciding whether to enforce the arbitration agreement, and speculated that refusing to enforce the agreement might be a restriction on Promise Keepers’ free exercise rights.

A second case upholding the use of Christian Conciliation is Woodlands Christian Academy v. Weibert, 2010 Tex. App. LEXIS 8107. In this case, a school contracted to use Christian Conciliation according to Peacemaker Ministries in any dispute that arose between a Christian school and a female teacher. After the woman was fired, she filed suit in Texas court, alleging constructive discharge, harassment, retaliation and discrimination. The Christian school appealed the trial court’s denial of its motion to remove the case to the Christian Conciliation process in accordance with the arbitration clause in the employment contract.  The arbitration clause read: “The parties to this agreement are Christians and believe that the Bible commands them to make every effort to live at peace and resolve disputes with each other in private or within the Christian community in conformity with the Biblical injunctions of Matthew 18:15-20. Therefore, the parties agree that any claim or dispute arising out of, or related to, this agreement or to any aspect of the employment relationship, including statutory claims, shall be settled by Biblically based mediation.

If resolution of the dispute and reconciliation do not result from such efforts, the matter shall then be submitted to a panel of three arbitrators for binding arbitration. Each party to the agreement shall have the right to select an arbitrator. The two arbitrators selected by the parties shall jointly select the neutral, third arbitrator. If there is an impasse in the selection of the third arbitrator, the Institute for Christian Conciliation, Billings, MT …, shall be asked to provide the name of a qualified person that will serve in that capacity. The arbitration shall be conducted in accordance with the Rules of Procedure for Christian Conciliation of the Institute for Christian Conciliation as printed in the Christian Conciliation Handbook.

The parties agree that these methods shall be the sole remedy for any controversy or claim arising out [of] the employment relationship or this agreement and expressly waive their right to file a lawsuit against one another in any civil court for such disputes, except to enforce a legally binding arbitration decision. Each party, regardless of the outcome of the matter, agrees to bear the cost of his own arbitrator and one half of the fees and costs of the neutral arbitrator and any other arbitration expenses.” Id. At trial, the former teacher presented no evidence to deny the validity or enforceability of this agreement. The court stated that after the school had shown that the parties agreed in writing to mediate and arbitrate the dispute, the burden shifted to the teacher to controvert the validity and enforceability of the arbitration agreement. Since the teacher had presented no evidence to controvert the validity of the agreement only vague statements of prejudice, the court held that this arbitration clause would be binding for the woman’s suit against the school.

This case illustrates several points. First, it provides a good example of a valid and binding Christian Conciliation agreement. Second, the reader should note that the court upheld the Christian Conciliation agreement, pointing to acceptance of an arbitration agreement written in this fashion. Third, the reader should also note well the court’s willingness to hear evidence from the principal controverting the validity and enforceability of the agreement. The court was looking for evidence that the school tricked her or mislead her into signing, or that she was not aware of the ramifications of signing the agreement. Since an arbitration agreement waives one’s civil right to sue in court, courts will need to see that parties to such an agreement knew what they were signing. Church and nonprofit leaders using Christian Conciliation clauses should be careful to explain thoroughly the terms and consequences of these clauses, and ensure that parties to such agreements understand these terms.

Finally, the Federal Fifth Circuit Court of Appeals affirmed the decision of the Federal District Court for the Eastern District of Louisiana upholding the decision of a Christian arbitrator in Prescott v. Northlake Christian School, 141 Fed.Appx. 263. In that case, a Christian school hired a woman as principal and included in their agreement a provision referring all disputes to arbitration as governed by the Rules of Procedure for Christian Conciliation as written by the Institute for Christian Conciliation. When the woman was fired a few months later, she made claims against the school in Christian Conciliation on several grounds. The arbitrator awarded the woman money based on damage to her reputation and future loss of income. The arbitrator also found that the school had breached its contract legally and Biblically in firing the woman. The woman then sought to have the decision of the arbitrator enforced in secular court. The school claimed that the arbitrator had exceeded the authority vested in him in deciding the case. Specifically, the school claimed that when the arbitrator used Matthew 18 to decide that the school had breached its contract Biblically, the arbitrator used Scripture in a way he was not allowed to.

The court determined that the employment contract between the woman and the school stated that both parties would abide by Matthew 18 in deciding their disputes. Therefore, the arbitrator concluded that Matthew 18 applied to the relationship between the woman and the school. The court concluded that the arbitrator’s award was therefore rationally related to the agreement between the parties. Further, Montana law (applicable here by a choice-of-law provision) stipulates that a court cannot overturn an arbitration award simply because the secular court would not have been able to make the same award itself. Therefore, the court upheld this award granted along Biblical principles.

Thus, a church or non-profit may be able to use Christian Conciliation to resolve disputes among employees or with its contractual partners, and have those decisions enforced by secular courts, even if the decision cites and uses the Bible in rendering a decision. However, the biblical passages used should be present in the original agreement as issue, as the verses from Matthew were present in the original employment contract in Prescott.

However, the following case illustrates the boundary of what Christian Conciliation can decide. In sensitive cases such as child custody disputes the decisions of arbitrators will be subject to close scrutiny by the court and will be subject to being set aside in the best interests of the child. In Miller v. Miller, 423 Pa. Super. 162 (1993), divorcing parents tried to resolve the issues in their divorce through Christian Conciliation. After arbitrators gave custody to the mother, the father refused to relinquish his claims to custody, and the mother sought to have the arbitrators’ decision enforced in court. The Superior Court of Pennsylvania refused to enforce the decision of the arbitrators in regards to child custody, saying, “We find agreements by parents concerning their children, while encouraged, will always be subject to close scrutiny by a court and are subject to being set aside as courts will not be bound by such agreements … Parents to a divorce action … have no power … to bargain away the rights of their children.” Id. The court therefore hinged its ruling on the rights of independent third-parties, namely the children involved in custody cases. This case illustrates that Christian Conciliation may not be upheld in all types of cases especially where Christian Conciliation agreements purport to apply to persons who have not expressly agreed to Christian Conciliation, such as children in child custody cases. Church and non-profit leaders should take note of such limitations and ensure that in their agreements that all affected parties have read, understood, and signed the agreements.

Although courts may be willing to allow churches and non-profits to settle disputes through Christian Conciliation, courts may not allow any procedure for arbitration to be enforced. For instance, a California Court of Appeals refused to enforce a church’s by-laws requiring disputes to go to arbitration because the arbitrator called for in the by-laws was obviously not neutral. In Southern California District Council of the Assemblies of God, Inc., v. Sonlite Tabernacle, Cal. App. 2 Dist. (unpublished decision, March 27, 1992), a local Assembly of God church had tried to disaffiliate with its denomination. The denomination sought to bring the case into arbitration, according to the by-laws of the denomination. The by-laws provided for arbitration by “an ordained minister” in “good standing” with the denomination. The court in this case did not enforce the arbitration agreement, noting that while the California Supreme Court had recognized the validity of arbitration agreements, “some minimum levels of integrity” are required for a court to enforce these agreements. A party to an arbitration agreement cannot himself be the arbitrator as well. Thus, churches seeking to create valid arbitration agreements should choose impartial arbitrators without close ties to either party and conduct the arbitration under well established Rules of Procedures like those established by ICC and found at www.hispeace.org.

4. Tips for Applying Christian Conciliation.

Church and non-profit leaders can recognize in the cases above some principles to be followed in crafting contracts and taking disputes into Christian Conciliation. Some of these principles apply in general, and some principles specifically to employment contracts and church member covenants and by-laws as indicated below.

First, Christian Conciliation clauses may be used to settle a wide variety of conflicts, ranging from disputes over church leadership to building contracts, from employment agreements to business contracts. Second, always carefully and clearly explain the Christian Conciliation clause in a contract. Make sure that the parties understand that any signing of the agreement may remove the right of seeking redress in a secular civil court. You may want to require that the Christian Conciliation clause be specially initialed to indicate that the parties fully understood what they were signing. Remember that courts will enforce these clauses, but the parties must have known that they were waiving their right to a civil court trial; otherwise the courts will not enforce these clauses. Informed consent is the key to having Christian Conciliation clauses upheld. Third, consult with an attorney familiar with these types of agreements when drafting and using Christian Conciliation clauses. The legal requirements of arbitration agreements may vary from state to state, and often the requirements may be arbitrary and unpredictable. Consulting with an experienced lawyer will help to ensure that your contracts will be enforced in a court, and not thrown out because of a technicality.

Fourth, if you want to use the Rules of Procedure for Christian Conciliation to guide the mediation/arbitration process, then make sure that the other party to the contract has seen, read, and understood these Rules of Procedure. Also make sure that these Rules are readily available so that the parties to the contract may review the Rules at any time. Keep several copies on hand, and you may want to post the Rules at work or on your website for easy access. Fifth, when choosing arbitrators, make sure that you choose these arbitrators wisely. Take care that you know and trust the arbitrators, for courts may void arbitration holdings if any showing of partiality, fraud, or other misconduct on the part of the arbitrators is made. If you have trouble selecting arbitrators, either seek the aid of a professional attorney skilled in arbitration, or contact Peacemaker Ministries at www.hispeace.org. Peacemaker Ministries trains individuals to act as arbitrators in Christian Conciliation settings, and they may be able to refer you to trained arbitrators in your area.

Sixth, take note that Christian Conciliation may not be able to cover all types of disputes. As indicated in the Miller case, Christian Conciliation may not be binding in child custody cases, because in those cases the court may intervene in the best interests of the child.

5. Church By-Laws.

If you are inserting a Christian Conciliation clause into your church by-laws, ensuring that informed consent has been given will be an extra burden for you, but well worth the effort. While the author is unaware of a published decision in which the Christian Conciliation clauses were inserted in church by-laws, if you work to ensure that informed consent has been given, these clauses should probably be enforceable. When introducing Christian Conciliation clauses into your by-laws, you should hold mandatory education sessions like New Members Classes, in which you explain the terms and consequences of the Christian Conciliation clauses. Make sure that some form of written consent is given at that time by the members of your church. When enrolling new members into your church, take care to fully explain the terms and consequences of these clauses to them, and have the new members sign, acknowledging their understanding of the terms.

Finally it may be wise, at least once a year to give a sermon or hold a meeting explaining anew the terms and consequences of the Christian Conciliation clauses, so that no member of the church may claim that he or she was uninformed about church discipline procedures or alternate dispute resolution clauses. Although this may seem difficult and time-consuming, spending time now on these agreements may save much time and money in the future.

6. Conclusion.

Churches and non-profit organizations should consider using Christian Conciliation to resolve disputes. The Gospel exhorts believers to settle disputes among themselves, first by private discussion, then with the mediation of another, then by submitting to the arbitration of another believer or the church. Litigation is only to be resorted to in extreme cases. Secular courts have encouraged arbitration in general, and have enforced specifically Christian mediation/arbitration, as well as arbitration conducted by different religious bodies. Those churches and non-profits seeking to include Christian Conciliation clauses in their contracts and by-laws should take care to make the terms and ramifications of such clauses absolutely clear, thereby allowing the parties involved to make an informed consent. Moreover, the parties should make clear how the arbitration will be run, and what principles will guide the arbitration. Contracts should include relevant biblical texts that will guide arbitrators, if possible. It is recommended that the parties agree to use the Rules of Procedure for Christian Conciliation as written by the Institute for Christian Conciliation, and ensure that a copy of these Rules is read by both parties. Parties to Christian Conciliation should also take note to choose arbitrators with care. Remember that courts may set aside an arbitration ruling if there is evidence of partiality, fraud, or misconduct by the arbitrators. Finally, parties to Christian Conciliation should bear in mind the reason for using this process. Christian Conciliation is a forum for spreading the gospel by reconciling brothers and sisters in Christ to each other. By resolving disputes amicably and not in fractious litigation, believers may be an example and light to the world. By settling divisions within the Body of Christ, the church and fellow believers will work toward the hopes of Our Lord, “that all of them may be one.” (John 17: 21, NIV) and the Apostle Paul “Make every effort to keep the unity of the Spirit through the bond of peace” (Eph. 4:3).

Disclaimer: This memorandum is provided for general information purposes only and is not a substitute for legal advice particular to your situation. No recipients of this memo should act or refrain from acting solely on the basis of this memorandum without seeking professional legal counsel. Simms Showers LLP expressly disclaims all liability relating to actions taken or not taken based solely on the content of this memorandum.  Please contact Robert Showers at hrs@simmsshowerslaw.com or Justin Coleman at jrc@simmsshowerslaw.com for greater details concerning which risk management strategy is best for your church or organization and clauses for bylaws, employment documents or third party contracts. Simms Showers LLP © 2014