Asian Dispute Review Nov 2004

Asian
Dispute Asian Dispute Review is sponsored by:

Hong Kong International Arbitration Centre
Review
Chartered Institute of Arbitrators, East Asia Branch
Hong Kong Institute of Arbitrators
Hong Kong Mediation Council
Editorial Board Members November 2004

Peter Caldwell
News
Christopher To
62 News
Chartered Institute of Arbitrators, 64 Useful Websites
East Asia Branch
Winnie Whittaker
66 Forthcoming Events
John Cock
Arbitration
Hong Kong Institute of Arbitrators 67 Minority Share Redemption Disputes Between Shareholders of Finnish
Edwin Chan Limited Liability Companies
Paul Varty Jouko Huhtala, Marko Hentunen, Marcus Möller
Hong Kong Mediation Council 69 CIETAC Financial Dispute Arbitration Rules: Practice and Problems
Andrzej Cierpicki James M Zimmerman and Diarmuid O'Brien
Norris Yang
71 Attempting The Impossible: The New IBA Guidelines On Conflicts of
Consulting and Commissioning Editor Interest in International Arbitrations
Robert Morgan Nick Longley
73 Soybean Contracts and FOSFA Arbitration

Editor and Publishing Director Samuel CC Wong
Diane O'Hare
76 Ex parte or Default Proceedings in International Arbitration
Published by Ben Beaumont
38/F, Two Exchange Square, Online Dispute Resolution
8 Connaught Place,
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79 ICODR 2004: Enhancing Understanding - Part 2
Tel.: (852) 2525 2381
Benjamin G Davis and Alan Gaitenby
Fax: (852) 2524 2171
Email: [email protected] Mediation
Website: www.hkiac.org 82 Pioneering an Approach to Mediating Large Disputes
Ian Hanger and John Cooper
86 Towards a New Definition of Mediation

Rhiân Williams
Case Report
91 Wal-Mart Recovers Chinese Domain Name
Gabriela Kennedy and Paloma Wong
(c) Hong Kong International Arbitration Centre, 2004 Book Review

All Rights Reserved
92 Law, Practice and Procedure of Arbitration by Sundra Rajoo
Asian Dispute Review is published quarterly for US$128 per year Robert Morgan
News
ADR in Asia Conference

The ADR in Asia Conference was held this year at the Island Shangri-La in Hong Kong
on 15 September 2004. ADR in Asia is a conference devoted to arbitration and other
forms of alternative dispute resolution and was organized by the Hong Kong International
Arbitration Centre in conjunction with the Hong Kong Corporate Counsel Association. The
Conference was well attended by over 100 delegates from countries throughout Asia. It
was such a success that it will certainly be held again next
year. The date set down for it is 15 September 2005 - so
please mark your diaries!
62 [2004] Asian DR
News
[2004] Asian DR 63
Useful websites
TREATIES AND CONVENTIONS ON ARBITRATION

The 1923 Geneva Protocol on Arbitration Clauses Contracting States and Measures Taken by Them for the
On the site of Juris International Purpose of the Convention
http://www.jurisint.org/pub/01/en/doc/150_1.htm http://www.worldbank.org/icsid/pubs/icsid-8/main-eng.htm
Information on the Protocol

The 1966 Strasbourg Convention Providing a Uniform
http://www.jurisint.org/pub/01/en/150.htm
Law on Arbitration
The 1927 Geneva Convention on the Execution of On the site of the Council of Europe
http://www.coe.fr/eng/legaltxt/56e.htm
Foreign Arbitral Awards
On the site of Juris International
The 1972 (Moscow) Convention on the Settlement by
http://www.jurisint.org/pub/01/en/doc/151_1.htm
Arbitration of Civil Law Disputes Resulting from
Information on the Convention
Relations of Economic and Scientific-Technical
Cooperation
The 1958 United Nations Convention (New York) on On the site of Juris International (see VII)
the Recognition and Enforcement of Foreign Arbitral
Awards Information on the Convention
On the site of UNCITRAL
http://www.uncitral.org/english/texts/arbconc/58conv.htm
The 1975 (Panama) Inter-American Convention on
The 1961 (Geneva) European Convention on International Commercial Arbitration
International Commercial Arbitration On the site of the Organization of American States (OAS)
http://www.sice.oas.org/dispute/comarb/iacac/iacac2e.asp
The 1979 (Montevideo) Inter-American Convention on
Information on the Convention
Extraterritorial Validity of Foreign Judgments and
Arbitral Awards
The 1962 (Paris) Agreement Relating to Application of On the FTAA site (see V)
http://www.alca-ftaa.org/busfac/comarb/intl_conv/caicmoe.asp#fjaat
the European Convention on International Commercial
Arbitration The 1987 (Amman) Arab Convention on Commercial
Arbitration
On the site of the Council of Europe
http://www.coe.fr/eng/legaltxt/42e.htm
http://www.jurisint.org/pub/01/en/155.htm (click on "English").
The 1965 Washington Convention on the Settlement of
The 1993 OHADA Treaty on the Harmonization of
Investment Disputes Between States and Nationals of
Business Law in Africa (Port-Louis, Senegal)
Other States
On the site of the World Bank/the International Center for
http://www.jurisint.org/pub/ohada/text/text.01.en.html
the Settlement of Investment Disputes (ICSID)
http://www.worldbank.org/icsid/basicdoc/9.htm Information on the Treaty
http://www.jurisint.org/pub/ohada/index_en.html
List of Contracting States
http://www.worldbank.org/icsid/constate/c-states-en.htm
TREATIES AND CONVENTIONS OF

INTEREST TO ARBITRATION AND ADR PRACTICE
1959-1996 Bilateral Investment Treaties The 1965 Hague Convention on the Service Abroad of
On the site of ICSID (see IV) Judicial and Extra-Judicial Documents in Civil or
http://www.worldbank.org/icsid/treaties/treaties.htm Commercial Matters
BIT bibliography On the site of the Hague Conference on Private International
http://www.worldbank.org/icsid/pubs/treatbibl/main.htm Law
http://www.hcch.net/e/conventions/menu14e.html
64 [2004] Asian DR
Useful websites
The 1968 European Convention (Brussels) on The 1980 European Convention (Rome) on the Law
Jurisdiction and Enforcement of Judgments in Civil and Applicable to Contractual Obligations
Commercial Matters On the European Union's legal research site EurLex
On the European Union's legal research site EurLex http://www.europa.eu.int/eur-lex/en/lif/dat/1980/en_480A0934.html
http://www.europa.eu.int/eur-lex/en/lif/dat/1968/en_468A0927_01.html 1998 consolidated version, incorporating the most recent
Consolidated version, incorporating amendments: amendments
http://www.europa.eu.int/eur-lex/en/lif/dat/1998/en_498Y0126_01.html http://www.europa.eu.int/eur-lex/en/lif/dat/1998/en_498Y0126_05.html
The 1970 Hague Convention on Taking Evidence The 1980 United Nations Convention (Vienna) on
Abroad in Civil or Commercial Matters Contracts for the International Sale of Goods
On the site of the Hague Conference on Private International On the site of UNCITRAL
Law http://www.uncitral.org/english/texts/sales/salescon.htm
http://www.hcch.net/e/conventions/menu20e.html
The 1986 Hague Convention on the Law Applicable to
The 1971 Hague Convention on the Recognition and Contracts for the International Sale of Goods
Enforcement of Foreign Judgments in Civil and On the site of the Hague Conference on Private International
Commercial Matters Law
On the site of the Hague Conference on Private International http://www.hcch.net/e/conventions/text31e.html
Law
http://www.hcch.net/e/conventions/menu16e.html The 1988 United Nations Convention (New York) on
Supplementary Protocol International Bills of Exchange and International
http://www.hcch.net/e/conventions/menu17e.html Promissory Notes
The 1973 Hague Convention on the Law Applicable to http://www.uncitral.org/english/texts/payments/bilnote.htm#TOP
Products Liability
On the site of the Hague Conference on Private International The 1988 European Convention (Lugano) on
Law Jurisdiction and the Enforcement of Judgments in Civil
http://www.hcch.net/e/conventions/menu22e.html and Commercial Matters
On the European Union's legal research site EurLex
The 1974 United Nations (New York) Convention on http://www.europa.eu.int/eur-lex/en/lif/dat/1988/en_488A0592.html
the Limitation Period in the International Sale of
Goods The 1992 United Nations Convention (Vienna) on the
On the site of UNCITRAL Liability of Operators of Transport Terminals in
http://www.uncitral.org/english/texts/sales/limitcon.htm International Trade
The 1978 Hague Convention on the Law Applicable to http://www.uncitral.org/english/texts/transpor/ott.htm#TOP
Agency
On the site of the Hague Conference on Private International The 1995 United Nations Convention (New York) on
Law Independent Guarantees and Stand-By Letters of
http://www.hcch.net/e/conventions/menu27e.html Credit
The 1978 United Nations Convention ("Hamburg http://www.uncitral.org/english/texts/payments/guarant.htm
Rules") on the Carriage of Goods by Sea
http://www.uncitral.org/english/texts/transpor/hamburg.htm
INVESTMENT TREATY ARBITRATION

A website providing free online access to the text of For further ADR websites please see:
international investment law documents and all publicly http://www.arbitration-icca.org/directory_of_arbitration_website.htm
available investment treaty awards.
http://www.mediate.com/articles/boskey.cfm
http://ita.law.uvic.ca
[2004] Asian DR 65
Forthcoming events
Function Title Place Date
Events of 2004
International Commercial Arbitration in the Asia-Pacific Region - Asian Arbitration Conference 2004 Sydney Nov. 3
http://www.hkiac.org/pdf/nov2004-Arbitration%20Conference.pdf
ABA Section of Dispute Resolution, Build Better Corporate Boards: New York Nov. 4-5
Better Decision-Making Through Collaboration.
http://www.abanet.org/dispute/buildbettercorporateboards.pdf
International Commercial Arbitration in Latin America: The ICC Perspective Miami, USA Nov. 7-9
International Chamber of Commerce (ICC)
http://www.iccwbo.org/
International Advanced Arbitration Practice Workshop (IAAP) Paris Nov. 8-9
Divorce and Custody Mediation - Mediation Training and Consultation Institute (USA) Chicago, USA Nov. 8-12
http://learn2mediate.com/index.php
KLRCA-CIETAC Joint Conference on Business Opportunities & Resolving Trade Disputes - Kuala Lumpur Nov. 9
China & Malaysia Experience
http://www.rcakl.org.my/pdf/cietacbroc.pdf
Divorce and Custody Mediation - Mediation Training and Consultation Institute (USA) Boulder, USA Nov. 15-19
http://learn2mediate.com/index.php
21st Joint Colloquium on International Arbitration - International Chamber of Commerce (ICC) Paris Nov. 19
Meeting Business Needs in the Middle East - Effective Dispute Resolution for the Region Dubai Nov. 23-24
Dubai International Arbitration Centre
http://www.arbitrators.org/Dubai/DUBAI%20FLYERS%20CIAW.pdf
ABA Judicial Division and Section of Dispute Resolution, Mediation for Judges. Phoenix, USA Nov. 29-Dec3
http://www.hkiac.org/main.html
The 11th Geneva Global Arbitration Forum - International Arbitration Institute Geneva Dec. 1-2
http://www.iaiparis.com/dwnld/agenda/Program%202004.doc/
KLRCA Symposium on The Essentials in Arbitration. Experienced Arbitrators sharing their knowledge, Kuala Lumpur Dec. 7
philosophy & skills
http://www.rcakl.org.my/pdf/fullesstlseminar.pdf
IBA SERL Gas Conference - International Bar Association Berlin Dec. 9-10
http://www.ibanet.org
Events of 2005
ITA -CANACO Workshop in Mexico City: "Arbitral Advocacy and Enforcement of Arbitral Awards." Mexico City Jan. 24
http://www.cailaw.org/ita/
Centre for International Legal Studies, International commercial Arbitration, Mediation, and Dispute Resolution. Steamboat Springs, Feb. 13 -19
http://www.cils.org/ USA
Mediating the Litigated Case Irvine, USA Mar. 17 - 18
http://www.hkiac.org/main.html
Spring Conference of the Institute for Transnational Arbitration's Academic Council: Washington,DC. Mar. 30
"Arbitration and the Involvement of Non-Parties: Transparency, Intervention and Appeal"
99th Annual Meeting of the American Society of International Law: "New World Order or a World in Disorder? Washington, DC. Mar. 30-Apr. 2
Testing the Limits of International Law"
http://www.asil.org/annual_meeting/index05.htm
School of International Arbitration - 20th Anniversary Conference - London Apr. 10 - 12
"Contemporary Problems in International Arbitration"
http://www.ccls.edu/
American Bar Association (ABA), Section of Dispute Resolution, Los Angeles Apr. 14 -16
Seventh Annual Section of Dispute Resolution conference
http://www.abanet.org/dispute/documents/callproposals.doc
18th Annual Summer Professional Skills Program in Dispute Resolution. Malibu, USA Jun. 9 -11
16th Annual ITA Commercial Arbitration Workshop Dallas, USA Jun. 16
IBA International Bar Association 2005 Conference Prague, Sep. 25 -30
http://www.ibanet.org Czech Republic
For more information on these Conferences go to www.hkiac.org and click on Events
66 [2004] Asian DR
Arbitration
Minority Share Redemption

Disputes Between Shareholders of
Finnish Limited Liability Companies
The settling of disputes arising between shareholders in limited liability companies can be complex.
But, in this article, the authors take the reader step by step though the procedures involved in this
process in Finland.
Jouko Huhtala, may be redeemed in accordance with the having jurisdiction over its registered
said rule, has the right to demand that his domicile, for appointment of a trustee to
Marko Hentunen and shares be redeemed. In such a situation, look after the interests of absent and
Marcus Möller disputes relating to the right of redemption passive shareholders during the redemption
and/or the terms and conditions for procedure. Where disputes have concerned
D
isputes between shareholders of redemption (e.g., the redemption price) listed companies, the trustees have generally
Finnish limited liability companies shall, unless otherwise agreed between the been certified public accountants.
are often settled in arbitration in shareholders, be settled in arbitration. Upon the application of a party claiming
accordance with the Finnish Arbitration Act With regard to listed companies, the redemption, the Central Chamber of
(967/1992, as amended, the "Arbitration right and/or duty to redeem shares, Commerce of Finland shall, for each
Act"). The shareholders may for example according to the provisions of the redemption dispute, decide upon the
have entered into a shareholders' agreement Companies Act, is usually preceded by the necessary number of arbitrators, which, in
that provides for disputes between the redemption obligation set forth in the general, with respect to smaller companies,
shareholders relating to the company in Finnish Securities Market Act (495/1989, is one, and with respect to larger companies,
question being settled by way of arbitration, as amended, the "SMA"). Accordingly, a is three, and appoint the chairman of the
or the articles of association of the shareholder, whose holding in a Finnish arbitral tribunal. In accordance with its
company may contain an arbitration clause. listed company exceeds two-thirds of the Arbitration Rules, the Arbitration Institute of
Pursuant to the Arbitration Act, arbitration voting rights carried by the shares, has a the Central Chamber of Commerce hears
clauses that are contained in shareholders' duty to redeem the remaining shares issued the respondent and requests the respondent
agreements that have been executed in by the company. It should further be noted to submit a written reply in response to the
writing, or in the articles of association of a that the articles of association of a request for arbitration. Where necessary,
company, shall be deemed to have the company may include even stricter the claimant may be required to ensure the
effect of an arbitration agreement. redemption provisions that set forth an communication to the respondent by
However, the Finnish Companies Act even lower threshold for the redemption verifiable means of the documents
(734/1978, as amended, the "Companies duty. necessary for such hearing. However, at
Act") provides for certain minority share Notwithstanding any stricter redemption this point it should be noted that the rules
redemption disputes to be settled by provisions that may apply, a shareholder of the Arbitration Institute of the Central
arbitration, even if there is no arbitration whose holding exceeds the nine-tenths Chamber of Commerce are only applicable
agreement between the shareholders and threshold shall, when the said threshold has as far as the appointment of the arbitral
neither the articles of association of the been exceeded, without delay, notify the tribunal is concerned. In other respects the
company nor a shareholders' agreement company that it has the right to redeem the proceedings are primarily governed by the
between the parties contains an arbitration other outstanding shares of the company. If provisions of the Companies Act and the
clause. According to the Companies Act, a the shareholders do not reach agreement Arbitration Act.
shareholder holding more than nine-tenths on the terms and conditions of redemption, In determining the redemption price,
of the shares of a company and the votes the redeeming shareholder shall notify the the arbitral tribunal shall, according to the
carried by all shares, shall have the right to company of its redemption claim and the Companies Act, take into account all the
redeem the shares held by the other company is under the obligation to notify relevant circumstances of each individual
shareholders at the going price. On the the shareholders of the said claim. The case. However, the Companies Act does
other hand, a shareholder, whose shares company shall also apply to the court not in detail regulate the actual arbitration
[2004] Asian DR 67
Arbitration
proceedings, and thus the general provisions approved by arbitral tribunals). In this case price with the county government having
of the Arbitration Act are applicable. the shareholder is entitled to the going jurisdiction over the registered domicile of
With regard to procedure, the interest on the redemption price from the the company. Provided that the appropriate
Arbitration Act stipulates, among other provision of the security until the final deposit is made and the redeeming
things, that the arbitral tribunal must determination of the redemption price. shareholder does not reserve the right to
provide the parties with sufficient The arbitral tribunal may issue partial reclaim the deposit, title to the shares is, in
opportunities to present their case. In order awards during the proceedings and a final this case, transferred to the redeeming
to promote the appropriate and expedient award at the end of the process. The shareholder at the moment the deposit is
settlement of the matter, the arbitral arbitral tribunal may further, if the parties made.
tribunal may ask witnesses or other persons have so agreed, decide by a separate award A shareholder dissatisfied with the
to appear in order to be heard and request a certain issue that is relevant for the arbitral award has the right to refer the
a shareholder or another person to submit resolution of the dispute, e.g. the existence matter to a court of law by bringing an
to the arbitral tribunal any document that of the redemption right in order to enable action against the counterparty. The action
may be of relevance to the case. It has, in transfer of title to the shares as set out shall be brought within two months from
fact, become an established practice to above. the date when the shareholder received a
arrange an oral hearing in disputes relating If title to the shares subject to copy of the arbitral award.
to redemption of minority shares in listed redemption has not already been transferred Generally, the redeeming shareholder is
companies. to the redeeming shareholder as set out liable for all costs arising from arbitration
If the redemption right is not disputed above, the holders of the shares must, relating to redemption of minority shares.
or if a decision thereon has become final, within one month from the agreement on However, for particular reasons, the arbitral
but the redemption price has not been the redemption price or from the date on tribunal may consider it reasonable to order
agreed upon or ordered, the redeeming which the decision thereon has become the original holder of the shares subject to
shareholder has the right to receive title to final, deliver the share certificates to the redemption to be liable for all or part of the
the share certificates against the provision redeeming shareholder against payment of costs.
of a security approved by the arbitral the redemption price. If the share certificates
Jouko Huhtala, Marko Hentunen and
tribunal for payment of the redemption are not delivered, the redeeming shareholder Marcus Möller
price (in general, bank guarantees are shall without delay deposit the redemption Castren & Snellman, Helsinki, Finland
!"#$%
Looking for a venue to hold

arbitrations, mediations or
other forms of dispute resolution, seminars
or training courses?
HKIAC offers custom built and comfortable rooms at competitive rates.
For viewing and room booking details, please visit
HKIAC's Website: http://www.hkiac.org
or contact Primrose Law at
tel 2525 2381 / fax 2524 2171 / email [email protected]
68 [2004] Asian DR
Arbitration
CIETAC Financial Dispute Arbitration

Rules: Practice and Problems
The new CIETAC Rules for Financial Dispute Arbitration are analysed in this article. The authors
have identified certain disadvantages in the administration of CIETAC rules and also in the enforcement
of the decision.
James M. Zimmerman and outside China and, a procedure other than answer to the respondent's counterclaim, if
that detailed in the financial rules, which any. Considerable flexibility is afforded to
Diarmuid O'Brien said procedure will prevail subject to the the tribunal in the manner of conducting
approval of the Arbitration Commission. the arbitration - the rules provide that the
I
n April 2003, CIETAC issued rules
Arbitrators are required to be selected from arbitral tribunal may conduct the arbitration
designed to provide a summary and
CIETAC's dedicated panel of Chinese in "such manner as it considers appropriate"
prompt forum for resolving disputes
financial specialists. but must provide reasonable opportunity to
relating to financial transactions.1 The CIETAC
The Financial Dispute Arbitration Rules each party to present his case.
Financial Dispute Arbitration Rules give a
apply a fast-track arbitration procedure. The parties may jointly agree on a time
broad and sweeping interpretation to the
Notification of acceptance, or otherwise, limit for the presentation of evidence, or, in
term "financial transactions". This term is
of the Application for Arbitration must be default of agreement or a determination of
defined as referring to transactions arising
issued by CIETAC within five days of its such time by the tribunal, the parties must
between financial institutions, or arising
receipt of the application. A rejection of an submit all evidence and submission
between financial institutions and other
application must be accompanied by the documentation within three days prior to the
natural or legal persons in the currency,
capital, foreign exchange, gold and insurance reasons therefor. The tribunal may comprise date of the first oral hearing of the case.3
markets that relate to financing in both a sole arbitrator or three - failure by the Subject to any mandatory rules of law
domestic and foreign currencies. The term parties to designate the number of arbitrators governing the contract underlying the
also refers to the assignment and sale of any will result in CIETAC making a determination. dispute, the arbitral tribunal must, in default
and all types of financial instruments and Unless otherwise agreed upon by the of agreement by the parties, apply
documents denominated in both domestic parties, where a sole arbitrator is to be international standards in determining the
and foreign currencies, including but not appointed, such appointment must be applicable substantive law. In all cases, the
limited to: (1) loans; (2) deposit certificates; jointly made by the parties, or alternatively, arbitral tribunal must take into account the
(3) guarantees; (4) letters of credit; (5) they must entrust the appointment to the terms of the contract, the usages and
negotiable instruments; (6) fund transactions Chairman of CIETAC, within seven business standard practices of the trade, and abide
and fund trusts; (7) bonds; (8) collection and days of the date of receipt of the Notice of by the principles of fairness and
remittance of foreign currencies; (9) factoring; Arbitration. If three arbitrators are to be reasonableness. An award must be rendered
and (10) reimbursement agreements appointed, each party must effect an within forty-five business days from the
between banks.2 appointment within the foregoing seven date on which the tribunal is formed -
As the above merely comprises business day period, while the parties are considerably faster than the nine-month
examples of the types of financial dispute afforded a second seven-day business period afforded generally under the CIETAC
falling within the remit of the rules, there is period in which to jointly appoint the Arbitration Rules. If necessary and justifiable,
ample scope for other finance-related presiding arbitrator - or entrust such function the CIETAC Secretary-General may extend
disputes to be referred to CIETAC under to CIETAC. the foregoing time limit by up to fifteen
these Rules. In order for the financial In default of the appointment of any business days. In respect of any matter not
arbitration rules to apply, the disputing arbitrator within prescribed time limits, such provided for in the financial rules, CIETAC's
parties are required specifically to refer to appointment will be effected by the general Arbitration Rules will apply.
the Rules in their arbitration agreement, and CIETAC Chairman. Consistent with its fast- The introduction of the financial
a failure to so specify may result in the track theme, the respondent is granted arbitration rules has paralleled and
application of the CIETAC's general rules of fifteen business days to file its defence and complemented CIETAC's jurisdictional
arbitration. counterclaim, in each case with supporting expansion over recent years. A 1998
Under the Financial Dispute Arbitration documentation. In turn, the claimant has revision to the arbitration rules expressly
Rules, the parties may agree to a venue fifteen business days in which to file an permitted the arbitration of disputes
[2004] Asian DR 69
Arbitration
involving Foreign Invested Enterprises, while a suitably qualified and technically will depend on the relative strengths and
an amendment in 2000 formally extended proficient arbitrator, it can be difficult to weaknesses of the parties, their bargaining
CIETAC's jurisdiction over domestic cases secure his services at relatively short positions and general leverage. For
and placed it in direct competition with notice. international arbitration, we recommend
'domestic arbitration institutions' such as (b) Enforcement: An award rendered by the Hong Kong International Arbitration
the Beijing Arbitration Commission. 4 C I E TAC i s a d o m e st i c awa rd ; Centre (HKIAC), the Singapore International
N o t w i t h sta n d i n g these h ea l t hy accordingly, the successful party will Arbitration Centre (SIAC), or ICC arbitration
developments and the observation that not benefit from the New York which can be located at a venue of choice
CIETAC's rules generally conform to Convention on the Recognition and (except mainland China). SIA and ICC
international standards, there can be certain Enforcement of Foreign Arbitral Awards. rendered awards will be enforceable in
drawbacks to arbitrating before CIETAC. A PRC court is entitled to refuse mainland China under the New York
These are explored below. Indeed, as at recognition and enforcement of an Convention. Those rendered in Hong Kong
the end of August, CIETAC - including its overseas rendered award only in (by HKIAC or ICC) will be enforceable in
branches in Shanghai and Shenzhen - had accordance with the limited criteria set China under a special arrangement that is
received few cases based on the new forth in the Convention. However, such similar to the New York Convention.
financial arbitration rules. According to court may examine a domestically
CIETAC, only one case has actually been (mainland Chinese) rendered award on James M Zimmerman and Diarmuid O'Brien
arbitrated under the new rules, and a the basis of the merits of the case. As Squire, Sanders & Dempsey, Beijing
decision is pending. The drawbacks are as CIETAC is a mainland organisation, ipso

follows: facto there are more grounds available 1 Financial Dispute Arbitration Rules (adopted on 4
(a) Administration: Firstly, from a for setting aside and refusing April 2003 by the China Council for the Promotion
of International Trade/ China Chamber of International
procedural perspective, the CIETAC enforcement of a CIETAC award that
Commerce).
Secretariat plays a considerably greater would not apply to an arbitral award 2 Financial Dispute Arbitration Rules, art. 2. Securities
role in the administration of the rendered overseas or a Hong Kong related disputes are excluded from the Rules.
arbitration than similar arbitration arbitral award. It is noteworthy that the 3 Subject to the agreement of the parties, the
commissions overseas, thereby limiting Financial Dispute Arbitration Rules do tribunal will determine whether or not to hold oral
hearings. Notification of a hearing must be served on
the role of the arbitrators. Secondly, permit the arbitral venue to be located
the parties at least ten working days before the
with CIETAC, arbitrators may only be overseas - consequently, the Convention scheduled hearing.
selected from CIETAC's drafted list of would apply to any award rendered by 4 CIETAC's jurisdictional expansion in 2000 is
approved arbitrators - a separate list of CIETAC overseas or in Hong Kong. generally considered a reaction to the 1996
approved arbitrators has been drafted Having regard to the foregoing, we expansion of the arbitral jurisdiction of domestic
institutions to include foreign-related disputes. See
for financial disputes. With cases recommend parties to seek settlement of
State Council Notice of the Office of the State
becoming increasingly more technical contractual disputes via arbitration at a Council Concerning Clarification of Several Issues
and complex, it can often prove location outside China. In practice, while regarding the Implementation of the Arbitration Law
difficult to select and nominate a the Chinese party will normally seek of the People's Republic of China.
suitable arbitrator from the dedicated CIETAC arbitration and the foreign party
list. Moreover, even where a party finds overseas arbitration, the eventual outcome
Asian
Dispute
Review Call for Papers
If you are interested in submitting an article to Asian Dispute Review,
please send it as a Word document by email to:
Diane O'Hare, Editor, Asian Dispute Review: [email protected]
70 [2004] Asian DR
Arbitration
Attempting the Impossible:

The New IBA Guidelines on
Conflicts of Interest in International
Arbitrations
The IBA's new Guidelines regarding conflicts of interest are explained in this article. Some criticism
is levelled but the author concedes that it is hard to make rules for every situation and notes that
feedback to the IBA will result in refinement of these Guidelines.
Nick Longley or in other words to create a degree of The General Test for Conflicts of
uniformity of approach to conflicts of Interest
I
n response to an ever increasing interest. General Standards 1 and 2 contain the
number of challenges to arbitrators, the The purpose of this article is to provide general test for when an arbitrator is in a
International Bar Association (IBA) an introduction to the main themes of the conflict of interest and cannot serve.
assembled a working party to consider and Guidelines and provide a cursory General Standard 1 requires all arbitrators
draft Guidelines on Conflicts of Interest in comparison with the current regime for to be impartial and independent. This
International Arbitration (the Guidelines). conflicts of interest in arbitrations in Hong requirement ends when the final award is
The Working Party was led by Otto de Kong. handed down and does not continue
Witt Wijnen, who recently described the during any challenge.
problems that the Working Party had to General Standard 2 states that an
Format of the Guidelines
address as enormous and complex. Given arbitrator must not serve when either:
that each jurisdiction adopts vastly different The Guidelines are set out in two parts.
(a) he considers that he has doubts over his
approaches to issues of bias and conflict of The first part sets out seven general
ability to be impartial or independent;
interest and the almost infinite number of principles, called General Standards and
or
situations in which a conflict of interest explanatory notes for each Standard. The (b) if facts or circumstances exist that,
could arise, a better description of the task second part of the Guidelines is a practical from a reasonable third person's point
might be 'impossible'. application, which divides potential conflict of view, having knowledge of the
Despite the enormity of the task and of interest situations into three colour relevant facts, give rise to justifiable
after two years of work, on 22 May 2004, coded lists. The Red List, which sets out doubts as to the arbitrator's impartiality
the Council of the IBA approved and situations where a conflict of interest exists, or independence.
published the Guidelines. The Guidelines is subdivided into two. The non-waivable The requirement that an arbitrator must
set out the Working Party's understanding Red List sets out severe conflicts of be both impartial and independent reflects
of the best current practice on the interests, where the arbitrator must not act, the test in Article 12 of the UNCITRAL
identification of conflicts of interest and whereas the waivable Red List lists situations Modal Law but is in contrast to the test in
disclosure rules in international arbitrations. where the arbitrator can only act with the the Hong Kong Arbitration Ordinance2 or
Although the Guidelines expressly state express consent of the parties. the English Arbitration Act,3 both of which
that they are not intended to override any The second list is the Orange List, only require arbitrators to be impartial.
law, the Working Party's stated intention is which lists situations where a conflict could General Standard 2 (c) sets out a test
to reduce the growing problems of conflicts exist in the eyes of the parties. The final list for what is meant by 'justifiable doubts'
of interest and: is the Green List, which is a list of situations which are:
help the decision making process, where no actual or apparent conflict exists. If a reasonable and informed third party
national laws, judicial decisions [and] Examples from each list appear at the end would reach the conclusion that there was
arbitration rules,1 of this article. a likelihood that the arbitrator may be
[2004] Asian DR 71
Arbitration
influenced by factors other than the merits The wording reflects the wording used The Orange List
of the case as presented by the parties in in the ICC Rules of Arbitration.5 Although The Orange list sets out situations
reaching his or her decision. the test for disqualification is objective, this which could be a conflict and which must
There are two important differences disclosure test is subjective, placing the be disclosed. The Orange List includes:
between this test and the test for bias set opinions of the parties at centre stage. (a) where the arbitrator's law firm currently
out in Article 3.3 of the HKIAC Domestic However under the Guidelines, party acts for one of the parties in an
Rules. First the test in the Domestic Rules is autonomy has limits. Any issue appearing unrelated matter without creating a
perhaps broader. Article 3.3 requires an on the Green List, in the view of the significant commercial relationship; and
arbitrator to disclose to the parties any Working Party, does not require any (b) where the arbitrator and Counsel are
circumstance likely to create an impression disclosure no matter what the views of the members of the same chambers.
of bias and requires a proposed arbitrator parties might be. Although a review of the
not to serve if he has any interest which, if a situations on the Green List might support The Green List
party knew of it, might lead him to think the views of the Working Party, there are The Green List sets out those situations,
that the arbitrator might be biased. Second, obvious difficulties with the drafting. This which the Working Group considers do not
the Guidelines set out an objective test for difficulty applies to situations listed on both raise a conflict of interest and raises no duty
the disqualification of arbitrators, whereas the Green and Orange lists. Each situation of disclosure. The Green List includes:
the disqualification test in Article 3.3 relies listed is open to interpretation. (a) where the arbitrator has previously
on the subjective views of the parties. For instance, the arbitrator is under a expressed a general opinion in an
There is a further difference between duty to disclose the fact that he has a unrelated forum concerning an issue
the Domestic Rules and General Standard material shareholding in one of the parties if arising in the arbitration; and
2. Under Article 3.3, no person can serve it is publicly listed6 but not when that share (b) where the arbitrator has previously
as an arbitrator in any dispute in which that holding is insubstantial.7 Similarly there is an worked with one of the Counsel as Co-
person has or has had any interest which obligation to disclose close personal Counsel.
might lead a party to think that the friendships with the parties 8 but not
proposed arbitrator might be biased, except relationships through membership of the Closing Comments
by consent of the parties. same professional organisation or social
The Guidelines will provide useful
The approach of the Working Party, club.9
guidance to proposed arbitrators, parties
however, is that there are some conflicts However, the Guidelines do not and
and their advisers on the approach to
that are so severe that an arbitrator cannot cannot legislate for every conceivable
adopt when considering whether a conflict
serve and these conflicts cannot be waived situation. The proposed arbitrators must
of interest exists. They might be particularly
by the parties. Examples of such conflicts exercise their discretion to disclose
useful in arbitrations governed by laws or
are listed on the non-waivable Red List and information in accordance with the General
rules, which require arbitrators to be both
include: Standards. General Standard 3 (c) comes
impartial and independent. It should be
(a) where there is an identity between the to the aid of the arbitrator. It states that any
borne in mind, however, that the publication
arbitrator and the party, i.e. where the doubt as to whether to disclose, should be
of the Guidelines is the beginning rather
arbitrator is a director of a party; or resolved in favour of disclosure.
than the end of the story. The Working
(b) where the arbitrator has a significant
Party has requested feedback on the actual
economic interest in the matter at stake.4 The Lists use of the Guidelines so that consideration
The inclusion of a non-waivable list is
can be given to revision and refinement.
perhaps a useful protection for disputants, The Red List
If you would like a full copy of the IBA
particular in Hong Kong, where the practice
The two-part Red List sets out those Conflict of Interest Guidelines please see
of including arbitration agreements in
situations where a conflict of interest could the IBA website (www.ibanet.org).
standard non-negotiable tender documents
arise. The situations on the non-waivable
means that the consensual nature of the Nick Longley
Red List are illustrations of situations deriving
arbitration agreement is more theoretical Tanner de Witt, Hong Kong
from the principle that no person can be
than real.
their own judge and there are two
1 The Guidelines - Introduction Para 4.
Disclosure examples from that list above. The
2 Section 2GA requires an arbitration tribunal to act
General Standard 3 sets out the general waivable Red List sets out less severe
fairly and impartially between the parties.
test for disclosure by the arbitrator. The situations such as: 3 See section 24 of the Arbitration Act 1996.
test is that the arbitrator must disclose facts (a) where the arbitrator holds shares in a 4 General Condition 2 (d).
party of an affiliate; and 5 Article 7(2).
and circumstances which may:
6 Orange List Article 3.5.1.
in the eyes of the parties, give rise to (b) where the arbitrator is a lawyer in the
7 Green List Article 4.5.2.
doubts as to the arbitrator's impartiality and same firm as a firm advising one of the
8 Orange List Article 3.4.3.
independence. parties. 9 Green List Article 4.4.1.
72 [2004] Asian DR
Arbitration
Soybean Contracts and

FOSFA Arbitration
This article examines FOSFA arbitrations such as those involving soybean contracts. The author
argues the case for choosing Hong Kong as the seat of arbitration instead of London.
Samuel C C Wong provided that the cargo complied with the from buyers of soybean oil and soybean
requirements of AQSIQ. Subsequently, meal. These are matters of the substantive
T
rade between China as importer further notices were issued, such as the law of contract and the provisions of the
and the USA, Brazil and Argentina notice of 31 May 2004, which announced particular contract governing apportionment
as exporters in soybean, has the rejection of a shipment of 58,944 of risks.
become very significant, reaching an import tonnes of soybean on board M/V Nordstra,
figure of 21 million tonnes for China for the by AQSIQ Guangdong. It was found that Substantive law
year 2003. Soybeans are imported into there were 2.8 to 4.6 red beans per This must be the first thing to ascertain.
China for crushing: soybean oil is used for kilogram. The pesticide which coated the In fact, from the contracts I have perused
human consumption and soybean meal for red beans was carboxin, a material harmful so far, English law applies, even though
animal feed. This makes China the largest to humans and animals. none of the contracting parties are English
importer of soybean in the world. However, This caused serious alarm to those and the place of performance is China. This
the trade in soybean is dominated by a few involved in the trade: the importers, the arose out of the incorporation of FOSFA
international grain traders: among others, exporters and the brokers. Shiploads of 50, contract forms. As an example, a Cargill
Cargill, Bunge, Dreyfus and ADM. Contracts 000 to 60,000 tonnes of soybeans with contract provides:
are generally made in accordance with the cargo values in excess of US$ 20 million per "This contract is made upon the terms,
seller's standard forms of contract, with shipload were stranded. Applications for conditions and rules, including the arbitration
arbitration in London per FOSFA (Federation GMO Safety Certificate and GMO Labelling clauses of this contract, in the form FOSFA
of Oils, Seeds and Fats Associations ("the Certificate for genetically modified soybeans 22 in force at the date of this contract....."
Federation")). This article explores two in accordance with the regulations of the Clause 28, the Domicile clause, of
questions: (1) whether the standard forms of Ministry of Agriculture of the PRC were FOSFA 22 provides:
contract allow for a fair allocation of risks, suspended. Likewise, in relation to suspended "This contract shall be deemed to have
and (2) whether FOSFA arbitration in London exporters, applications by PRC importers for been made in England and the construction,
best serves the needs of the parties. CIQ Certificates (import permits) for the validity and performance thereof shall be
discharge of soybean in Chinese ports were governed in all respects by English Law...."
Background returned and not processed.
It is timely to explore the above two There were accusations that the Chinese Frustration and Force Majeure
issues as a result of the recent suspension Government used quality as a pretext to Under English law, a contract can be
of Brazilian soybean shipments due to depress soybean prices. In fact, soybean discharged by frustration, by breach or by
contamination. On 24 May 2004, Notice prices did drop dramatically from about performance. The consequence under each
No 58 was issued by the Administration of US$ 450 to US$ 300 per tonne. Intense scenario is markedly different. Take the
Quality Supervision, Inspection and political pressure was exerted by Brazilian example of the soybean case: if the US
Quarantine of the People's Republic of and US interests and vigorous negotiations Government imposes a ban, making it
China (AQSIQ). The Notice reported that took place. It was eventually agreed that illegal to export soybean due to war1or
AQSIQ Guangdong had once again found China would permit resumption of import prohibition2, or the Chinese Government
pesticide-coated soybeans, so called "red of Brazilian beans provided that a limit of bans import due to a change in the law3,
beans", in a shipment from Brazil. The one red bean per kilogram was not exchange control or, as in this case, due to
exporter was Louis Dreyfus Asia Pte Ltd exceeded. This was announced on or the threat of contamination, the contract can
and the suppliers to Dreyfus were ADM Do about 22 June 2004. With the resumption be discharged and both parties can be
Brazil, Cargill Agricola SA and Bianchini SA of discharge, the question arose as to which excused from performing it. However, the
Industria Comerico E Agricultura. The party should bear the consequences of the frustrating event must be one that is beyond
Notice, more importantly, announced the delay and the loss and damage that the parties' control. If so, it would be a case of
suspension of Louis Dreyfus, ADM Do accrued as a result. For example: the drop subsequent impossibility, of supervening
Brazil and two other suppliers from in the price of soybean; the additional events occurring after the contract was
exporting soybeans to China. But there was charter hire due to demurrage; idle plant entered into, making it impossible if not illegal
an exception: for shipments already en capacity due to raw material shortage; to perform.
route, the Notice permitted importation unfulfilled or cancelled contracts and claims When that happens, what would be the
[2004] Asian DR 73
Arbitration
consequence for a shipment of soybean that These and other features of these one who is a trading, full broker, or full non-
is en route? If there is no other provision such soybean contracts are biased in favour of trading member of FOSFA or a nominated
as a "force majeure" clause in the contract sellers in risk allocation, such as terms that representative of a trading, full broker or full
which provides for the consequences of the provide for phytosanitary inspection, quality, non-trading member of the FOSFA. Criticisms
frustrating event and the contract is held to be condition, and weight to be final at load of this system are: (1) that the parties are
frustrated, all monies paid by the buyers (by port as per independent surveyor at the limited in their choice of arbitrators; (2)
letters of credit or otherwise) before the time seller's option. It leads one to wonder members of FOSFA or their nominees are
of discharge shall be recoverable from the whether the buyers should collectively often persons with no legal background or
sellers4. If this were to happen, it would be negotiate for more equitable terms. judicial capacity, and are therefore incapable
very favourable to the Chinese importers in a of properly adjudicating the cases before
falling market, but this in fact is not the case. FOSFA Arbitration them; (3) the commodities traders belong to
The reason lies in the provisions of the Typically, two types of arbitration a small community dominated by key
contracts. The force majeure clause in the clause are used: (a) arbitration to take place players: the question is whether an arbitrator
Cargill contract provides that the contract is in London as per FOSFA and (b) arbitration appointed in the circumstances from the
subject to the "force majeure clause in to take place in Hong Kong or Hong Kong FOSFA list can be truly (or perceptibly)
FOSFA 22", while other contract forms arbitration as per FOSFA. independent and impartial; (4) there is a lack
stipulate that the contracts are "subject to of Asian representation in the Federation,
the usual force majeure practices as per Seat of Arbitration with virtually no known practising Asian
FOSFA". So what do FOSFA 22 and the In the absence of any agreement to the FOSFA arbitrator.
usual practices of FOSFA have to say? Not contrary, the procedural law of an arbitration Further, an appeal is heard before a
surprisingly, the force majeure clause only will be the law of the jurisdiction where the tribunal of five arbitrators, none of whom is
deals with prevention of shipment and not arbitration is to take place.6 So, for London appointed by the parties.
with events at discharge. It says: "Should arbitration, English procedural law under the
shipment...be prevented at any time during Arbitration Act 1996 would govern. However, No legal representation at
the last 30 days of the contract shipment a problem arises in relation to Hong Kong hearing
period by reason of Act of God, strikes, arbitration. The question is whether Hong Parties may not be represented by
lockout, riot, civil commotions, fires or Kong is merely the place of arbitration with members of the legal profession (Rule 4(g)).
other cause comprehended by the term English procedural law to apply or whether the This will prevent or hamper parties from fully
Force Majeure at port of loading...the time Hong Kong Arbitration Ordinance (Cap 341) and properly ventilating their cases. Even at
allowed for shipment shall be extended to (the Ordinance) governs. In a soybean contract the appeal stage, the Board of Appeal has
30 days beyond the termination of such that is currently under arbitration pursuant to the right to decide whether legal
cause..." and under the prohibition clause in clause (b), the Ordinance applies by consent of representation at the hearing is granted.
the event of prohibition of export of the the parties. Thus the problem was resolved
country of origin, if shipment proves without the arbitrators having to decide the Obscure time bar clause
impossible during the extended 30 days, issue. But there are serious differences between Under the Procedure for claiming
any unfulfilled part shall be cancelled. the effect of the Ordinance and the Rules of arbitration and time limits provisions, Clause
But this is only one half of the catch. Arbitration and Appeals of FOSFA under 2(a) and (b), the Rules of Arbitration of
Under the Import licence and quota clause, English procedural law. FOSFA impose a time bar for seeking
the buyer is required to guarantee "all arbitration: 21 consecutive days after the
import licences/ quota...and any certification Two-tier system date of discharge of the goods for claims on
demanded by Chinese authorities beyond FOSFA arbitration is a two-tier system. quality and/or condition, and 120
those specified in this contract", an absolute Firstly, an arbitration takes place before two consecutive days after the day of final
duty and failure by the buyer to obtain arbitrators, one appointed by each party discharge of the goods for other types of
import licences or quota is "not to constitute and, if the arbitrators cannot agree, an claim. For the unwary, the need for a party
a reason to declare force majeure". umpire would be appointed to take over to dispatch the notice of claim together with
With this in place, all the risk of the the case. The arbitrators appointed by the the name of its appointed arbitrator to the
contract falls upon the buyer. In the case of parties then assume the role of advocate/ other party and to the Federation within the
Bangladesh Export Import Co Ltd (BEI) v. agent for their respective parties. Secondly, above period can be a deadly trap. Failure to
Sucden Kerry SA 5 , the buyer (BEI) was each party has the right to appeal to the serve the required notice of claim within the
under an absolute duty to obtain an import Federation against the first tier tribunal's time stipulated results in the claim being
licence and the contract term stipulated award (the second tier). Under English law, deemed to be waived and absolutely
that inability to obtain one did not constitute an appeal is a complete rehearing of the barred, unless the arbitrators in their absolute
force majeure. Sugar imports were case. Thus, the award of the first tier discretion otherwise determine.
subsequently prohibited by the Bangladesh tribunal is not final and a repeat of the
Government after the contract was entered hearing is expected in big money cases, Security for costs
into. It was held that this prohibition was not with further costs to the parties. Another undesirable consequence of
a frustrating event and BEI, unable to FOSFA arbitration under English law is the
perform, was ordered to pay US$ 2.6 FOSFA arbitrators prospect of a respondent seeking an order
million pursuant to the seller's counterclaim. The parties can only appoint as arbitrator for security for costs. This is a peculiar
74 [2004] Asian DR
Arbitration
aspect of English law put in place to protect (4) there is no restriction as to qualification (6) the common law is a large part of the
an English defendant or respondent from an or nationality of an arbitrator, unless substantive law of Hong Kong, as well as
action taken by a foreign plaintiff or otherwise stated in the arbitration the basis of the commercial law applicable
claimant in England. While the arbitration agreement. Thus, for complex to many international trade transactions.
legislation has been amended so that commercial disputes involving serious By virtue of both 'one country, two
security for costs cannot be exercised on arguments as to issues of law, legally systems' under Hong Kong's Basic Law and
the ground that the claimant is ordinarily qualified arbitrators conversant in the the Closer Economic Partnership
resident or incorporated outside the United relevant areas of law can be appointed; Arrangement of 2003, Hong Kong's role is
Kingdom, there is no judicial guidance as to (5) there is no restriction against legal to complement mainland China in the
how the tribunal is to exercise its discretion7. representation at a hearing, whether by provision of legal or related services for the
In Bank Mellat8, Kerr and Walker LJJ said that local or foreign counsel: in fact, in most ad va n ce m e nt, re g u l a r i s at i o n a n d
"the English courts should be slow in cases where hearings took place in furtherance of trade between Chinese and
applying the jurisdiction to order security Hong Kong, parties were routinely foreign entities. In this respect, it is submitted
for costs in international arbitration unless, represented by counsel and solicitors; that Hong Kong arbitration is well suited to
in the particular circumstances of each (6) intervention by a Hong Kong court is serve the needs of both foreign traders and
case, there was some more specific minimal and circumscribed by the Chinese business entities in the resolution of
connection with England other than the Model Law13 international commercial disputes, of which
mere fact that the parties had agreed that (7) it is arguable that the tribunal may not have the disputes arising out of the threat of
the arbitration was to take place there." The jurisdiction to order security for costs of contaminated soybean is but one example.
question is whether FOSFA arbitration is the respondent14 and this accords with the It is suggested that an arbitration clause
such a specific connection as to trigger the agreement of the parties to an international which clearly stipulates Hong Kong as the
power to order security for costs. In a arbitration for the arbitration to take place seat of arbitration (and applying the
commodity arbitration under FOSFA in a neutral venue. UNCITAL Model Law) should be promoted
involving the writer and governed by English for soybean contract disputes.
law, where both parties were foreign, A case for Hong Kong arbitration A recommended arbitration clause could
security for costs was applied for by the Disputes involving soybean contracts read as follows:
respondent on the ground that there might between US or Brazilian exporters/traders "Any dispute or difference of any kind
be difficulties in enforcing arbitral awards in and Chinese importer/processors are whatsoever which arises or occurs between
China against the Chinese claimant. This matters that fall within the definition of the parties in relation to any thing or matter
was notwithstanding that China is a signatory 'international arbitration' under the arising under or out of or in connection with
to the New York Convention9 and regularly Ordinance. It is suggested that Hong Kong this contract shall be referred to arbitration
enforces Convention awards. would be a more appropriate seat for such which shall take place in Hong Kong in
arbitrations than the UK for the following accordance with the Arbitration Ordinance
Hong Kong Procedural law reasons: of Hong Kong Cap 341 then in force."
The UNCITRAL Model Law ("the Model (1) Hong Kong is a neutral venue acceptable
Law") applies to an international arbitration to both parties; Samuel C C Wong
Barrister at Law and Chartered Arbitrator, Hong Kong
conducted in Hong Kong or governed by (2) H o n g Ko n g i s ge o g ra p h i ca l l y
Hong Kong procedural law: Part IIA of the advantageous for both parties and
Ordinance. Features of international convenient to witnesses (compared 1 Fribrosa v. Fairbairn, Lawson Combe Barbour Ltd
[1943] AC 32.
arbitration in Hong Kong include the with travelling to UK to give evidence);
2 Societe Co-operative Suisse de Cereales v. La Plata
following: (3) the Hong Kong Ordinance is user- Cereal Co. SA (1947) 80 Ll. L Rep. 530, 542.
(1) there is finality of the award10: recourse friendly and fully reflects party 3 Nile Co for the Export of Agricultural Crops v. H.& J.
against an award is restricted to matters autonomy; M. Bennett (Commodities) Ltd [1986] 1 Lloyd's Rep 555.
of procedural unfairness, disputes not (4) section 2GA of the Ordinance requires 4 Section 1(2) of the Law Reform (Frustrated Contracts)
Act 1943.
falling within the submission to (and permits) the arbitrator to use 5 [1995] 2 Lloyd's Rep 1.
arbitration, the composition of the procedures that are appropriate to the 6 Bank Mellat v. Helliniki SA [1984] QB 291.
tribunal not being in accordance with particular case15. This would, subject to 7 Section 38(3) of the Arbitration Act of 1996.
the agreement to arbitrate, non- contrary agreement by the parties, 8 Bank Mellat v. Helliniki Techniki [1984] 1 QB 291 at
292.
arbitrability under Hong Kong law and unfetter an arbitrator from a set
9 New York Convention on the Recognition and
contravention of Hong Kong policy; procedure and allow him the use of Enforcement of Foreign Arbitral Awards.
(2) unless the parties have agreed the alternate procedures depending on the 10 Article 34 of the Model Law.
number of arbitrators, Hong Kong complexity of the case, with the aim of 11 Article 10 of the Model Law, as modified by section
34C(5) of the Ordinance.
International Arbitration Centre is achieving the fair, expeditious and
12 Article 11 of the Model Law.
empowered to determine this question11; economical resolution of disputes - the 13 Article 5 of the Model Law.
(3) the parties are free to agree on a stated objectives of the Ordinance16; 14 See Article 17of the Model Law (but cf section 2GB
procedure for appointing arbitrators. Failing (5) Hong Kong has a pool of experienced (1)(a) of the Ordinance) and paragraph 13-123 of
Arbitration in Hong Kong: a Practical Guide, Editor in Chief:
agreement, each party shall appoint an bilingual arbitrators, experienced
the Hon Mr Justice Ma, Sweet & Maxwell Asia, 2003.
arbitrator and the two appointed arbitrators barristers, solicitors and experts in trade 15 Section 2GA(1)(b) of the Ordinance.
shall appoint the third arbitrator12; and maritime disputes; and 16 Section 2AA of the Ordinance.
[2004] Asian DR 75
Arbitration
Ex parte or
Default Proceedings in
International Arbitration
At present there is no unity of opinion among senior arbitration figures as to the proper course
of action to be taken in the event of a default in arbitration proceedings. The author argues that there
is a need for guidance and offers some suggestions to alleviate uncertainty.
Ben Beaumont respondent has failed to communicate arbitral tribunal may continue the
his statement of defence without proceedings and make the award on
E
x parte or default proceedings in showing sufficient cause for such failure, the evidence before it.
international arbitration occur regularly. the arbitral tribunal shall order that the The provisions of the Model Law,
And yet, detailed guidance as to how proceedings continue. Article 25 (a) and (b), are very similar to
to proceed is lacking and opinions are 2. If one of the parties, duly notified under those provisions in the UNCITRAL Rules as
divided. The adequacy of the process can these Rules, fails to appear at a hearing, to the power to proceed. However, the
be vital to the success or failure not only of without showing sufficient cause for absence of a defence does not permit the
the arbitration process but of any such failure, the arbitral tribunal may tribunal to treat that absence as an
subsequent enforcement attempt. The proceed with the arbitration. admission that the issues set out in the claim
reason appears to be that explicit guidance 3. If one of the parties, duly invited to or counterclaim are substantiated.
would inhibit the tribunal in some produce documentary evidence, fails The London Court of International
jurisdictions. The majority of parties and to do so within the established period Arbitration (LCIA) Rules, Article 15(8),
international tribunals would agree that of time, without showing sufficient directs that, where a respondent has failed
there is a need for guidelines as to how to cause for such failure, the arbitral to submit a statement of defence, then the
proceed in such circumstances. tribunal may make the award on the tribunal may proceed with the arbitration
The very important question of the evidence before it. and make an award. The ICC International
procedure to be used when one party does The key point here is that this article is Court of Arbitration Rules, Article 6(3),
not comply with the directions of the mandatory, if the parties adopt the gives a wide and general power to the
tribunal is not an area much discussed and UNCITRAL Rules unamended, whereas the tribunal. The tribunal is authorised to
yet it is a situation which occurs regularly in authority given in the UNCITRAL Model proceed with the arbitration notwithstanding
a variety of circumstances and requires ex Law, Article 25 is only available "unless a refusal or failure to participate in all or part
parte action. otherwise agreed by the parties". of the arbitration.
There are many occasions when one The Model Law, Article 25(c), permits
party may not participate at all in the Article 25. Default of a party the tribunal in the above circumstances to
proceedings or may not comply with an Unless otherwise agreed by the parties, proceed to make an award upon the
order of the tribunal. It is at that stage that if, without showing sufficient cause, evidence before the tribunal. Article 25(c)
Article 28, of the UNCITRAL Arbitration (a) the claimant fails to communicate his specifically refers to a power given to the
Rules applies. Article 28 states: statement of claim in accordance with tribunal to decide the issue upon the
article 23(1), the arbitral tribunal shall evidence before it. It is not clear whether
DEFAULT Article 28 terminate the proceedings; that direction refers to evidence before the
1. If, within the period of time fixed by the (b) the respondent fails to communicate his tribunal at the time of the act of default. If
arbitral tribunal, the claimant has failed statement of defence in accordance the phrase "on the evidence before it" is the
to communicate his claim without with article 23(1), the arbitral tribunal key condition, then the tribunal must be
showing sufficient cause for such failure, shall continue the proceedings without instructed, within the applicable rules or law
the arbitral tribunal shall issue an order treating such failure in itself as an or by agreement of the parties, as to the
for the termination of the arbitral admission of the claimant's allegations; stage in the proceedings when the evidence
proceedings. If, within the period of (c) any party fails to appear at a hearing or is deemed to be before it.
time fixed by the arbitral tribunal, the to produce documentary evidence, the In the alternative the non-defaulting
76 [2004] Asian DR
Arbitration
party could be required to submit all its the arbitration. However, it may be unable many national laws on civil
evidence and make submissions. There is to establish that the non-defaulting party procedure default of the defendant
no unity of opinion among senior arbitration has met the burden of proof. There may in court proceedings was treated as
figures as to the proper course of action arise the issue of a costs order being made an admission of the claimant's
that should be taken in the event of a against the non-defaulting party by reason allegations. (Emphasis added)
default. The inference is drawn that each of its failure to comply. Proofs of evidence It is clear, in my view, that the Working
jurisdiction should fall back upon the made by means of affidavit or affirmation Group anticipated that a default without proof
procedure that would apply before the must be taken and submitted to the procedure would be acceptable in international
local courts at the seat of arbitration in tribunal. The tribunal will transmit all such arbitration. Paragraph 71 of the First Working
litigation involving civil disputes. evidence to the defaulting party. Group Report supports this conclusion.
Mustill and Boyd in Commercial Redfern and Hunter in the Law and 71. However, divergent views were
Arbitration, (2nd ed, Butterworths, 1989) Practice of International Commercial expressed as to whether the model
discuss default procedures. At page 538 Arbitration (3rd ed., Sweet and Maxwell, law should contain a provision to
the learned authors emphasise that the 1999) examine both ex parte hearings and that effect which would set forth
tribunal must keep in mind the need for default awards. The authors, at page 336, the conditions for such continuation.
adherence to the burden of proof. The assume that the defaulting party will usually Under one view, an attempt should
tribunal must not make an award unless the be the respondent. be made to formulate the conditions
claimant has proved its case, or likewise the Redfern and Hunter do not examine the for such continuation......Under
respondent, where applicable. No authority situation where there is more than one another view, it was not practical to
is cited for this suggestion. party, and only one of those parties is in regulate this issue in the model law,
The authors also state that where the default. The example of a recently joined since such regulation might not be
terms of the arbitration agreement require a respondent which fails, from the outset, to readily acceptable in some countries
full oral hearing, it will be sufficient for the co-operate is apposite. Against which in view of their general position on
tribunal to waive that requirement and respondent does the tribunal take default ex parte judgements. (Emphasis
require that such oral evidence be submitted action, against the defaulting respondent, added)
in sworn form. How this suggestion both respondents, or all respondents? In The parties may, by agreement,
improves the search for "the truth", in any event the tribunal must act in a way authorise the tribunal to make an award
achieving the necessary burden of proof, is where this exercise of discretion must be using a default procedure, which does not
uncertain. able to be seen to be carried out fairly and require the examination of the merits of the
In my view the tribunal must examine equitably. Action must be taken against the case, and which permits a tribunal to issue
the arbitration law at the seat of the defaulting second respondent whatever the an award in the case of an undefended
arbitration. If the jurisdiction at the seat of situation of the other respondents. claim or, where appropriate, counterclaim.
the arbitration has adopted the Model Law, Redfern and Hunter state that, in any An arbitral award which suggests the
Article 25(c), then it is suggested that the award issued as a result of exercising a correct procedure to follow in the absence
tribunal can decide the dispute upon the decision to proceed in default, the tribunal of a party is described by Redfern and
evidence before it at the time of the act of must state in the award the circumstances Hunter (op cit) at page 170. In the case of
default. In any event the tribunal should which caused the tribunal to proceed ex Turriff Construction (Sudan) Ltd. v
determine a fair and equitable burden of parte. This is a crucial comment. It must be Government of the Republic of Sudan
proof and inform the parties thereof. The adhered to rigorously. (Survey of International Arbitrations 1794-
need to ensure that all necessary evidence Redfern and Hunter state that the 1970, Case No. A31), the hearings
is before the tribunal, in order to be seen to tribunal has no authority to issue an award continued over 22 days in the absence of
meet the burden of proof, is vital. It is not in a procedure similar to a default judgment. the Sudanese Government. This approach
sufficient to issue an order that the claimant It is suggested that the learned authors are must be correct where, as in this case,
has failed to prove its case. There is a duty not correct. The commentary to the Model there is no agreement to the contrary (the
upon the tribunal to require the claimant to Law makes quite clear that the Working Turriff tribunal had express power under
fill the gaps, all the while adhering to the Group was unwilling to spell out a detailed the submission agreement to proceed in
rules of natural justice, by copying all such procedure for fear of clashing with the default). A tribunal, when in any doubt as to
requests, or demands, to the defaulting default procedures in individual jurisdictions whether the burden of proof has been
party. The requirement is not noted in (Sixth Working Group Report, para 83). achieved must seek further evidence, at the
Mustill and Boyd. It is submitted that the 83 As regards the three variants presented same time ensuring that the absent party is
defaulting party must be kept supplied with in subparagraph (b), the Working Group, not prejudiced. Such attention to detail may
copies of all correspondence, pleadings, after deliberation, adopted the wording preclude a successful challenge at the time
evidence and submissions up to and of variant B. That wording, while of enforcement - that the losing party was
including the issuance of an award. according certain discretion to the deprived of an opportunity of putting its
It must be explicit that unless the non- arbitral tribunal, contained a case (Model Law, Articles 34 (2)(a)(ii); 36
defaulting party complies with those limitation which was considered (1)(a)(ii); and New York Convention 1958
requirements the tribunal will proceed with useful in view of the fact that under Article V 1 (b)).
[2004] Asian DR 77
Arbitration
The New Zealand Law Commission in Zealand, unlike many jurisdictions has retained then issuing a reasoned determination as to
Report No. 20, addressing the adoption of the original Article skeleton of the Model which procedure would be appropriate.
the Model Law, noted concerns as to the Law. It is regrettable that so many jurisdictions The submission of a claimant as to why it
adequacy of Article 25. As a result an ignore the original UNCITRAL skeleton while should not have to prove its case would be
additional clause 25(d) was enacted which retaining the concepts. This makes research of interest. The tribunal must choose the
states: "....if without showing sufficient very difficult and that is why authoritative procedure which proves most equitable to
cause.....the claimant fails to prosecute the texts such as those by Robert Morgan and the parties, and is overtly undertaken and
claim, the arbitral tribunal may make an Neil Kaplan are so essential. set out in the award.
award dismissing the claim or give directions, A default, without proof, procedure
with or without conditions, for the speedy should be allowed where the parties are
determination of the claim." Two issues are fully aware of the implications and agree
important to note here. By this addition thereto explicitly. The UNCITRAL Rules Ben Beaumont
Barrister (Hong Kong and England & Wales) and
New Zealand is using the fact that the could be modified to add an Article 28(4).
Observer to UNCITRAL
Model Law is just that, a Model Law, This would confer a discretion on the
capable of adaptation to make it effective in tribunal to use a clearly stated procedure
the view of the Commission. Further New after inviting the views of the parties and
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78 [2004] Asian DR
Online Dispute Resolution
ICODR 2004:
Enhancing Understanding
Part 2
In a two-part article, the authors discuss the 2004 International Competitions for Online Dispute
Resolution (ICODR). Part one, which was published in the August 2004 issue, gave an introduction to
the ICODR and a detailed examination of the technical procedures involved in the running of the
ICODR. This is the second part of the article in which the role and responsibilities of the Administrator
of the ICODR are examined.
Benjamin G Davis and independence through technical backdoors against each other in one of the rooms. In
or specialised access for one party as 2003, this potential risk led to a very
Alan Gaitenby opposed to other parties. Even if the interesting situation about which I have
actions do not amount to claims of fraud, reflected at length.
they may still have the chilling effect of A student mediator from School B
III. The Administrator's Role
eliminating trust. dropped out just before a mediation round
P
robably the most important lesson I1 The level of trust in the administrator that in Room 1 and, thanks to the kindness of
learned in creating ICODR is how is required rises when the role of the another team's coach, there was a possibility
m u c h re s p o n s i b i l i t y fo r t h e computer platform is more extensive than that a second student from another school
independence and neutrality of Online providing a dispute resolution space. In (School A) could serve as a mediator. The
Dispute Resolution systems rests on the systems with analytical support, the user problem was that the mediator in Room 1
shoulders of the administrator. Equality of trusts the computer to calculate accurately had to be switched with the mediator in
treatment in design of the spaces is an the user's preferences to determine the another room (Room 2) as one of the
essential component. As I could dictate optimal result. If for some reason, parties in Room 1 also came from School A.
access, there was the possibility that I could unbeknownst to one party or the other, the This was done and a place reserved for the
design rooms with or without certain manner of calculation by the computer (or second student from School A to act as a
features for students in the same competition algorithm) were to be altered by the mediator in Room 2. However, that second
and no one would necessarily be the wiser. administrator, a suboptimal result could be student declined at the last minute and, out
One side might be given a "backdoor" unfairly made to appear as an optimal result. of desperation, I asked one of the students
access that the other side did not have. This computer generated optimum may in the hall at my law school whether he
Only by exchanging passwords (which inadvertently be given more credibility due to wanted to participate. He said yes and
would be hard to do since the students did its coming from an ostensibly "neutral" ultimately served as mediator in Room 2
not know who was in which room) would computer (sometimes called the fourth party) where the second student from School A
students see what other rooms looked like. as opposed to from one or the other party. would have served. The new mediator from
Clearly, to be able to say one had set up a In other words, the same issues present in the my law school ultimately won a medal in
fair competition, the rooms had to be offline world of having a reliable neutral as a the competition. I was happy for the
equal. However, in the real world, with the third party are also needed when the student but I wondered if I had somehow
pressures of making money, one can technology is being selected. betrayed the trust of the rest of the
wonder if an administrator for real disputes The random allocation of teams to students as, due to the late decline of the
might feel pressure to give one side greater rooms was vital so as not, consciously or second student from School A, I could have
privileges/access than the other. I refer to unconsciously, to give one party an switched the mediators again so that the
this problem as structural independence advantage. However, perfect randomness student from my law school would have
tensions that arise, and emphasise here was not possible as at least twice the result served in the original mediation in Room 1
only the need for great attention to was for students from the same school to rather than Room 2. The result would have
eliminating even the appearance of lack of potentially be placed in different roles or been that the student from my law school,
[2004] Asian DR 79
who had joined late, would have mediated now also was one of a "local authenticator" independence and neutrality could arise in
with completely different students and letting the organiser of the competition an anonymous setting. What I learned from
might not have scored so highly. Did I know that true students are enrolled and this is that notwithstanding the most
somehow favour the student from my participating. It raised the difficulty of aggressive efforts of the administrator,
school? I reflected at length on this and authenticating persons on the periphery in serendipitous things happen. When those
remembered my rationale had been that I a worldwide structure and suggested that things happen, we must rely on the neutral
had already changed these rooms once and the key is to have local authentication by or evaluator to figure out what is the right
did not want to create greater confusion by someone that is trusted (a chamber of thing to do. One could think that in an
changing rooms again - it did not appear commerce, a court, an administrative anonymous setting, the evaluator should
professional. However, someone else might service, or, as here, a professor). While immediately draw the suspicion to the
think I should have changed everything competing globally, each local authentication attention of the administrator (as drawing
back to the original status quo. While I feel was a pillar on which the whole ICODR the matter to the attention of the teams
comfortable with my decision, this edifice stood. Trust was being built team by would run the risk of loss of anonymity).
experience highlights one burden on the team, coach by coach. The kind of immediate recognition that
administrator and more broadly the vigilance A fourth concern I had involved the would happen in face-to-face dispute
needed by the administrator in selecting the evaluators. While evaluators came from resolution was not possible here. This text-
neutrals for the dispute resolution. around the world, some evaluators accepted based setting suggests a real need to be
A second concern I had involved a to evaluate more than one or two rooms extremely careful in reading what is put in
situation where, again due to last minute while others did not, and many of the the room. Suspicions might be acted on
changes, the end result was that the evaluators were American. While in the early to make sure that no improper
advocates on both sides of one arbitration past the ultimate results showed a great contact had occurred. Some might think
room were from the same law school. This diversity of medals won by schools of that the evaluator should not have
happenstance came to light just after the various nationalities, I did wonder if legal participated in the competition after his
start of the arbitration round and, as an culture played a role in the evaluations in a suspicion had been aroused. One could
organiser, I was worried that I had somehow manner that I did not seek. As a practical also think that a vague hunch was simply
compromised the competition. With the matter, the evaluators were greatly not enough to have an evaluator removed.
other organiser we determined to disclose appreciated for what they did, but even Transposing these concerns to a situation of
our concerns to the teams in that with many countries represented, some a real dispute, one wonders if more
competition, explain the likely consequences cultural bias (language or legal culture) may extensive care concerning the appearance
of a change and invite them to object to the have crept in. We do not know but will of independence is important to the online
team placement within a specified period endeavour to be sensitive to this issue each dispute resolution environment in order to
of time. As it turned out, none of the other year. help it flourish. No clear answer arose in
schools objected during the time allowed In addition, evaluators appeared to do a the discussion, but it brought forth another
for objections and the round went smoothly better job of completing the specific criteria aspect of the Online Dispute Resolution
from there. However, in thinking over the evaluations (seven to nine discrete categories environment and a vital exchange of ideas.
experience, it did strike me that the for each team) than in ranking the teams. At the end of the day, as the
confidence in the competition was likely Some evaluators only saw one room and administrator, I have to ask myself whether
enhanced by our presenting the difficulties were therefore only able to evaluate two each student was given a fair opportunity
to all the parties rather than keeping it to teams or one mediator or arbitral tribunal. to compete on a level playing field in the
ourselves. As a result, we eliminated the ranking by year's ICODR. I feel that we have achieved a
A third concern was that I had involved evaluators and kept the specific criteria fair international competition and this is a
one participant. As part of the rules, it is evaluations. This approach appears for now cause for tremendous elation. I think it tells
specified that each student participant is to as the best that we can do. all students that we are able to design an
have a faculty coach. It turned out that one More intriguing was the discussion in a easily accessible global competition where
student had signed up without stating they recent Online Dispute Resolution Workshop - no matter what the modest means of the
had a faculty coach while other students at held at the University of Edinburgh in June students - they can be judged on their
that same school did have a faculty coach. 2003. During the Fall of 2002, one ability anonymously and by experienced
When the first student was not active evaluator had visited a law school and had evaluators. It is not the student's school,
enough, the lack of a faculty coach came spoken with students about tactics and background or how they look, but what
to light and a request was made to the strategies for the ICODR competitions. they do in the room that is evaluated.
faculty coach for the school to enter into Notwithstanding the random allocation of Having seen students who have done well,
contact with the quiet student. This evaluators to rooms and the anonymous having read the joy of their coaches in
situation created an interesting authentication process, this evaluator was assigned to a hearing of the students' achievements, and
problem in which the role of the faculty room where a student participant seemed having seen how impressed some evaluators
coach was now seen in a different light. In to be using the strategies and tactics that have been with the work of the students, I
addition to helping the students prepare for the evaluator had mentioned at the Fall know that a real sense of accomplishment
the competition, the faculty coach role meeting. This illustrates how concern about has been felt by students in these virtual
80 [2004] Asian DR
competitions. The satisfaction of the ICODR web page one can see the faces of people are helping humanity to progress in
students is as real as that experienced in some of the students, coaches, evaluators making a portion of the internet - a dispute
any sport or competition in the physical and organizers2. I find it remarkable how all resolution space - a place for connection,
world. I sensed that a way of conducting share this common experience while of learning about justice and of hope for
dispute resolution worldwide that is remaining in our home locations. To bring peace. While people have ideas, institutions
independent, neutral and global in a way this point home - the two authors of this such as ICODR help preserve those ideas.
that so far has only been reserved for the article have now been working together for Those institutions eventually have power
well-off is possible through these little steps over three years on this project and have and the ultimate question is for what goal
of alerting law students to the power of the never met physically. that power is used. I hope that I will be able
internet. to make future ICODR competitions honour
I am also greatly appreciative of all IV. The spirit that spirit, which works towards helping
those who make these competitions I was privileged to know and work with humanity to progress and enhances
possible. In addition to the people behind the late Michel Gaudet, former Chairman of understanding for all so that we grow
the technologies described above, we have the ICC International Court of Arbitration together.
been pleased to have the assistance of the and tireless worker at the ICC Institute of
Harvard Program on Negotiation in the World Business Law. He once told me
selection of the mediation problems. The about a spirit - a spirit that I had felt in the Benjamin G Davis
Hong Kong International Arbitration Centre, room at lunch on Gaudet Day, a day held in Associate Professor of Law,
the London Court of International honour of Chairman Gaudet, with 150 University of Toledo College of Law
Arbitration, the International Chamber of sophisticated international lawyers present. I
Commerce International Court of remember asking an ICC Court counsel,
Arbitration, the Arbitration and Mediation Odette Lagace, during lunch that day, "Do Alan Gaitenby
Centre of the World Intellectual Property you feel something in this room?" Without Adjunct Professor, Legal Studies Department,
Organization, the International Centre for us having spoken, Chairman Gaudet wrote University of Massachusetts,
Dispute Resolution of the American to me a week after Gaudet Day that that Amherst and Assistant Director of the Center for
Arbitration Association, and the Permanent spirit I had felt in the room was the spirit he Information Technology and Dispute Resolution.
Court of Arbitration in the Hague have, had felt when he first went to work with
over the years, all enthusiastically permitted Jean Monnet in the early 1950s, beginning This article is adapted with permission from Kluwer
us to make reference to them to help with the extraordinary task of creating what has Law International, (c) 2003, Benjamin G. Davis, ICODR
the realism of the experience. At the heart now become the European Union. He 2003: Helping Humanity Progress, Journal of
of the experience is the Center for wrote that in his career, whenever he had International Arbitration, 20(6), 589-597.
Information Technology and Dispute felt that same spirit where people were
Re s o l u t i o n of t h e U n i ve r s i t y of together, he knew that what was going on 1. For ease of reading, we have written this in the
Massachusetts and the financial support of in that place was something that was first person using "I" rather than "we" generally
the University of Toledo College of Law and helping humanity to progress. I felt honoured throughout the text.
Hamline University School of Law. Without that he had given me that insight to guide 2. http://www.ombuds.org/cyberweek2003/
their assistance, this idea would not have me. I feel this spirit during the ICODR icodr2003_pics.html (Last visited March 12, 2004).
come this far. Finally, there are the competitions and I keep a hope alive that For general information, see http://www.odr.info/
students, coaches and evaluators. On the these efforts by all these extraordinary icodr.php (Last visited March 12, 2004)
[2004] Asian DR 81
Mediation
Pioneering an Approach to
Mediating Large Disputes
The type of dispute resolution process chosen should be appropriate to a particular dispute. The
authors have developed a type of dispute resolution which they call a "Senior Executive Appraisal
Mediation" (SEAM). They discuss the effectiveness of this form of mediation in a large and complex
dispute.
Ian Hanger and in dealing with it. In a nutshell it involves an account in their way. Instead, they are
experienced mediator working with two asked to answer questions designed to
John Cooper senior officers of disputing organisations bring out evidence in the manner the
who listen to presentations from their own lawyers think most appropriate. Much
B
oth mediation and arbitration are well
employees who are in conflict and then evidence is excluded by rules of evidence
established as effective methods of
meet with the mediator to resolve the which, while logical to lawyers, are not
dispute resolution in Australia -
conflict. logical to their clients. Clients frequently
the latter involving the submission of a
We will deal with the topic under the feel that they have failed to get their
dispute for determination by an independent
following headings: message across to a judge because of the
third party and the former involving the
Needs from an ADR process formal and rigid nature of the process and
resolution of the dispute by mutual
Our dispute - the background the application of the rules of evidence.
agreement between the parties utilising the
Initiation of the process They are therefore psychologically
skills of an independent third party.
The protocol dissatisfied.
Not all disputes fit comfortably into
The hearing
either the mediation or the arbitration Those experienced in mediation work
Was SEAM effective?
process. We argue that it is essential to will have noticed the delight of participants
Lessons learned
design a dispute resolution process that when given feedback showing that the
Which cases are suitable for SEAM?
suits the particular dispute rather than to try mediator understands and acknowledges
to make the dispute fit into a process. It is the concerns being expressed. In our view
only through taking this flexible approach Needs from an ADR process it is part of human nature to want to justify
that a number of disputes we have been An ADR process has four fundamental an action that has been taken, not only to
involved with have been effectively and needs. It must be economical. It must be the opposing party, but also to a significant
efficiently resolved with our input. The fast. The parties must perceive it to be fair. other person. That is why, despite the
process that we have recently adopted is a It must minimise the risk to the parties. encouragement of the mediator to look and
hybrid one. It is akin to a mini trial but we There are two other needs that it is talk to the other party, a client will address
have declined to use that term because the desirable to satisfy. The process should be the mediator rather than the other party.
term has different meanings depending on amicable and it should facilitate an ongoing Like the ancient mariner, we all have a need
where you are. We thought that the most relationship between the parties. In order to tell our story to a significant other
apposite term in Australia was to call it a to meet each of these needs the ADR person. That need increases if our
"Senior Executive Appraisal Mediation" process must be flexible. company's finances are affected by our
("SEAM"). It is based on and adapted from The mediation process also usually actions or if our own reputation or
a procedure described by Sir Laurence takes account of the psychological need of prospects are affected. Who better to
Street in a paper given many years ago. We a person to be heard and to be understood. satisfy that need than, not only a mediator,
have added the word "mediation" after the This is a need which is generally not but also the CEO of the company?
words "senior executive appraisal" to satisfied by the litigation or arbitration During the SEAM hearings the tribunal
describe better our adaptation of the process because of their very formal and must utilise significant listening skills. We do
process in which we were involved which rigid nature and the insistence by the not suggest for a moment that a SEAM is an
requires both appraisal and mediation. It is tribunal, quite properly, that all evidence be exercise in psychotherapy but one cannot
a flexible process and we will describe the relevant and that it be otherwise admissible. help drawing on principles applied over
nature of the process and our experiences Witnesses are prevented from giving their many years in the field of psychology and
82 [2004] Asian DR
Mediation
psychiatry. Listening involves giving full failings by the contractor in respect of mediator suggested that lawyers should be
attention to the speaker with both body design and construction quality and an involved at all times but that presentations
and mind; acknowledging the speaker by entitlement to liquidated and other damages. should be done by the persons actually
showing interest in, and respect for, what The principal also alleged that the involved. It was agreed that a lawyer should
the speaker is saying; inviting more contractor's claims were time barred. be, in effect, the captain of the team for
information where such is either helpful to The claims were complex and each side but that their role would be an
the panel or the panel feels that it would be significant. The superintendent had not organisational role rather than a speaking
helpful to the speaker to get more off his/ issued decisions on all of the claims, and role.
her chest and summarising what a speaker many of the decisions made by the The CEOs agreed to draft a preliminary
has said. The process of summarising superintendent had been disputed by one agreement between themselves in respect
serves two purposes: or both parties. The parties had been of the process and to return a week later to
(a) it ensures to the panel member that he unable to resolve the majority of their discuss the draft. This was done and some
or she has properly understood the disputes with the assistance of the suggestions made by the mediator and
concerns expressed; and superintendent. The relationships between adopted. This turned out to be a more
(b) it reassures the speaker that the message the parties were strained at all levels; on site important step than had been at first
sent is a message received. and at different levels of management. envisaged by the mediator. The CEOs
We would suggest for this reason, It was considered by the parties that having put considerable energy into drafting
where possible, that it is the "opposing" the traditional dispute resolution process in the agreement were very committed to
CEO who should be encouraged to do the the contract (which involved mediation and making it work. Nor did they want their
summarising. then arbitration) was unlikely effectively agreement redrafted by either of their
The mediator chairing the SEAM panel and efficiently to resolve the dispute. There solicitors.
has to appreciate that CEOs also like to be was a desire on both sides for a cheap, fast
The Protocol: The creation of alliances -
heard and understood and in prive sessions and non-acrimonious solution and a desire
a retrospective look at alliances - a bit
with CEOs the mediator should apply the to continue with an amicable business
of amateur psychology
same principles. relationship on this project and for the
Some of what we are about to say in
future.
this matter occurred deliberately; some of it
Our dispute - the context is has been perceived with the wisdom of
The dispute in which we first employed Initiation of process hindsight to have occurred; and a small
the SEAM process related to a major road The process began with a meeting amount of it is wishful thinking.
project in Queensland. The project was bid between the mediator and the two CEOs Step 1 - Before the SEAM process can
as a lump sum design and construct to discuss the nature of the dispute and begin, it is essential that each of the CEOs
contract. then to consider the options for a speedy trust and have confidence in the mediator's
It was a very large and complex project resolution. Arbitration, mediation, senior skills and integrity. To achieve this, the
with a very tight delivery period. The e xe c u t i ve a p p ra i s a l a n d e x p e r t mediator had quite lengthy conversations in
project was made more complex by the determination were all discussed and the a relaxed and informal atmosphere with
fact that through traffic had to be maintained relevant benefits and advantages and each of the CEOs alone.
during the whole of the construction disadvantages of each process considered. Step 2 - It is necessary to establish trust
period. The contract was quite prescriptive What was clear is that the CEOs were between the two other members of the
in terms of performance requirements, prepared to trade off what might be panel. They should approach the process
technical requirements, programming and described euphemistically as a Rolls Royce knowing that they are going to have
contractual requirements. system of arbitration or litigation as against different opinions from time to time but
It was alleged that during the course of a quick and cheap process. They indicated that each will act with absolute integrity.
the project there were many variations, that they were prepared to live with rough Hence the mediator and the CEOs worked
directions, ambiguities in documents, and justice and wanted to resolve this dispute on getting to know and trust each other
other contractual issues. It was also alleged and resume a satisfactory business before the hearings commenced.
that there were some mistakes in the relationship. They did not want the dispute Step 3 - Each of lawyers must have
sequencing documentation provided by the to escalate by virtue of a litigious process. confidence in the mediator. This probably
principal and problems with other designs They jumped at the idea of being personally exists prior to the initial approach being
and information provided by the principal. involved in a process whereby they listened made to the mediator but if it does not exist
Finally, it was alleged by the contractor that to presentations from their relevant then the mediator must make an effort to
the superintendent under the contract had employees and then made decisions on create the trust before the SEAM
failed to administer the contract properly. particular aspects of the dispute in commences.
Essentially, the contractor brought claims consultation with each other and the Step 4 - The lawyers for the parties
for variations, delay costs, disruption costs, mediator. must know, respect and trust each other.
acceleration costs and damages for breaches The role of lawyers was discussed and In our experience steps 3 and 4 had been
of contract. they were anxious to avoid the dispute accomplished long before this dispute
The principal alleged that there were turning into a legalistic dispute. The arose. That is to say the mediator and the
[2004] Asian DR 83
Mediation
lawyers had all known each other well for that barriers might begin to fall. sessions (sometimes with others) to consider
many years and the lawyers trusted each Step 8 - Proceeding in a similar fashion further the material that had been presented.
other and the mediator to the extent that (in an ideal world) one then attempts to Where the panel could not arrive at a
they were supportive of the CEOs meeting minimise the conflict between other resolution on a particular matter, then the
with the mediator without the lawyers individuals in the dispute. This is a counsel three members kept a note of what A
present. of perfection and of course as much as one would accept and what B would offer and
Step 5 - In the SEAMs with which we would like to mend all of the damaged at times would do trade-offs as against
have been involved, experts have played a relationships, it does not happen. In the end o t h e r m at te r s w h e re t h e re wa s
vital role. The matters could not have from the psychological viewpoint one does disagreement. Alternatively, the mediator
proceeded without expert input on a daily the best one can to mend the relationships. would attempt to ascertain why the two
basis. Experts exert a very large influence panel members arrived at different figures
on their own clients and on their own legal The hearing and the panel would then work out a way
team. It is therefore necessary for the Prior to the hearing, the SEAM panel to overcome the hurdle to a settlement on
mediator to develop a rapport with the had met with the solicitors for the parties that issue. That generally involved going
experts such that they appreciate that they and together broke the hearing process back and getting more detail on a very
are not just helping their own team but that down into discrete issues, agreed days for precise issue and appropriate directions
they are helping the mediator and the panel the discussion of discrete issues and would be given through the solicitors to
to resolve the dispute. They should be allocated time to the parties to deal with investigate that matter further and give a
encouraged to step out of what so many each issue. A flexible approach was further presentation on a particular point.
see as their adversarial role and to step into adopted and if the solicitors could agree on
the role of an independent expert trying to a discrete issue the panel accepted their Was SEAM effective?
help clients resolve a difficult matter. It is up recommendations. Yes, SEAM was effective on this dispute
to the mediator to convey this message to Prior to the hearing of the particular and has been successful on others.
them. issues the parties exchanged position papers It resolved all issues in dispute between
Step 6 - The experts should ideally and then at the hearing each party was the parties.
develop a relationship of trust and mutual given a specific limited and equal time to The resolutions arrived at were diverse
respect for each other, and again, both the deal with the item on the agenda for that in nature. They involved payments of
mediator and the SEAM panel can assist in day. Again, some flexibility was permitted money, extensions of time, agreements
this regard. It may be that the panel will but in our experience the parties observed to rectify work, waiver of rights and
have private discussions with experts or ask the time limitations fairly well, although not affirmation of contractual obligations.
experts to enter conclaves to discuss and without considerable effort and sometimes The process gave the panel a "helicopter
try to resolve specific issues and then discomfort. Presentations were generally view" of the claims and the parties'
report back to the panel. We find that the done utilising PowerPoint with printouts of respective cases and provided "rough
fewer people present in the room, the more the presentation being given to the panel justice" and an opportunity for the
frank the discussion. members and opposing parties. The parties, and importantly their people, to
Step 7 - We speak now of the presentations were usually very factual and be heard. It was cathartic. It also gave
theoretical ideal. The panel should aim to of a very high standard. They usually each of the CEOs a first hand look at
minimise the conflict by reducing the clearly apprised the panel of the issues and their respective organisation's case.
tension between the most promising parties of each party's case even though they were Both parties were happy with the
on either side - that is to say if the panel has given in a short period of time. The panel process and happy to reach resolution.
gained an impression that Bloggs on side A engaged in the listening and questioning to Neither party viewed the result as a
has less of a conflict with Smith on Side B which we have earlier referred. Questions win, which in itself suggests the process
than the other members of the respective asked by one party of the other for the was effective.
teams, then one might give Bloggs and purpose of understanding a position were The process was relationship building.
Smith a mutual task. For example, in our permitted by the panel but no cross- The parties owned and ran the process
particular mediation there were many examination was permitted by a party of and worked very closely with each
smaller matters that the panel did not feel the other party. On some occasions the other to resolve the issues. The panel
should be dealt with by the panel because written material was sufficient for the panel members formed strong bonds.
they did not involve a very large part of the to deal with an issue without the need for It was efficient. It took about 4 months.
conflict or a very large amount of the presentations. After each session the An arbitration would have taken years.
money. Bloggs and Smith could be mediator discussed the material with the It cost each party approximately about
appointed to sort that matter out between panel members and, in a large number of one tenth to one fifth of the estimated
them in private conference with the panel cases, agreement was reached within a costs of an arbitration.
saying that they would abide by the couple of hours.
recommendation made by Bloggs and The SEAM hearings occurred with Lessons Learned
Smith. Given a joint task and delegated several days' break in between sessions There were many lessons learned by all
responsibility to resolve issues, it was hoped and, if necessary, the panel met between parties to the dispute and all those involved
84 [2004] Asian DR
Mediation
in the SEAM process. example, in our dispute it was agreed time. We would suggest that the following
The main lessons learned are as follows: that all notice and dispute process factors indicate circumstances in which
it is critical to understand fully the provisions under the contract would be SEAM may be appropriate:
parties' objectives before recommending halted during the SEAM so that no (a) the issues are many and involve large
any form of alternative dispute resolution party would be disadvantaged. It was amounts of money;
and then to ensure that the process also agreed that the process would (b) the organisations concerned are large
selected will meet the parties' objectives; constitute the meeting of the parties' enough for the CEOs not to have been
the choice of mediator is absolutely CEOs under the dispute resolution involved at the grassroots level prior to
critical. The parties (CEOs, panel clause in respect of the issues submitted the SEAM;
members, management and presenters) to the SEAM; (c) a desire by the stakeholders to mend
must fully trust and respect the there is a need to focus on the small the relationship and genuinely to resolve
mediator; issues and the large issues, and if there the issues without resort to litigation
there is a real need to educate the are a significant number of small issues, and in a quick and cheap fashion
parties fully about the process (including to deal with these early and agree a without excessive attention to detail;
cost and time) and the consequences process which will allow them to be (d) a willingness by senior management to
of not participating fully and in good resolved. It is important to monitor that be involved in the process.
faith in the process (including the cost process to ensure progress (by way of
and time involved in more formal agreement) is being made; Conclusion
processes if the ADR process does not in most ADR processes deeds of If ADR processes are to be effective
succeed). Not all parties fully understand settlement can cause significant anxiety. and efficient they must at least meet the
the nature of ADR processes (including The main anxiety arises in respect of fundamental needs of:
whether they are binding or non- the releases to be given by the parties. being economical;
binding) or the timing or cost involved. SEAMs are no different in this regard being fast;
Additionally most clients tend to and if anything, because of the large being perceived to be fair; and
underestimate the resources, cost and number of complex issues in dispute, minimising the risk to the parties.
time other more formal processes such and the likelihood of future obligations Because every dispute is different, ADR
as arbitration and litigation will consume. under the contract remaining to be processes are only likely to succeed in
In our SEAM the lawyers were asked to performed, the terms of settlement are meeting these needs if they are designed to
submit to the CEOs and the mediator often difficult to finalise. To avoid this, suit the subjects and the subject matter of
the likely cost and timing involved in we recommend fully discussing the the particular dispute.
pursuing arbitration if the SEAM did not breadth of the releases at the outset of
succeed. The estimates were realistic. the process and working on the terms
This helped the parties appreciate the of settlement early. Ian Hanger QC
importance of trying to make the SEAM Brisbane
work; Which cases are suitable for
there is a need to deal with the SEAM?
contractual processes which will It is not suggested that the SEAM John Cooper
otherwise continue to operate while process is cheap. It ties up a large amount Allens Arthur Robinson, Sydney
the ADR process is working. For of resources for a relatively short period of
[2004] Asian DR 85
Mediation
Towards a New Definition of

Mediation
Mediation is not a culturally neutral process. It is shaped by the cultural contexts from which it
emerges. This article explores the critical implications when mediation is used in cross cultural contexts
and makes the argument that mediation should be relationship focussed rather than outcome focussed.
Rhiân Williams by the following diagram - termed the "what" over the satisfaction triangle. The
Satisfaction Triangle: procedural and emotional arms of the
triangle parallel the "how" of how people
I
n a dispute, disputants are normally,
resolve their issues and the substantive arm
and quite rightly, focussed on what
parallels "what" needs to be resolved. Thus
they need to resolve. There are often
in the separating couple example above,
particular outcomes that they wish to
whilst a 'what' or an outcome has been
secure. Those outcomes tend to make
achieved, the 'how' of how people feel has
sense to the disputants because of the
been left dissatisfied, which in turn, may
ways in which they understand the dispute,
ultimately lead to dissatisfaction with the
their and others' role in it, and the needs
'what'.
they wish to satisfy. Disputants very rarely Procedurally, people need to believe
understand the perspective of other that a process is fair, that it gives them an
disputants, even though, in many instances, opportunity to have their say, and that it is
they may believe they do. Indeed, it is often not biased or prejudiced in any way.
the misunderstandings that escalate the Emotionally, people need to feel OK about
dispute because they feed the disputants' themselves and their participation in
negative perceptions of one another. discussion or dispute resolution processes.
The outcomes sought by a particular They need to feel listened to, acknowledged,
disputant fit the understanding that disputant respected and validated as part of their
has of the dispute. Yet the "dispute" is a participation. Substantive needs relate to
shared property. It belongs to all the the issues or things that are the subject of
disputants involved and each of their the negotiation. These can be material and
"stories" of the dispute builds to a more tangible, for example, land, rights, money
complete picture. The challenge for the or intangibles such as, for example, respect, It is important to recognise that culture
mediator is to assist disputants to move recognition or consideration. Disputes are is one of the key forces shaping how
beyond their individual and partial viewpoint not resolved by dealing with only one or disputants constitute their procedural,
to a shared understanding that enables the two of these needs or sides of the triangle. emotional and substantive needs. In his
development of mutually acceptable People may often appear to get their book Understanding Ways - Communicating
agreements. In essence, mediators are tangible, substantive needs met in a dispute Between Cultures, Kerry O'Sullivan provides
assisting disputants to transform their resolution process and yet not feel happy the following example of a negotiation
understanding of the dispute in order to about the outcomes because their b et we e n C h i n e s e a n d Au st ra l i a n
resolve it. How then do mediators effect emotional or procedural needs have not counterparts on an aid project in China.
this transformation and what are the range been met. For example, a dispute between "Prior to the meeting, the Chinese side
of factors that impact on the design of the a separating couple may reach a "fair" had been very concerned about the
mediation process such that such a substantive outcome in the division of (culturally inappropriate) behaviour of one
transformation is best enabled? property, and yet one person may continue of the Australians. The Chinese head-of-
According to Chris Moore in his book to feel aggrieved because their emotional project began by praising the work of all
The Mediation Process, people in dispute, need to understand why the relationship people involved in the project. He spoke at
or in any communication exchange, have ended has not been addressed. length about the difficulties overcome and
three interdependent needs as represented It is also useful to overlay "how" and the enormous contributions made and
86 [2004] Asian DR
Mediation
sacrifices endured by the Australian their ability to recognise it is of critical limiting the time of the mediation process.
participants. He enumerated the successes importance in the design of mediation It often forces participants to focus
achieved. Only right at the end of the processes. In many instances when the prematurely on what will be done to
speech did he comment on the importance need is identified for mediation, high profile resolve matters thus defaulting to the low
of respecting others' customs and working mediators from outside the immediate area context value of focusing on the future.
for the common good. or country are brought in and they will Whilst it may be argued that mediation is
At no stage was the name of the often be drawn from low context cultures. about reaching agreements about what will
offending party mentioned, but he expected A low context culture mediator is often far be done, it must also be acknowledged that
that from the outset the message was quite more comfortable working within the for high context cultures the need is to
clear" (O'Sullivan, 1994) limited amounts of time available for explain and seek acknowledgement for
To the Chinese it was obvious that they mediation as this fits easily with the value of what has happened or what has gone
were communicating grave concerns about "time" being a core priority in low context before. Unless there is an opportunity to
the behaviour of one of the Australians - cultures. Time urgent processes are often do this there may be vital elements missing
their substantive concerns were clear to justified on the grounds that certain, if not from any agreement or settlement from
them and how they communicated those all parties are busy; it is expensive to bring the perspective of high context participants.
concerns was also clear. However, as people together and it is important to move Another consequence of time limited
Sullivan goes on to point out, the speech quickly to reach agreement so as to not processes is that when issues are raised that
probably suggested to the Australians that h o l d u p e c o n o m i c d eve l o p m e nt, seem to relate to historical relationships
"... all was well." (Ibid) How the substantive government or industry schedules, etc. between the disputes, they are understood
concerns of the Chinese delegates were Whose need is this mediation process by the low context mediator in a linear
communicated did not translate to the meeting? Certainly not the need of sense as being in the past and separate
Australians in the same way. establishing and focusing on relationships as from future agreements. However, for
The writer Edward T. Hall argues that a completely interwoven element of any those from a high context cultural
cultural contexts are critical to understanding agreement process for those from high perspective they are inseparable because
effective inter-cultural communication. Hall context cultures. they define or contextualise the relationship
argues that all cultures exist along a There are many consequences of a n d t h e re fo re m u st b e re s o l ve d .
continuum from high to low context. For
Hall, high and low context refers to the
LOW CONTEXT HIGH CONTEXT
amount of information that a person can
(INDIVIDUALISTIC) (COLLECTIVE)
comfortably manage. This can vary from a
high context culture where background
Mastery over nature Harmony with Nature
information is implicit to low context culture
where much of the background information Personal Control over the environment Fate
must be made explicit in an interaction.
People from a high context culture often Doing Being
send more information implicitly, have a
wider "network", and thus tend to stay well Future Orientation Past or Present Orientation
informed on many subjects. People from
low context cultures usually verbalise much Change Tradition
more background information, and tend
not to be well informed on subjects outside Time Dominates Focus on Relationships
of their own interests. Hall argues that all
cultures exist along a continuum from low Human Equality Hierarchy/Rank/Status
to high context and that the following
values can be ascribed to each context Youth Elders
(See the table at right).
Put simply, in low context cultures the Self-Help Birthright Inheritance
majority of information is explicitly
communicated in the verbal message Individualism/Privacy Group Welfare
whereas in high context cultures the
information is embedded in the context of Competition Co-operation
the relationship. Hall identifies that England
(including Australians and New Zealanders Informality Formality
of English origin), Germany, the US and
Directness/Openness/Honesty Indirectness/Ritual/"Face"
Scandinavian countries fit on the low
context end of the continuum and Asian
Practicality/Efficiency Idealism/Theory
and indigenous cultures are on the high
context end. (Hall 1981)
Materialism Spiritualism/Detachment
The cultural context of mediators and
[2004] Asian DR 87
Mediation
Furthermore in most disputes there is often relationship between the parties in dispute together to prepare for the coming drought.
one or more groups who feel most strongly and becomes itself part of the story or Whilst the El Nino resulting drop in the
about the historical relationship (particularly history that needs to be resolved. Mediators rainfall was one of the most significant, its
in disputes when the history is often one of drawn from low context cultures may miss impacts were far less.
colonisation and dispossession). Mediators the significance in high context cultures of In preparing for El Nino, a key thing was
who frame discussion processes that allow both the practice and symbolism of co- learnt. There was a critical need to build
for the exclusion of historical contexts and operating. Whilst in low context cultures a relationships in order to establish trust
instead emphasise future agreements are breakdown in an agreement is often also a between the scientists who forecast El Nino
prioritising the interests of one or some loss of face, it is normally seen as something and the people who were going to use the
parties over others and in so doing are to be overcome. However, in high context forecasting information. In one instance
being biased. cultures a breakdown may be seen to be forecasters were describing the coming
Some Australian writers on mediation indicative of the very nature of the drought whilst standing under a tin roof in
have sought to create schema that justify relationship between those involved and in pouring rain. The only reason people
the exclusion of particular interests from some instances may mean it is impossible responded was that they trusted the
the mediation process. In relation to how for the relationship to continue. In essence, forecasters and the only reason they
indigenous Australians constitute their mediation processes that do not allow time trusted them was because relationships had
interests in relation to land management for the necessary level of discussion in been built up. As one researcher involved
issues such as Native Title, it has been order to build genuine understanding and explained: it's "... eyeball to eyeball contact:
argued that: "There are other interactions cooperation can only serve, as observed by you can't write it in a paper and expect
between the parties and within the parties Laurie Nathan, from the Centre for Conflict people to believe you; it's got to be a
that may have an influence on the conflict Resolution at the University of Cape Town, human, individual, personal trust
but are in a sense excluded from the South Africa, to "... heighten the suspicion, relationship". (Williams 2003)
conflict resolution domain. An example, fear and anger of beleaguered disputants". It is also critical to appreciate the need
may be how the group interacts with its Mediators often lack an awareness of for technical experts to recognise that
elders or... conflict between members of how their own cultural context is shaping communities are experts in themselves -
the group that is only amenable to their determination of procedural that is they are expert in what it will take to
resolution by traditional law means. ...An acceptability. Models of mediation can make things work in that community.
understanding of these interactions allows easily be seen to be culturally determined Technical experts are concerned with
the mediator to make decisions about what when they are future focused and time getting an outcome, or 'the right answer'
issues should be in the negotiation and dominates with an emphasis placed on whereas in many instances creating
which should not." (Jones 2000) pushing hard for settlement or agreement. relationships with communities requires
It is clear that some writers see a role Approaches to mediation that emphasise time and a degree of comfort, at least
for mediators in "policing" what interests the need to discuss and understand what initially with ambiguity. However,
can be brought into the mediation. Yet the has gone before in order to understand relationships are necessary to sustaining the
role of the mediator is not to "police" what how to move to any future agreement, and process of getting the community to
is in the mediation. The role of the that focus on relationships, allow for engage with the experts about both the
mediator is to facilitate the parties' decision- participants from both high and low problems and the answers. This can also
making about how they will manage the full context cultures to participate meaningfully be true for mediators. As Nathan points
range of issues that constitute and impact in the process. Inevitably this will mean that out "the pressure on the mediator ... may be
on their disputes. Artificial exclusions or any mediation process may seem to be intense particularly where a large number
third party determinations of what proceeding much more slowly from the of people are dying in ongoing hostilities.
constitutes appropriate issues for mediation perspective of the low context culture Father Romano recalls that the Sant'Egidio
is a positional approach requiring parties to mediator. Yet it should lead to a more team in Mozambique was "put under
ignore the full range of their substantive, meaningful and lasting engagement between strong pressure to end the talks quickly....
procedural, emotional interests in order to the stakeholders. Our awareness that every day more of war
achieve an "outcome" or "agreement". The emphasis on the importance of meant more killings was an extremely hard
If a time limited mediation process is taking time to build relationships as the pre- burden to bear." The mediators nevertheless
instituted that does not allow participants requisite to securing sustainable outcomes resisted the pressure because the "pathology
the time to explore what is relevant to them which are owned by stakeholders is being of memory could not easily be cancelled",
but instead pushes for agreements, then recognised by those outside the mediation and because "there is no use in forcing
when those agreements break down, as community. In 1997 there were growing people to agree on anything. The only way
they invariably do, participants blame each forecasts of a very severe El Nino drought the process could have been successful and
other for this breakdown. Further to this, for Pacific nations in the 1997/1998 the reason that made it successful was that
the low context mediator may not summer. A number of countries, including all the actors involved gained ownership of
appreciate the consequences for those the Federated States of Micronesia, the the process...". (Nathan 1998)
involved of the loss of face associated with Republic of Palau and the Republic of the Mediators need to work hard to
the breakdown of agreements. This loss of Marshalls set up El Nino task forces and uncover the cultural biases within their
face then further contextualises the insisted that their ministries all worked processes and their perceptions of what
88 [2004] Asian DR
Mediation
makes for "good" mediation. Low context accommodate their needs. Mediation is a points of misunderstanding between them.
mediators tend to focus on "what" people process which emphasises the participants' Relationship building exercises are seen as a
need to negotiate. They see that at the own responsibility for making decisions that key support to the negotiation process.
heart of their process are the substantive affect their lives. It is therefore a self- What has happened in South Australia is
issues. From my perspective as a practitioner empowering process" (Folberg & Taylor that the groups have been brought together
it is vital that mediators remember that 1984). in processes that focus not on the
"how" people talk is as important as "what" Both these definitions seem to place substantive issues in relation to Native Title,
they need to talk about. Mediators must the dispute at the heart of the mediation but rather on the procedural and emotional
start by negotiating with parties in dispute process. If, as I have proposed, relationships issues of each stakeholder group. These
the "how" of how they will talk about between parties are at the heart of many, if processes have brought people together
"what" they need to negotiate. As this not all, disputes, mediation is not merely a with the express purpose of building shared
paper has sought to explain, any limits on process of enabling parties to 'settle' relationships including cross-cultural
the process have consequences for both dispute issues but is one that can assist understanding in recognition that any lack
the disputants and the outcomes of the them to fundamentally renegotiate their of understanding holds the potential to
process. Mediators must see that procedural relationships with one another, and in so derail the substantive negotiations.
n e goti ations p recede substant ive doing transform their understanding and The emphasis has been on humanising
negotiations and that this is vital if parties the nature of 'their dispute'. the exchange. The pilot meeting for the
are to have a sense of ownership over both I would like to propose a definition of relationship building meeting was set up
the process and its outcomes. Mediators mediation that draws on elements of both between the boards of the Aboriginal Legal
need to be prepared to start by negotiating the Moore and Folberg & Taylor definitions Rights Movement and the South Australian
and not imposing their process. whilst emphasising the centrality of Farmers Federation. Traditionally farmers
In Australia there has been a proliferation relationships rather than outcomes or and Aboriginal people have had a fraught
of mediation services. Have a dispute with "settlement". I propose that: Mediation is a relationship in South Australia, particularly
your neighbour, your boss, your ex-partner process whereby people choose to come since it was determined that Native Title
- business or personal, your church, your together with the assistance of a non- could co-exist with pastoral leases. The
council or just about anyone else and you partisan and mutually acceptable third meeting between the two boards was seen
will probably be offered mediation. It is fair party, who assists them to analyse and as a very important meeting as it was vital
to say, however, that whilst you might be discuss the causes of the differences that when farmers and Aboriginal people
offered mediation services in every between them in order better to understand came to talk about 'what does Native Title
Australian state and territory, with some and negotiate ways of fairly dealing with mean in practice?' or 'what does co-
jurisdictions even having mandated each other. It is a process which recognises existence mean in practice?' - it was
mediation processes, there is no one that disputes are shaped by the relationships important that they had a shared
approach to mediation that is universally between the disputants and that assisting understanding of their various relationships
agreed. It does appear, however, that most disputants to build and manage their to land. During the preparation for the
mediation processes tend to emphasise the relationships with one another is central to meeting a number of the farmers had
importance of achieving outcomes or any meaningful, sustainable and mutually identified quite confrontational questions
settlement, particularly where they have agreed and acceptable resolution of dispute that they wanted to put to Aboriginal
been funded as a means of expediting issues. participants in the meeting. My colleague
matters that might otherwise be dealt with I believe that if accepted, this definition and I thought that we needed to introduce
by the courts. will require mediators to evaluate whether the element of 'saving face' into the
Both the Moore and Folberg & Taylor their process is emphasising outcomes at process, so we asked the participants to
definitions of mediation, which are broadly the expense of relationships. And if it is, is it undertake a role reversal exercise. We
accepted by mediation practitioners in doing so because it reflects the cultural asked the farmers to imagine they were
Australia, place a strong emphasis on context of the mediator rather than the Aboriginal people and thinking as Aboriginal
'settlement' as a core component of the parties? people what were the questions they
mediation process. Moore has defined Approaching dispute system design would want to put to farmers. We did the
mediation as "the intervention into a dispute with this definitional approach has had same with the Aboriginal people by asking
or negotiation by an acceptable, impartial considerable impact on my own mediation them to imagine that they were farmers
and neutral third party to assist disputing practice. Since 2000, I have been engaged and as farmers what were the questions
parties in voluntarily reaching their own as a Process Advisor to the Aboriginal Legal that they would want to put to Aboriginal
mutually acceptable settlement of issues in Rights Movement supporting their Statewide people.
dispute" (Moore 2003). Folberg & Taylor Approach to negotiating Native Title. A key Each of the boards identified all of the
describe mediation as "... a process by responsibility of mine has been to design questions that the other board had wanted
which the participants, together with the relationship building processes between the to put to them, but as Aboriginal people
assistance of a neutral person or persons, stakeholders, such as farmers, miners, were role-playing farmers and drafting the
systematically isolate dispute issues in order government or Aboriginal people. Each of questions, there was no heat in the
to develop options, consider alternatives, the stakeholders has a range of connections questions, because they had not come
and reach a consensual settlement that will and shared histories and these are often from the actual farmers themselves. One
[2004] Asian DR 89
Mediation
of the other powerful impacts of the through the difficult negotiating points that Refernces
process was that each board gained an lay ahead. As a practitioner, it reinforced
Behrendt, L., (1995). Aboriginal Dispute Resolution,
understanding that the other board did for me that the key to transforming conflict Federation Press, Sydney.
have an insight into how they saw things. is to assist the parties in conflict to Fo l b e rg a n d Tay l o r, ( 1 9 8 4 ) . Me d i at i o n : A
The process did not go on to discuss understand that the conflict is a part of Comprehensive Guide to Resolving Conflict
substantive issues in any way. What it their relationship, not the whole of their without Litigation, Jossey-Bass, San Francisco.
Hall, E.T., (1981). Beyond Culture, Doubleday, New
allowed each of the participants the relationship.
York.
opportunity to do was to explain in greater As a mediator it is easy to measure the Jones, Craig, (2002). Aboriginal Boundaries: The
detail their personal stories. Both the success of the process by whether an Mediation and Settlement of Aboriginal Boundary
Aboriginal participants and the pastoralists outcome has been achieved. However, Disputes in a Native Title Context, in National
chose to share quite personal and emotional outcomes break down, and if insufficient Native Title Tribunal Occasional Paper Series No2.
Moore, C., (2003). The Mediation Process, Jossey-
stories. What was powerful about this was attention has been paid to the relationship
Bass, San Francisco.
that at the end of that meeting both of the between the parties, there will be very little in Nathan, L., (1998). A Case of Undue Pressure
groups decided that they wanted to place to sustain a process of renegotiation. International Mediation in African Civil Wars.
produce a joint statement indicating their The key to transforming conflict is to start, Centre for Conflict Resolution, University of Cape
commitment to and support for working not with the solution or the outcomes, but to Town South Africa. Staff Papers.
National Alternative Dispute Resolution Advisory
together. They recognised the need to look at the relationships between all of the
Council, (1997). Issues of Fairness and Justice in
work together because their connections stakeholders to that conflict, and to build in Alternative Dispute Resolution, Commonwealth of
to land and country meant that, despite the processes that assist them to transform their Australia, Canberra.
very difficult issues for negotiation, their relationships. This approach of assisting O'Donnell, M., (1997). The Development and
areas of commonality significantly stakeholders to manage and transform their Delivery of Facilitation Services in Queensland,
1990-1996, Australian Dispute Resolution Journal
outweighed their differences. Furthermore, relationships is one that has transformed my
8(3):162-167. Ed. R. Charlton.
they recognised that prior to coming own practice as a mediator. It has enabled me O'Sullivan, K., (1994). Understanding Ways of
together they had seen their differences as to uncover some of the cultural biases within Communicating between Cultures, Hale and
largely overwhelming any commonalities. my processes and to recognise that the very Iremonger, Sydney.
The opportunity to come together and get act of preferencing outcomes or settlements Williams, R. The Science Show ABC Radio National
(Transcript of an interview with Eileen Shea Climate
to know each other without the pressure to can actively work against achieving them.
Project Co-ordinator East-West Centre Honolulu
negotiate an outcome was seen as After all, it is relationships, not conflicts, that Hawaii broadcast Saturday 5 April 2003) found at
invaluable by all attending. are the building blocks of societies. www.abc.net.au/rn
Through the realisation that their
relationships and shared connections were
bigger than their current conflict, that RhiIân Williams
relationship was able to sustain them Dispute Resolution Consultant, Australia
Asian
Dispute
Review Call for Papers
If you are interested in submitting an article to Asian Dispute Review,
please send it as a Word document by email to:
Diane O'Hare, Editor, Asian Dispute Review: [email protected]
90 [2004] Asian DR
Case Report
Wal-Mart Recovers Chinese

Domain Name
Gabriela Kennedy & hold any registered trade mark rights in In response to the complainant's
respect of the " " mark. argument regarding bad faith, Chen stated
Paloma Wong Thirdly, Wal-Mart argued that the that he had not obtained any commercial
respondent had registered and used the gains from the disputed domain name.
T
his case concerned a dispute over disputed domain name in bad faith. The
the domain name < .com>, complainant put forward evidence that the The Decision
(ie Wal-Mart in Chinese characters). respondent registered the disputed domain The panellist ruled in favour of the
The case was brought before the Asian name for the purpose of selling or otherwise complainant, Wal-Mart, and ordered the
Domain Name Dispute Resolution Centre, transferring it to obtain unjustified benefits. transfer of the disputed domain name to them.
which is one of the four dispute resolution E-mail correspondence, between Wal-Mart The panellist agreed with the arguments
providers accredited to hear complaints and the predecessors of the respondent in put forward by the complainant, and noted
brought under the ICANN Uniform Dispute which these entities sought an unreasonably that the company had registered its "Wal-
Resolution Policy. The ADNDRC has been excessive amount of money to transfer or Mart" trade marks in more than 46
handling .com domain name disputes since sell the disputed domain name to Wal- countries. Wal-Mart owned 13 " "
2002. Over 69 complaints have been Mart, was produced as evidence. Further, trade marks in the PRC, among which the
handled by ADNDRC so far and in most it was argued that the disputed domain latest predated the respondent's registration
cases those have had an Asian nexus. This name had never resolved to any operational of the disputed domain name.
case was no exception. website. The respondent also failed to Further, the panellist found that there
The complainant was Wal-Mart, which provide a real address and had in fact given was not sufficient evidence to support
is a well-known retailer with a principal false telephone numbers when obtaining Chen's argument that the website to which
place of business in the USA. The respondent the registration of the disputed domain the disputed domain name resolved was
was Chen Qingrui. Prior to filing the name. widely used and recognized; although
complaint, Wal-Mart sought to purchase The respondent denied all allegations there were letters from the respondent's
the disputed domain name from the made by the complainant and claimed he relatives and friends certifying this.
respondent's predecessor. Wal-Mart had was not aware of the existence of any Regarding bad faith, the panellist did not
engaged in e-mail correspondence with "Wal-Mart" Chinese names or trade marks. agree with Wal-Mart's contention that
various owners of the disputed domain Chen argued that his choice of the name " Chen had registered or acquired the
name over the course of almost one year. " for the disputed domain name was
disputed domain name for the purpose of
based on a name, which he liked, of a
The Arguments selling it or to obtain unjustified benefits.
character in the works of the famous
There was no evidence to show that the
Wal-Mart brought forward evidence French writer, Jean-Jacques Rousseau.
quoted prices received by the complainant
that the disputed domain name was Hedging his bets, Chen also claimed that he
as a result of anonymous approaches made
identical to, or confusingly similar to, its remembered seeing a lighting store in
to predecessors of the respondent were
own trade marks and showed evidence of Zhong Shan city, Guangdong which used
sent by the authorised agents of the
its numerous trade mark registrations for the characters " " for its name and
respondent for and on behalf of the
" " in the PRC. The complainant also that this inspired him to choose the
respondent. However, the panellist was
cited evidence of its various websites disputed domain name.
satisfied with the other evidence/arguments
accessible worldwide and in the PRC using The respondent cited cases where
regarding bad faith adduced by the
the domain names "www.walmart.com", domain name complaints, brought by
complainant, namely the passive holding of
"www.wal-mart.com" and "www.wal- famous brand owners, were rejected.
the disputed domain name and the
martchina.com". These included google.com v google.com.
respondent's failure to provide any address
Secondly, Wal-Mart contended that the cn, General Motors v hummer.com.cn, and
in Whois, which is a searchable database
respondent, Chen Qingrui, had no rights or Paradox Security Systems Ltd v paradox.
containing information about domain name
legitimate interests in the disputed domain com.cn, etc.
registration - whois.net. The panellist also
name. The complainant argued that there The respondent also argued that he was
agreed that the giving of false telephone
was no relationship between the complainant entitled to use < .com> in any business,
numbers in Whois, in contravention of
and the respondent that would give rise to provided such business was not in direct
ICANN policy, amounted to bad faith.
any licence, permission, endorsement or competition with the complainant's business.
authorisation by which the respondent could Chen asserted that < .com> would
own or use the disputed domain name, never be used for any commercial or profit-
which consisted entirely of Wal-Mart's " making purposes, but that it was a website Gabriela Kennedy & Paloma Wong
" mark; and that the respondent did not serving the interest of the public. Lovells, Hong Kong
[2004] Asian DR 91
Book Review
Law, Practice and

Procedure of Arbitration
by Sundra Rajoo
(2003, Malaysian Law Journal\LexisNexis, Kuala Lumpur, ISBN 967-962-481-1), cxxxvi + 1396 pp, casebound
Robert Morgan Law which will apply to both domestic and that sections 32-34 are missing - although,
international arbitration, together with curiously, they are referred to in the list of
M
alaysia is one of a number of additional optional rules for domestic sections at page 688. (ii) The 1980 Act has
'home-grown' international arbitrations covering, for example, been omitted from the appendices - an
arbitration venues in East Asia consolidation, judicial determination of important omission given that this Act was
possessed of well-known arbitration centres, preliminary points of law and appeals against the source of section 34 to the 1952 Act5.
commissions or other institutions. In terms awards on questions of law. The proposed (iii) Appendix 9, which purports to contain
of cases referred, the giants are China and Malaysian approach is, therefore, broadly the text of the 1985 Act, appears to be
Hong Kong, the middle rankers are Singapore similar to that proposed for Hong Kong in incomplete as it merely sets out verbatim
and South Korea and the smallest are 2003 by the Hong Kong Institute of Arbitrators' the text of the New York Convention
Malaysia and Japan1. Or apparently so, in Committee on Hong Kong Arbitration Law. without provisions to implement it6. The
the case of Malaysia: for annual figures There is considerable interest in New York Convention is then set out
about international arbitration in Malaysia arbitration law and practice in Malaysia and verbatim once again in Appendix 10. Given
are hard to come by, as a glance at the in the prospects for law reform. Sundra the aforementioned difficulties in accessing
Statistics page on HKIAC's website reveals2. Rajoo's book is, therefore, a welcome and Malaysian legislation online, these three
It should not be assumed, however, that long overdue contribution to the subject. It omissions detract from the usefulness of
little arbitral activity goes on there. Far is the very first detailed and comprehensive the statutory materials appendices. Perhaps
from it: Malaysia has a profile in international treatise on Malaysian arbitration. It performs the publisher would consider issuing
arbitration under the auspices of the Kuala the dual functions of an authoritative addenda pages with each copy of the book
Lumpur Regional Centre for Arbitration textbook, discussing the subject from first to remedy this situation. (iv) Order 69 of
(KLRCA). It is also active in domestic principles, and a practice manual. The the Malaysian Rules of the High Court
arbitration, servicing mainly the construction arbitration process throughout is generally (Arbitration Proceedings) ('the RHC') is
industry. This, despite the fact that the discussed in a chronological manner, from lumped together with trade union and
principal Arbitration Act 1952 ('the 1952 arbitration agreement to challenge and workmen's compensation legislation in
Act'), which governs both domestic and enforcement of awards, thus facilitating Appendix 4; the RHC surely merit an
international commercial arbitration ease of reference. Given its special status appendix of their own.
conducted in Malaysia, is based upon the and its de-linking from national arbitration These criticisms apart, this book is an
"vastly outdated"3 pre-1979 version of the law by virtue of section 34 of the 1952 essential addition to the library of anyone who is
English Arbitration Act 1950. Amendments Act, arbitration under the auspices of the interested or involved in arbitration in Malaysia.
thereto have been largely piecemeal, the KLRCA is discussed in a separate chapter.
most important amending statutes being The appendices contain an extensive
Robert Morgan
the Arbitration (Amendment) Act 1980 collection of reference materials, both Malaysian Barrister (England & Wales, Queensland)
('the 1980 Act') and the Convention on the and foreign, embracing statutes, arbitration
Recognition and Enforcement of Foreign rules and procedural and ethical guidelines.
Users and students of Malaysian arbitration are 1. See 'Statistics' link at the HKIAC website -
Arbitral Awards Act 1985 ('the 1985 Act').
http://www.hkiac.org/en_statistics.html.
Arbitration law reform in Malaysia has thus provided with a 'one stop shop' in this
2. See note 1.
been a protracted process, information about regard, and one which is particularly useful for 3. Rajoo, p 683.
which has been hard to come by over the comparative purposes. In relation to statutory 4. This reviewer was unable to find any arbitration
years. By comparison with the openness materials, this is just as well, especially for laws and related rules of court listed at leading
overseas users and academics, for very few websites such as www.worldlii.org, the Commissioner
about the subject shown in Hong Kong and
for Law Revision's website, www.lawsofmalaysia.com
Singapore, reform appears to have been Malaysian statutes appear to be accessible
(which, in any event, is a commercial service) or the
regarded in Malaysia as something of a state online4. The text of the new draft Arbitration Malaysian Judiciary website, http://www.kehakiman.
secret. It is now a matter of record, however, Act is set out at Appendix 17. gov.my/acts.html.
that the Malaysian Government is considering This reviewer's criticisms are limited to 5. The text of section 34 does, however, appear at
the incompleteness of the statutory materials p 658 in the text.
proposals by the Bar Council of Malaysia for
6. In Hong Kong, by way of comparison, the
the enactment of a new Arbitration Act. The in the appendices. These are as follows. (i)
equivalent enactments in Part IV of the Arbitration
draft Act is premised on the adoption of an Appendix 1 sets out the text of the 1952 Ordinance (Cap 341) contain provisions additional to
amended version of the UNCITRAL Model Act as at 1 November 1972, which means the New York Convention.
92 [2004] Asian DR
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