By Catherine Green

Part four of a six part series titled ‘the Singapore Convention: a panacea for trade in the Trans-Pacific or just one piece of the puzzle?’

Part One of the series ‘An Introduction’ may be accessed here.

Part Two of the series ‘The “Trans-Pacific” Experience’ may be accessed here.

Part Three of the series ‘Facilitation of Trade and Investment’ may be accessed here.

This is the fourth instalment of a six part series on the Singapore Mediation Convention in which I have considered the overarching question of whether the Singapore Convention is a panacea for trade in the Trans-Pacific Region or just one piece of the puzzle.

Part One of the series provides an introduction; Part Two of the series considers the ‘Trans-Pacific’ experience and why the question of accession to the Singapore Convention needs to be considered taking into account the specific characteristics of the constituent member states within that region; and Part Three gives consideration to the facilitation of trade and investment in the Trans-Pacific.

Part Four now turns to consider how mediation might be received by local commercial counterparties and, in particular, how it might fit culturally from a Trans-Pacific perspective.

 

Introductory comments

The widespread failure to engage in an assessment of such a proposal from a Trans-Pacific perspective is identified by Huffer and Qalo in their work on Pacific theoretical thought, where they raise the concern that there is considerable focus on promoting “development” and integrating Pacific nations into western economic norms to the extent that economists “have come to see Pacific attitudes as a constraint or barrier to their mission rather than as an area to be taken seriously.”[i]

It is plainly unwise to ignore the reality of the matter. It is a truism that to succeed in mediation, one must carefully consider the other party’s interests and point of view. Developing and promoting business models and trading terms (including dispute resolution procedures) that only take into account the needs of one party and not the other is unlikely to result in willing and collaborative participation, engagement and commitment to best of project outcomes.

A word of warning first though. Culture is a relatively amorphous term which may relate to many different types of environmental inputs affecting an individual or group. Generally, however, culture may be viewed as “a set of understandings, interpretations, and expectations regarding our environment”.[ii]

Certain generalisations must be made to make any useful assessment of the relevance of more prevalent cultural propensities and requirements to the proper selection of dispute resolution processes.

 

Is there a cultural preference in the Trans-Pacific Region for facilitative as opposed to determinative dispute resolution processes?

The prevalence of customary systems of law and justice throughout the Trans-Pacific Region remains significant,[iii] with customary dispute resolution systems often being characterised as “non-adversarial” with a focus on “restoring social harmony” and seeking “resolutions that all parties can agree to and that represent the collective interests of the community”. Such processes are also often “participatory” in nature.[iv]

Whilst Trans-Pacific peoples have traditionally adopted both facilitative and adjudicative dispute resolution processes, there is a certain ingrained tendency to lean toward a collective model as was described by the Chief Justice of Fiji, His Honour Justice V Faitiaki in 2005:[v]

The common element of these various models of traditional dispute settlement in Pacific societies is characterised by one of a peaceful settlement, compromise and agreement where communal interests outweigh individual rights and interests.

At the risk of overly generalising the position, it certainly seems clear that there is a relatively prevalent preference for disputes to be resolved through less adversarial means, in which case mediation would arguably be a better cultural fit than adjudicative processes like arbitration or litigation. At the least, it would appear safe to say that mediation is unlikely to be met with hostility or a lack of interest.

 

Is there likely to be a cultural preference for facilitative as opposed to determinative dispute resolution processes on the part of investors into the Trans-Pacific Region?

Equally, the question of cultural preference in dispute resolution process should also extend to a consideration of the foreign investor’s needs and imperatives.

Of course, there are a wide range of foreign entities which might consider investing into the Trans-Pacific Region. As such, it is inherently difficult to pinpoint any specific group to determine whether or not a cultural preference for facilitative as opposed to determinative dispute resolution process might be pervasive.

It would however be naïve not to recognise the increasing dominance of Chinese investment into the Trans-Pacific Region. A 2018 report issued by the United States-China Economic and Security Review Commission (the Commission) specifically notes the increased economic engagement by China in the Trans-Pacific Region:[vi]

In recent years, China has significantly bolstered its economic engagement with Pacific Island countries. An examination of trade, investment, aid, and tourism data shows that China is becoming one of the dominant economic players in the region, well ahead of the United States.

The Commission has identified China as the “largest trading partner of PIF member countries (excluding Australia and New Zealand)”,[vii] with total goods traded with these countries in 2017 reaching $8.2 billion, as compared to South Korea ($8 billion), Australia ($5 billion) and the United States ($1.6 billion).[viii]

Moreover, the Commission also identifies that China’s total trade in the Trans-Pacific Region has grown over the last decade by a factor of four.[ix]

It is clear that China is, and most likely will continue to be, an economic force in the region. It follows that, when looking at potential counterparties, China must be considered as the most important trading partner (in terms of volume) to consider at this juncture.

Mediation arguably remains the most popular process for resolving disputes in China and has been for thousands of years.[x] China’s long tradition of utilising conciliatory practices to resolve disputes[xi] evolved from Confucian ethics and ideology. The adoption of the determinative arbitration model only came later and was seen as an “invention of the West”.[xii]

That said, the Chinese approach to mediation might be considered as being more closely aligned to a determinative or adjudicatory function. The traditional Chinese model “has normally been conducted by individuals who operate from a position of authority relative to the parties”.[xiii] Even in the modern era, observations of Chinese community mediation processes have demonstrated that this semi-adjudicatory model remains the norm. This description is given of a visit to a community mediator in China:[xiv]

…our subsequent conversation left the impression that her normal method of resolving community disputes…was to investigate, converse separately with those involved and propose a solution. In this role – which is much more directive than the norm for commercial or neighbourhood mediators in the United States, but well suited to keeping the peace in a densely-packed neighbourhood in a high-context culture and hierarchical society like the PRC – she was very effective.

The Chinese business community has not been blinded to the need to integrate with their western counterparties. On the contrary, mediation has been widely promoted for commercial disputes with partnerships being established with dispute resolution organisations in other countries to develop joint mediation processes for the resolution of international disputes. Those initiatives have been developed along the lines of a more “western” facilitative model of mediation. However, there is some scepticism that this has in fact led to better integration between the east and the west with comparably low levels of uptake reported.[xv]

Nonetheless, a mediation model (whether more or less evaluative in nature) would appear to be an acceptable option, and potentially a good fit for Chinese investors into the Trans-Pacific Region.

Looking further afield, elsewhere throughout Asia there has also been a recognised cultural aversion to litigation, with a general preference for private dispute resolution whether by negotiation, mediation or conciliation.[xvi]

Taken overall, the clear indication is that there is a prevailing preference for disputes to be resolved by facilitative means where that is possible. This lends itself to the argument that the promotion of mediation with the promulgation of the Singapore Convention is likely to be seen as a beneficial development not only by local businesses within the Trans-Pacific Region, but also by their most significant trading and investment partner.

 

How does diversity factor into the equation?

There is a risk in over-generalising by classifying certain cultural groups as being relational, collectivist or individualistic.[xvii] As such, an evaluation of the impact of culture on the value of any given dispute resolution process must also take into account diversity across the relevant stakeholders.

More generally, diversity of culture in cross-border commercial conflict in tandem with a growth in pluralistic societies across the board, gives rise to specific issues which often require a degree of flexibility of process which cannot be met in the same way when engaged in more structured, rules-based dispute resolution processes like litigation and arbitration.

The Trans-Pacific Region itself is remarkably diverse. We need look no further than our own backyard in New Zealand to appreciate the level of diversity across the Trans-Pacific Region, with New Zealand’s 2013 Census recording a total of 295,941 people from over thirty distinct Pacific groups living in New Zealand.[xviii]

Moreover, on a more micro level, the extent to which customary (often collective) systems remain of substantive influence varies considerably throughout the Trans-Pacific Region both between different states and also within the borders of any given state.[xix]

Any consideration of diversity must also of course take into account that which will inevitably exist in any cross-border conflict, being the type of diversity which will manifest itself in terms of cultural differences between protagonist A and protagonist B in that dispute. The mere fact that the two parties originate from different geographical locations will more likely than not mean that they are approaching the business relationship and any dispute arising in relation to it from a different cultural perspective. Arguably, bearing in mind the nebulous nature of conflict, all conflict may be viewed as cross-cultural.[xx]

Cross-cultural disputes are often characterised by parties having different goals, bargaining styles, styles of conduct, modes of communication, approaches to time, levels of emotionalism, approaches to the form of agreements, approaches to problem solving, approaches to settlement authority and views as to risk taking.[xxi]

Mediation model variants have evolved out of many different cultures with the result that mediation in one country might look entirely different to mediation in another. For instance, the North American or “western” model of mediation is typically “founded on the primacy and autonomy of individuals and the furtherance of individual interests” whereas a Chinese or “eastern” model of mediation is typically founded on a “traditional orientation toward, among other things, social hierarchy, societal harmony and obedience to authority”.[xxii]

In light of the diversity of conflicts, circumstances, parties, and any number of other relevant factors in any given case, when considered globally, there cannot be any one correct approach to mediation.[xxiii]

Taking this into account, however, the potential value of mediation as a dispute resolution practice becomes clear. There is no prescriptive formula for how the process must be delivered and the various possible process options are arguably infinite.

By way of example, the utility and relevance of a co-mediation model could be considered as a way of meeting the particular needs of diverse participants in a mediation. Co-mediation may be particularly useful for multi-party mediations but it also provides a useful means of bringing in more specific skills and experience which might be useful to enable the parties to engage more effectively and efficiently in mediation to resolve their dispute.[xxiv]

The inherent flexibility and diversity[xxv] of the mediation process means that it is, when compared to litigation or arbitration, perhaps better able to appropriately meet the needs of what is a culturally diverse region of the world accustomed to resolving disputes by negotiation with the assistance of a skilled mediator who can ensure the parties’ cultural needs and mores are met sensitively and respectfully.

Look out for Part Five of this series: ‘International Dispute Resolution: the Dual Questions of Cost and Time’

References

[i] Elise Huffer and Ropate Qalo “Have We Been Thinking Upside-Down? The Contemporary Emergence of Pacific Theoretical Thought” (2004) 16 The Contemporary Pacific 87 at 89.

[ii] Kenneth Cloke Mediating Dangerously: The Frontiers of Conflict Resolution (Jossey-Bass, San Francisco, 2001) at 224. [iii] Matthew Zurstrassen “Customary Dispute Resolution Research Project: Final Report to the Regional PJDP Meetings in Samoa in March 2012” (paper presented to the Pacific Judicial Development Programme, Samoa, March 2012) at 2.

[iv] Ibid at 20.

[v] Ratu Filimore Ralogaivau “Blending traditional approaches to dispute resolution in Fiji with rule of law – the best  of both worlds” (paper presented to the 3rd Asia Pacific Mediation Forum Conference, University of the South Pacific, Suva, 26-30 June 2006).

[vi] United States-China Economic and Security Review Commission “China’s Engagement in the Pacific Islands: Implications for the United States” (Staff Research Report, 14 June 2018) at 7.

[vii] Ibid.

[viii] Ibid.

[ix] Ibid at 8.

[x] Wilson Huo “Alternative Dispute Resolution in China” (2011) 30 (2) The Arbitrator & Mediator, The Journal of the Institute of Arbitrators & Mediators, Australia 49.

[xi] Thomas Stipanowich “The International Evolution of Mediation: A Call for Dialogue and Deliberation (2015) 46 VUWLR 1191 at 1214. [xii] Craig Pudig “Domestic Lessons from International Arbitration” (2004) 23 (3) The Arbitrator & Mediator, The Journal of the Institute of Arbitrators & Mediators, Australia 29 at 42.

[xiii] Stipanowich, above at 1215.

[xiv] Ibid

[xv] Ibid at 1216.

[xvi] Laurence Boulle Mediation Principles Process Practice (2nd ed, LexisNexis Butterworths, Australia, 2005), at 51.

[xvii] Ibid at 82.

[xviii] Auckland Council “Pacific Auckland: Who are Pacific people?” <www.aucklandcouncil.govt.nz>.

[xix] Zurstrassen, above at 2.

[xx] Kenneth Cloke, above, at 224.

[xxi] Alexandra Alvarado Bowen “The Power of Mediation to Resolve International Commercial Disputes and Repair Business Relationship” (2005) 60 (2) DispResolJ 58 at 60-61.

[xxii] Stipanowich, above, at 1214.

[xxiii] Jacob Bercovitch and Richard Jackson Conflict Resolution in the Twenty-first Century: Principles, Methods, and Approaches (The University of Michigan Press Ann Arbor, Michigan, 2009) at 41.

[xxiv] Grant Morris and Annabel Shaw Mediation in New Zealand (Thomson Reuters, New Zealand, 2018), at 125-126.

[xxv] Ibid, at 7.

About the Author

Catherine GreenCatherine Green

Catherine is the Executive Director of the New Zealand International Arbitration Centre (NZIAC) as well as its related domestic registry services which cover a full spectrum of commercial, building and construction, and family and relationship disputes. She also has her own private practice as an arbitrator, adjudicator, and mediator taking appointments with respect to both commercial and construction disputes.