At the recent UNCITRAL Working Group II meeting in Vienna in September 2019, the issue of expedited arbitration continued to be the focus of consultation. Member states and observers offered recommendations on how to strike a balance between timely resolution of disputes and respect for due process. The full report can be found here.
1. Ali, Shahla F., Nudging Civil Justice: Examining Voluntary and Mandatory Court Mediation User Experience in Twelve Regions (February 18, 2018). Cardozo Journal of Conflict Resolution, Vol. 19, Issue 2, pp. 269-288, 2018 .
Abstract: Nudge theory suggests that positive reinforcement to encourage compliance is at least as effective, if not more effective, than traditional directions issued through legislation. This Article tests nudge theory in the context of court mediation reform by examining whether, and if so how, light nudges encouraging voluntary mediation have a differential effect on civil justice outcomes as compared with more robust nudges through mandated mediation processes. A statistical analysis of 2016–2017 civil justice indicators in twelve regions suggests light nudges, (voluntary court mediation programs, or (self-directed resolution), on average associated with higher overall jurisdictional scores for efficiency and non-discrimination. In comparison, robust nudges, (court-mandated mediation processes) show no significant difference in relation to the quality of civil justice, effective enforcement, accessibility and affordability, and impartiality, and effectiveness between voluntary and mandatory mediation systems in the regions examined.
2. Ali, Shahla F., Practitioners’ Perception of Court-Connected Mediation in Five Regions: An Empirical Study, Vanderbilt Journal of Transnational Law, Oct 2018, Vol. 51, No. 4
Abstract: Courts throughout the world face the challenge of designing court mediation programs to provide opportunities for party-directed reconciliation on the one hand, while ensuring access to formal legal channels on the other. In some jurisdictions, mandated programs require initial attempts at mediation, while in others, voluntary programs encourage party-selected participation. This Article explores the attitudes and perceptions of eighty-three practitioners implementing court mediation programs in five regions in order to understand the dynamics, challenges, and lessons learned from the perspectives of those directly engaged in the work of administering, representing, and mediating civil claims. Given the highly contextual nature of court mediation programs, this Article highlights achievements, challenges, and lessons learned in the implementation of mediation programs for general civil claims. The principal findings indicate that overall, from the perspective of the court mediation practitioners surveyed, practitioners report slightly higher levels of confidence in mandatory mediation programs, higher perceptions of efficiency with respect to voluntary programs, and regard voluntary and mandatory mediation programs with relatively equal perceptions of fairness. Program achievements largely depend on the functioning of the civil litigation system, the qualities and skill of the mediators, safeguards against bias, participant education, and cultural and institutional support.
At the most recent UNCITRAL Working Group II on dispute settlement, held in New York in February 2019, the issues of improving the quality and efficiency of arbitral proceedings through expedited arbitration was discussed. It was agreed that there was need to establish an acceptable international framework on expedited arbitration focusing on aspects such as appointment of emergency arbitrators, preliminary determination and early dismissal of cases by an arbitral tribunal and adjudication. Participants highlighted the vitality of such a set of rules, and the subsequent preparation of Application Guidance on Expedited Arbitration by the Working Group with a close linkage to the existing UNCITRAL Arbitration Rules to ensure flexibility and sound alternatives to parties (UN WG II Report). This area of reform takes into consideration the place of expedited arbitration in ensuring expediency of arbitral proceedings and the need to protect the interests of parties whose rights are at stake.
By Prof James Claxton, Prof Luke Nottage & Dr Brett Williams*
- Introduction: complex multi-faceted tensions
- A media and geopolitical storm recently erupted after Japan introduced measures affecting exports to the Republic of Korea (Korea). Thunder sounded with Japan’s imposition of certification requirements on three chemicals needed by South Korean companies to make semiconductors, memory chips and displays for consumer electronics (the 4 July Measure). This was followed by lightning and rain when Japan removed Korea from its “white list” of trusted trading partners (the 2 August Measure), then threats by Seoul to retaliate by reducing military-intelligence cooperation and imposing countermeasures on trade. The growing geopolitical tempest has brought about the worst breakdown in cross-border bilateral relations in five decades, generating both regional and global ramifications.
- Differing rationales for the geopolitical storm have been given. The Japanese government and media tend to emphasise security concerns, namely on-shipments of such chemicals with potential military applications to North Korea, violating multilateral sanctions. The South Korean government and media, as well as some international news outlets, have often placed more emphasis on the possibility of Japan “retaliating” for an October 2018 judgment of the Supreme Court of Korea. That decision upheld lower court judgments from 2014 finding major Japanese companies, such as Nippon Steel, liable to compensate claimants alleging that they were forced labourers for the Japanese companies during World War 2. The companies, and the Japanese government, have argued that such claims were precluded by a bilateral treaty signed in 1965 to restore diplomatic relations. (Interestingly, similar claims and defences under a different bilateral instruments have been raised before Japanese courts by Chinese war-time labourers, generating a settlement with Nishimatsu group companies.) A few media reports also speculated that Japan introduced export restrictions affecting Korea to bolster the appeal of the Abe Administration in upper House of Councillor elections, but it secured another solid victory anyway. Some media sources also suggest that populist Korean President Moon Jae-in may be “playing to the base” too in domestic politics.
- Introducing trade-restrictive measures, however, raises the potential for Korea to complain before the World Trade Organization (WTO). It brings to mind the claim successfully brought by the Obama Administration against China over 2012-14, resulting in China removing export duties and quotas imposed on rare earths, for which it similarly controlled almost all world trade. However, the general exceptions China failed to establish in that case, under Article XX of the General Agreement on Tariffs and Trade (GATT), dealt with health and conservation of natural resources. By contrast, Japan here could be expected to raise national security exceptions under Article XXI. There are even greater differences from a procedural perspective, which we focus on below. If indeed Korea files a formal complaint and an ad hoc panel rules against Japan, this would only come by next year at the earliest. By then the Appellate Body will lack sufficient members (full-time “judges”), due to the Trump Administration blocking new appointments until its concerns about dispute resolution and other aspects of the WTO system are adequately addressed. Accordingly, Japan could appeal any panel decision allowing retaliation for any GATT violations found, and then never come under pressure to remove or adjust its measures against Korea.
- The situation becomes even messier when we consider below [[in Part 3]] other potential inter-state dispute resolution processes. Japan could seek arbitration under the 1965 treaty, but that effectively requires the counterparty to provide further consent, which Korea does not seem to want to do. Japan might also consider litigating the treaty before the International Court of Justice (ICJ). Another option is to invoke inter-state arbitration under the Japan-Korea bilateral investment treaty (BIT) in force since 2003, and/or a trilateral investment treaty in force from 2014. However, it may be difficult to prove that the Korean court judgments involved a procedural defect or discrimination towards the Japanese companies creating a denial of justice, contrary to the relevant treaty.
- A further possibility, mentioned so far only in a very few media reports but also sketched below [[in Part 4]], is that the companies directly initiate investor-state dispute settlement (ISDS) claims, as provided by both investment treaties in lieu of inter-state arbitration. This could theoretically include an application to the ad hoc arbitration tribunal to issue interim measures preventing enforcement of the Korean Supreme Court ruling, until the tribunal had finally determined claims such as denial of justice.
- A major problem for the Japanese companies is that this means they would have to fork out tribunal, lawyer and expert witness fees – often hefty, even if the claim ultimately succeeds. A major problem for the Japanese government, in turn, is that ISDS claims brought by the companies would likely further incense not only the current Korean government, but also some groups within Korean society (including an association of judges). They and the then opposition party became critical of ISDS especially as it was negotiated into the Korea-US Free Trade Agreement (KORUS), brought into effect from March 2012, and as the first-ever treaty-based claim was brought against Korea from late 2012 by a Belgian subsidiary of US-based Lone Star. One Australian NGO even interprets a recent Korean newspaper report of current Prime Minister Lee Nak-Yeon as suggesting that Korea may “abolish” ISDS. More likely he was signalling the need for further rethinking of Korea’s investment treaty policy and practice, which has anyway been evolving (eg regarding ISDS transparency). But an ISDS claim by Japanese companies and/or an award favouring Lone Star would further inflame simmering political tensions, especially as this year another US investor (Gale) has filed a notice to initiate ISDS regarding a development in Incheon, while Chinese and now Malaysian investors have filed notices regarding projects on Jeju Island.
- As we conclude [[in Part 5]], given this complex set of potential claims across multiple forums, the best way forward seems to be a negotiated overall settlement, perhaps facilitated by formal mediation.
By Dr. Nobumichi Teramura
More than a year has passed since the commencement of the so-called trade war between China and the US. The ongoing geopolitical tension in the Asia-Pacific region shows no signs of slowing down, and this inevitably affects the business environment; international business is not separable from international relations. It is time for international lawyers in the region to reconsider their strategy for the coming years, especially concerning international commercial arbitration (ICA) and investor-state dispute settlement (ISDS).
On 15 July 2019, the University of Hong Kong Asian Institute of International Financial Law (AIIFL), jointly with Sydney Law School, organised an international symposium: “Challenges and Opportunities for International Commercial Arbitration and Investor-State Dispute Settlement in the Asia-Pacific Region”. The symposium, supported by Transnational Dispute Management (TDM), brought together leading experts in international business law from the Asia-Pacific region. Building on Reyes & Gu (eds), The Developing World of Arbitration: A Comparative Study of Arbitration Reform in the Asia-Pacific (Hart, 2018) and Chaisse and Nottage (eds) International Investment Treaties and Arbitration Across Asia (Brill, 2018), the symposium examined more recent challenges and opportunities for ICA and ISDS: the proliferation of international commercial courts; the 2018 UN Convention on enforcement of mediated settlement agreements; dispute resolution mechanisms for the Belt & Road initiative; and the impact of evolving investment treaty practices and high-profile cases on public attitudes towards ICA and ISDS. The main focus of the symposium was Australia, Japan, China, Hong Kong and Singapore.
HKU School of Law, the University of Sydney School of Law together with AIIFL will be hosting a conference on “Challenges and Opportunities for International Commercial Arbitration and Investor State Dispute Settlement in the Asia Pacific Region on 15 July 2019 starting at 1:30pm. Below is information on the program:
International Commercial Arbitration in Australia: Judicial Control over Arbitral Awards
An Australian Perspective on Investment Treaty Negotiations and Investment Arbitration
Developing Japan as a Regional Hub for International Dispute Resolution: Dream Come True or Daydream?
Procedural Models to Upgrade BIT’s: China’s Experience
China and International Investment Arbitration: Chinese Arbitral Institutions and ISDS Rules
China’s Belt and Road Development and A New International Commercial Arbitration Initiative in Asia
International Commercial Arbitration and ISDS Developments in Hong Kong in the Context of the Belt and Road Initiative
Can the Singapore International Commercial Court Play a Role in ISDS?
ISDS in Recent Arbitration of International Investment Agreements Involving Asian countries
Contract claims v Treaty claims: can the investor have it both ways?
Draft Programme is available HERE.
Please register ONLINE to reserve a place.
The Asian Journal of Law and Society recently published a review written by Professor Eric Feldman of University of Pennsylvania of Court Mediation Reform: Efficiency, Confidence and Perceptions of Justice
“Where there are people, there is conflict; and where there is conflict, there are conflict resolution institutions. In many societies, including the ten countries that form the heart of this book, the government-run institutions charged with resolving conflict are called courts. Yet, in all ten countries, experts and the populace more generally believe that courts are to some degree failing. In response, they have created alternative dispute resolution (ADR) institutions to handle at least some of the conflict bubbling throughout society. In addition, country by country, they have retooled their courts and introduced court-based mediation in an effort to provide an attractive venue to disputants.
Professor Shahla Ali’s book, Court Mediation Reform: Efficiency, Confidence, and Perceptions of Justice, takes a careful look at whether mediation provides a solution to the various problems that allegedly are endemic to courts around the world. Is mediation less expensive than litigation, for litigants themselves or for the state? Does mediation reduce the caseloads that so often overburden the civil-litigation system? To what extent does mediation serve to mend, or even enhance, relationships that might be permanently frayed by litigation? Does the relative informality of mediation improve the experience of those who engage in conflict by involving them more thoroughly in the process of dispute resolution? Might mediation offer social benefits that elude litigation, like creating a shared sense of harmony? By looking systematically at court mediation in a variety of national settings, Ali provides insight into how mediation currently functions, as well as its successes, failures, and continuing challenges.
Ali, a law professor at Hong Kong University, has carefully constructed this comparative study. Because of differences between civil-law and common-law jurisdictions, she explores mediation in both types of legal systems. She also accounts for gaps between more and less economically advanced countries, and for differences between mandatory and voluntary mediation systems. The result is a book with ten case-studies, five of which focus on voluntary mediation (UK, Hong Kong, France, the Netherlands, Malaysia) and five on mandatory mediation (the US, Australia, Italy, China, and India). The studies are centred on the five years following the introduction of mediation in each jurisdiction. A survey of 83 practitioners provides a complementary, qualitative assessment of mediation.
The tight, rigorous construction of Ali’s comparative project belies the far-reaching, multifaceted nature of the questions it addresses. As her review of the theoretical framework of the project makes clear, her aim is to put some empirical meat on the bones of the debate over the strengths and weaknesses of ADR. What happens, she asks, when conflict resolution bypasses formal, state-sponsored, judicial decision-making, and is instead managed through ADR? Does ADR serve as a venue for the public airing of values? Does it establish precedent for future cases? Does it damage the authority and credibility of courts? To what extent does it diffuse the legitimate claims of parties? How well does it serve justice? As Ali makes clear, defenders of ADR generally (and mediation more particularly) argue that it enhances participation in the legal process, empowers participants, strengthens values like dignity and empathy, underscores relationships, and promotes justice. Does it? Or do the critics of ADR have a long list of legitimate gripes? Against this ideologically charged debate, Ali insists that we put aside the rhetoric and look carefully at how mediation is working on the ground.