Assessing the Effectiveness of ADR Service Providers in Meeting the Needs of Asian Users

In the 13^th Asia-Pacific ADR Conference where participants assessed the current state of Asian ADR stands and explored the feasibility and desirability of developing Asian models or best practices to improve the existing suite of services Andrew Sek-Hwan Hong, Vice President, Hyundai Heavy Industries shared his views on whether, and to what extent, the ADR service providers satisfy the demand of Asian users, the Effectiveness of ADR Service Providers in Meeting the Needs of Asian Users and more.

From a user perspective, although the general theme of this conference is Asian ADR, we do not make much meaningful distinction between Asian ADR and ADR in other jurisdictions. For instance, when you buy a phone whether it is Apple or Samsung it does not matter; as long as it works we are fine with the product.

However, another important factor from an in-house perspective and from a business perspective is that when we decide how to handle disputes we ask a lot of strategic questions and among these strategic questions, we do not ask ourselves whether is the counterparty Asian or is the governing law an Asian country or is there any Asian institution involved?

Therefore, in that context from a business perspective and user perspective, the Asian part of the ADR does not make much of a difference. However, I would go one step further and share my observations over various ADR Services, so that it can be a food for thought for the other panellists.

At the risk of overgeneralization, and oversimplification let us look at arbitration first. For the past 10 to 20 years, clients especially - Asian companies have piled up, and built up their experience of large and small arbitrations. Therefore, now they are getting a sense of the general cost and the time duration which is associated with the arbitration. And, when I discuss with my colleagues from other companies the kind of general sentiment is that they are moving away from arbitration they thought that would be a perfect alternative to litigation but they are learning it is so expensive and so slow. Therefore, this satisfaction is growing.

Generally, mediation is more of a help for the parties to settle. Therefore, as long as the parties are ready and willing to get help in the mediation, mediation is helpful. However, there are many situations where parties are not willing to take any help from outside and in that sense, they welcome the help of the mediation but with reservation the last fact that I would want to mention is the dispute resolution board or also known as Expert determination and this is the least favourite ADR service from our perspective. Expert Determination - Dispute Resolution board is a meaning arbitration and a pregame to arbitration but the time and cost is not much compared to arbitration. Therefore, when it comes to the efficiency and effectiveness the determination and dispute resolution board - we do not feel it is efficient or effective at all.

The Preference for Non-Adversarial Dispute Resolution in Asia

Everything has pros and cons. From the business users’ perspective, the strengths or advantages of mediation is the time and cost efficiency, it's short and it's relatively inexpensive compared to arbitration. Therefore, there is an attraction to the business user. The issue from the user is the effectiveness; also, there is no guarantee of success of the mediation.

We are doubtful as to whether we can settle through mediation. I have been involved in several mediation cases and I unfortunately have not had the joy of reaching a settlement through mediation yet. So according to the statistics, 77% of business people prefer mediation. Therefore, I should learn from them but I think the other reason for that is perhaps you ask the question of comparing mediation and arbitration litigation. If you ask comparison between mediation and negotiation I think the result can be different.

At the end of the day, I also think about why the mediation failed and what would be the key to the success of the mediation. My opinion is that it's very party-specific and the party's willingness is key to the success. There are two groups where the mediation would not work. The first one is a party which does not want to make any decision. There are people parties similar to that, they do not want to make any decision and they want the third party to make the decision for them.

Therefore, mediation does not work for those groups. Also, the other group is a party with a very strong grip on the case. They want to make the whole decision on their own and they do not want to get help from others. This can be much of an overgeneralization but I feel Asian parties generally have a strong sense of ownership and the decision grip on the decision.

When we negotiate in such situations with some parties, during the negotiation we sometimes ask them and we have talked a lot about why and what you think about going to the mediation to get some help. In many cases, the answer is – “No, we do not think it will work, we do not need help, if we have the willingness we can find a way, why do we need to go to the third party, let us sit down and let us keep talking until we find the solution.

Hence, there are increasing numbers of mediation cases perhaps. Still, there are also other sides of the world where you know we just simply say mediation - well if we have willingness to negotiate and settle you know we can find the solution. It is a case-by-case situation, Party by party situation, so this is my personal opinion. Thus, I am not in favour of mandatory mediation. I want to have the option of mediation available but I want to assess the situation and the level of willingness of the counterparty to settle and then make a decision on whether to engage the mediation or not. Therefore, mandatory mediation is something to think about from the user's perspective