AS NOTED IN A PREVIOUS COLUMN of Lexicon (see China Business Law Journal, volume #, 11, issue #: 3: Culture in the courtroom), one impact of the phenomenal growth in cross-border trade and investment in the past few decades is that courts in countries like Australia are increasingly hearing commercial disputes in which both parties are from countries outside Australia.
This column discusses judicial mediation as a mechanism for settling disputes, particularly involving parties from Asia, continuing previous discussion of judicial mediation in general terms (see China Business Law Journal, volume 9, issue 8: Judicial mediation).
An anecdote
This columnist recently met with a judicial visitor to Melbourne Law School from a jurisdiction in Asia. The judicial officer from a Family Court and had come to Australia to learn about our approach to mediation, particularly in relation to disputes involving divorce and custody of children.
When I asked him to identify the greatest difference between the approach in Australia and his jurisdiction, he said in his jurisdiction the mediator speaks separately with each party but does not bring the parties together.
When I asked why, he said it was because mediation, like litigation, is considered to be a zero-sum game; namely, there will inevitably be a winner and a loser. Further, by the time a dispute is submitted for dispute resolution, the relationship between the parties has broken down irretrievably – and it would be risky and counterproductive to bring the parties together.
This story highlights the extent to which the traditional, “Western” approach to mediation is often based on different premises and paradigms from those that underpin mediation and dispute resolution in an Asian context.
Judicial mediation
Over the past decade or so, mediation has become an integral part of civil proceedings in Australia. By way of example, the website of the Supreme Court of Victoria states the following:
“The purpose of a judicial mediation is not limited to achieving settlement of the proceeding. While that may be the main objective of the mediation, if that is not achieved, a judicial mediation can assist in the parties understanding each other’s case, resolving the proceeding in part, limiting the issues for trial, resolving interlocutory disputes and reaching agreement on the conduct of the litigation.”
Under section 66 of the Civil Procedure Act 2010 in Victoria, the Supreme Court is authorised to refer a proceeding to judicial mediation. A referred matter will usually have various features, including one or more parties with limited resources or “aspects that otherwise make it in the interests of justice that the matter be referred to judicial mediation”.
The court may order mediation – known as judicial mediation – in which the mediator is an Associate Judge or Judicial Registrar. The court may also order a private mediation, in which the mediator does not work at the court.
An order referring the parties to mediation may occur at any time during the dispute, even if one or more parties tell the judge they do not want to attend mediation. The mediation must be attended by parties or representatives of the parties who have full authority to settle the proceeding.
To date, mediation has proven to be effective in settling disputes that would otherwise need to go to judgment. Anecdotal evidence, however, suggests that mediation has been less effective in disputes involving Asian parties or, perhaps more accurately to avoid generalisations, some parties that have an Asian background.
Feedback on mediation involving Asian parties (or some parties with an Asian background) suggests the following:
- Language barriers are often present and interpreters are required;
- Overseas parties often send Australian-based representatives with limited authority to negotiate;
- Loss of “face” can significantly hinder negotiations: parties can be unwilling to put forward a first offer or compromise for fear of how they will be perceived (including in the local community);
- Sometimes the mere fact that litigation has been commenced is seen as relationship-destroying and can act as a barrier to commercial negotiations; and
- Parties approach negotiations not through an analysis of risk but simply by reference to what they are prepared to pay to settle the dispute.
In addition, there is often a reluctance to engage with legal issues; a lack of familiarity with the legal system and the legal process in Australia; and a reluctance or inability on the part of lawyers to challenge their client’s underlying thinking or to suggest possible settlement terms.
To understand why mediation is less effective with some Asian parties, it is helpful to have an understanding of the different approaches to, and understandings of, mediation.
As this column has previously discussed (see China Business Law Journal, volume #, 9, issue #: 8: Judicial mediation), a distinction is drawn between “neutral” or “facilitative” mediation and “evaluative” mediation.
With facilitative mediation, the mediator adopts a neutral role and focuses more on facilitating negotiations between the parties than actively presenting strategies for the parties to consider. In this context, the mediator is usually an independent person who is not known to the parties.
With evaluative mediation, the mediator evaluates the legal issues in the case and actively presents strategies to the parties to consider for the purpose of resolving the dispute. Further, the mediator is often a trusted person who is known to the parties.
In broad terms, the traditional approach to mediation adopted by many Asian jurisdictions is evaluative mediation.
To understand how to make mediation more effective for Asian parties, it is helpful to have an understanding of the differences between the rules and processes that apply to mediation. For, example, in certain Asian jurisdictions, including mainland China, a judge who hears a case often acts concurrently as a mediator. This is an approach that is not unique to mainland China. It can also be found in civil law jurisdictions such as Germany.
In contrast, common law jurisdictions are consistent in rejecting the proposition that the judge who is hearing a case should act as a mediator in the same case. The main argument against this proposition is that a judge who has acted as a mediator between the parties will not be perceived to be impartial if the mediation is unsuccessful and the judge is required to determine the issues. This is because having heard admissions by one or both parties during the course of the mediation, it is unrealistic to expect that the judge could ignore prejudicial evidence when adjudicating the case.
From the perspective of a party from a jurisdiction in Asia who is used to the evaluative approach to mediation, it is often very difficult to distinguish between litigation and judicial mediation that involves facilitative mediation. Each situation involves a judicial officer and a structured process that takes place in a formal environment.
In particular, in circumstances where the parties have moved beyond the point of saving face, the Western-style neutral approach to mediation is less likely to have an impact for the reasons noted in the above-mentioned anecdote.
Possible solutions
So what are the possible solutions in terms of increasing the effectiveness of judicial mediation in relation to disputes involving Asian parties?
Much of this will not come as any surprise. First, it is well recognised that training for judicial officers, mediators and practitioners is important in developing their understanding and skills.
Secondly, greater information to parties about the legal system and legal processes, particularly in the context of pre-trial management, is useful. An interesting initiative took place in Australia last year, when the Federal Circuit and Family Court of Australia launched videos in 12 languages to help people understand the legal system and legal processes in migration cases.
Thirdly, and along similar lines, if mediation is less attractive to disputing parties than it should be, perhaps part of the solution lies in making litigation look less attractive. This can be achieved through greater information and education about the realities, challenges and costs of litigation.
Finally, there is scope to make more effective use of interpreters. One question is whether courts should have the power to make orders for the mediator to have their own interpreter.
As one practitioner in Melbourne suggested to me: “The mediator needs to have their own voice. That is what gives power to the mediator. If the mediator can only communicate through the same interpreter as the party’s lawyer and barrister, the effect of having their “own” voice is lost. It is even less effective when the lawyer acts as an informal interpreter – the lawyer may consciously or subconsciously act as a filter to what the mediator is really saying.”
In conclusion, as a result of the growing number of disputes involving Asian parties in jurisdictions such as Australia, it has become increasingly important to strengthen mediation as a form of dispute resolution and to benefit from the experience in other jurisdictions.
The above article is based on a paper that the columnist recently delivered to an event hosted by the New Zealand Asian Lawyers, themed: “Considering possible settlement: Asian parties in court”.
Andrew Godwin previously practised as a foreign lawyer in Shanghai (1996 – 2006) before returning to his alma mater, Melbourne Law School in Australia, to teach and research law. Andrew is currently Joint Associate Director of the Corporate Law and Financial Regulation Research Programme at the Melbourne Centre for Commercial Law and Honorary Associate Director (Commercial law) of the Asian Law Centre. Andrew has acted as a consultant to a broad range of organisations, regulators and governments in Australia and abroad. He served as Special Counsel and Acting General Counsel of the Australian Law Reform Commission between 2020 and 2024.
