Currently, the number of cases regarding international commercial disputes has rapidly increased, as there has occurred more and a wider range of international transaction . Alternative Dispute resolution (“ADR”) has become a popular form of dispute resolution in Korea as international business and domestic transaction in specialized fields increase.
In Korea, there have been more legal disputes entailing various causes, which leads to resolving disputes through ADR instead of court’s decision . Particularly, ADR systems enable parties to partake in dispute resolution process more actively, while reducing unnecessary cost and time as well as enabling to utilize specialized competence. With these reasons, a number of countries acknowledged utility of ADR and has been working on enacting as well as revising institution for the purpose of activating ADR.
However, in Korea, there appears to be lack of awareness of ADR systems compared to foreign countries, this institution hasn’t been utilized that much, which leads to the need to come up with effective counterplans. This paper would like to cover methods to activate ADR systems in Korea through discussing problems and resolutions of ADR systems in Korea.
II. Definition of ADR
Alternative Dispute Resolution (“ADR”) refers to any means of settling disputes outside of the courtroom, and ADR typically includes arbitration, mediation, conciliation and consultation, etc., which will be further stated in detail. ADR replaces traditional judicial process, and it has its significance in that parties can make the process private and voluntary unlike cases to the court being resolved with the force of law, which is why ADR has been expressed as privatization of civil justice .
ADR is also particularly preferred because the disputes can be resolved by arbitrators with a high level of expertise that disputant parties appoint on their own. The society has faced rapid technological advances, and thus complex issues have followed this progress. It is not easy for the court judges with common sense and logic to review disputes bearing complex technical issues. This type of disputes that are occurred newly in the modern society needs to be handled properly by experts having special knowledge and experience in the area . There can be expert testimony in traditional judicial process, but it is still limited in that leading role in trial is conducted by judges with common sense and it takes a long time to go through this procedure.
Also, ADR can be less costly and time-consuming. Compared to legal procedure that requires appointing legal representatives and paying for court fees , ADR procedures keep costs low and it makes it easier for disputant parties to approach to dispute resolution . Also, considering that ADR takes a flexible stance as in procedures that disputes are resolved through, disputant parties can save time with simplifying the process as the need arises. This aspect attracts companies going through commercial disputes, in that time to access to market can be saved through ADR systems.
Of course, there have been opinions taking a critical view of ADR systems. While taking the perspective of whole community, ADR can appear to hinder justice from being served. It is because ADR aims to reach a compromise between parties while premising partial abandonment of legal rights instead of conserving legal rights, in that ADR forsakes the parties’ right to trial. Also ADR systems are criticized for overlooking disparity of socio-economic status between disputant parties, and this system can demean itself by letting the weaker party make a concession for the stronger party in resolving disputes. However, ADR systems still have significance in enabling disputes to be resolved through justice without the force of law, in that individuals can partake in their grievance settlement more proactively while cutting cost and time .
III. Types of ADR
In general, ADR can be divided into primary dispute resolution process and hybrid dispute resolution process. Primary dispute resolution process includes negotiation, mediation and arbitration, while hybrid dispute resolution process entails med-arb, court-annexed arbitration, court-annexed mediation, mini-trial, private judging and etc. Within hybrid dispute resolution process, new forms of dispute resolution method can be created as circumstances demand . Since the two most common forms of ADR in Korea are arbitration and mediation , and negotiation has played a basic factor in all other dispute resolution method, I would like to particularly discuss types of primary dispute resolution in this paper.
Negotiation signifies communication process conducted by more than two disputing parties for the purpose of coordinating interest and finding common ground . Third party doesn’t intervene in negotiation, and there is no limitation as in forms of negotiation, which leads to unlimited submission of claims and evidences throughout the process . Negotiation has its significance in playing the primary role of all other dispute resolution process, in that all the parties partake in dispute resolution and find the common ground through exchanging their claims and evidences .
Mediation is a process in which the mediator assists the disputants in reaching a negotiated settlement of their differences. The mediator’s role is primarily encourage open communications by helping disputants identify the specific areas of dispute and agreement and ultimately reaching a negotiated settlement. A prior agreement between the parties to resolve their disputes through mediation is not required. And the settlement agreement between the parties made at mediation is not readily enforceable and thus requires a regular judgment from the court after examination on the merits to enforce the agreement . Also, mediation is a private and non-disclosed procedure, which characterizes this process as confidential .
Arbitration is generally defined as a legal proceeding to settle a dispute by the decision of an arbitrator(s) who is appointed by the disputing parties. An arbitration agreement between the parties must exist, and disputants are bound by the outcome of the arbitral award. Once an arbitral award is rendered, it carries the effect of a judicial settlement which is readily enforceable in Korea . Since arbitration entails finality, it enables the procedures less costly and time-consuming. And arbitration has been considered highly effective for commercial disputes in that the process is conducted in a closed manner so that it doesn’t reveal trade secrets. Also, arbitration can resolve disputes over a certain judicial sovereignty, and thus arbitration is preferred when it comes to international disputes .
IV. Problems regarding ADR systems in Korea
(1) Lack of legislation concerning ADR systems
In Korea, there does not exist the fundamental law enacted unlike the case in the U.S. and Japan. In the case of judiciary ADR (i.e. conciliations of civil disputes or family disputes that are conducted by the court), cases are based on the Civil Conciliation Act or the Family Conciliation Act. However, in the case of administrative ADR, disputes are resolved through establishing each conflict adjustment committee by individual law(개별법). In the case of civil ADR, merely the Arbitration Act was enacted in 1966 then revised in 1999 for the purpose of internationalization. And the international arbitration rules were enacted in 2007, and the Korea Commercial Arbitration board has conducted arbitration or conciliation based on these rules.
Meanwhile, the UNCITRAL has been revising the standard act(표준법) that covers international commercial arbitration, followed by the Model Law on international commercial mediation enacted in 2002. Also other countries not only have promoted facilitating ADR systems but also hurriedly modified ADR fundamental laws that regulate basic structure of ADR systems and its connection to judicial procedures. Examining this trend in the United Nations and world’s leading countries leads to the need of Korea to modify the Arbitration Act in order to activate arbitration systems, and to enact the fundamental law regarding ADR that includes reconciliation, conciliation and mediation for development of ADR systems in Korea. The fundamental law of ADR systems in Korea will be a useful guideline for policy originators and practitioners while leading development of civil ADR systems.
(2) Operation of ADR Institutes in Korea
Administrative ADR institutes and civil ADR institute have problems as in its operation. In the case of Administrative ADR, performances as in operation have been substandard except for the few such as the Environmental Dispute Resolution Commission, the Press Arbitration Commission, or the Subcontract Dispute Mediation Council. In spite of various types of Administrative ADR case, it is hard even for legal experts to know which commission to request dispute resolution to. However, there is no particular system that apprehend the overall Administrative ADR institutes so that it can promote or guide as in where to request dispute resolutions. Also, it has been pointed out that the institutes are composed of high profile public officers or well-known persons, and there are not enough employees who would be practically in charge of dispute resolutions.
Meanwhile, in the case of Civil ADR institutes, the Korean Commercial Arbitration Board is almost the only institute. Although the number of cases on domestic arbitration and conciliation has been increasing, it has been hard to handle the cases of special sectors such as inter-Korean commercial arbitration or commercial arbitration in the Free Economic Zone due to shortage of budget and manpower. Besides, there is no national support center of ADR system which can back up and connect multiple Civil ADR institutes, and it has been detrimental to development of Civil ADR systems.
(3) Lack of public awareness on ADR systems
Lack of public awareness on ADR systems can be detrimental to development of ADR. Generally, social disputes in Korea in the past are estimated to be suppressed. However, starting from late in 1980s, as democratization was preceded and authoritarian mechanism to suppress social dispute was collapsed, disputes in various aspects started to occur. Although the economic and social structure in Korea has become complex, public awareness on changes in types of resolution hasn’t been high, which lead to lack of awareness on ADR systems as well.
It is hard to find any public efforts including education to raise awareness on ADR systems, and even law students hardly recognize these systems as effective resolution methods as there are few classes open in law school curriculum. In addition, the general public tends to depend on litigation procedures, and lawyers are more likely to attempt to resolve disputes through litigation rather than arbitration or conciliation. For this reason, in Korea public awareness to ADR systems is estimated to be insufficient overall, while making it difficult to extend the perception.
(1) Enactment of the Fundamental Law of ADR Systems
It has become the global trend to legislate a set of laws that can regulate ADR systems in order to promote facilitating ADR systems and connect it to legal procedures. In Japan, the fundamental law regarding ADR systems has been enacted in 2004 and the certificate system also has been introduced so that a number of civil ADR institutes can be established by. In the United States, mediation and arbitration have been utilized starting from 1970s and the use of these alternative means has rapidly increased since. Even with this rapid increase in use of ADR systems, the U.S. compels federal district courts to introduce ADR systems to disputant parties through enacting the Judicial Reformation Act in Civil Matters(민사사법개혁법-다시찾기) in 1990. In the United Kingdom, 신민사소송규칙 has been legislated in 1999, and the use of ADR systems can be recommended to the disputant parties having cases that are proper to be resolved by ADR. And In France, through amending 신민사소송법 in 1998, a single party was enabled to apply for execution force when dealing with conciliation procedures. Examining this trend in establishing fundamental acts in ADR system leading countries, we can come to the conclusion that Korea also should establish the fundamental law regarding ADR systems, so that it can activate civil ADR systems as well.
(2) Expansion of ADR Institutes and Establishment of Systems to Support the Institutes ADR
1) Expansion of Civil ADR Institutes
In Korea, Civil ADR cases such as civil of family conciliation accounts for most of ADR cases, and the Korean Commercial Arbitration Board is almost the only institute in Civil ADR institutes. For the prospective activation of ADR systems, it is highly required to cultivate Civil ADR systems, and it is advisable to newly establish civil-oriented ADR institutes. However establishment of Civil ADR institutes itself would be insufficient, and administrative and financial support through national ADR support system, which will be covered below, should be followed.
2) Introduction of ADR Certification Systems
In order to activate Civil ADR systems, ADR institutes should be impartial, fair, specialized and trustable in the first place. Civil ADR Institutes cannot be indiscreetly flooded, but it should be established by following a certain set of standard, so that Civil ADR systems can earn a reputation of being objective. It can be advisable for the Minister of Justice or the Office of Court handle certification of ADR Institutes. Even with establishing certification systems, however, excessive regulation may over constrict Civil ADR systems, and it would be preferable for Civil ADR to be operated independently. Once the certificate system of ADR is introduced then settled, a number of dispute resolution commission that has been flooded randomly can be reorganized as well as merged, while being able to build up a network between.
3) Reorganization of Administrative ADR Institutes
Currently a number of Administrative ADR Institutes are scattered, while having different applicable Acts and committee structure as well as dispute resolution procedures and its effects, which renders it difficult to regulate properly. This results in making Administrative ADR systems nominal, and thus Administrative ADR systems have to be rearranged so that it can be regulated by a single applicable Act.
4) Establishment of ADR Support Center ADR
For activating civil-oriented ADR systems through newly establishing Civil ADR institutes, establishment of a governmental ADR support system that can supervise and back up ADR institutes will be highly imperative. This center can take a role of systemically promoting ADR institutes and forming partnership between institutes, while providing services to offer information to the general public that is the potential users of ADR systems. This support center will be desirable to be established as public corporate body that is connected to the Ministry of Justice, the Supreme Court or the Korean Bar Association, and it needs to be operated through governmental support in budget.
(3) Enhancement of Public Awareness to ADR Systems
In order to activate ADR systems, forming a social consensus on ADR systems comes above everything else. Lack of public awareness to ADR systems has prevented people from utilizing ADR to dispute resolution. Besides, trust into ADR systems in resolving disputes has to be built up. For this purpose, continual education and active promotion on substance and procedures of ADR systems would be needed.
This promotion and education has to be conducted through institutes that are accessible to the public such as city halls, district offices, borough offices(구청), police stations, or consumer centers, so that people visiting these areas would be provided with information regarding ADR systems as well. Equipping counseling offices at the court with information leaflets on ADR systems would be a desirable means to promote ADR(전병서외).
As to promotion through education, expert training would be needed, and making courses related to ADR systems available at law schools can be a preferable way to make this happen. In regards with primary and secondary education, importance of ADR systems should be taught so that students do not think of judicial procedures as mere dispute resolution method but acknowledge ADR systems as a possible means to resolve problems through.
Litigation, as a traditional means of dispute resolution, usually takes a long period of time and a high level of burden of expenses to disputing parties. As the procedure becomes long-deferred, the courts would be overburdened and it leads to diminishing social capacity toward dispute resolution. For this reason, activating ADR systems would be highly imperative, in that it curtails cost and times that takes, while enabling disputant parties to participate in the resolving procedures and actualizing the principle of private autonomy. Dispute resolution through ADR systems signifies not only handling disputant cases but also letting disputing parties partake in the resolving procedures.
So far, in this paper, I have covered current status and problems of ADR systems in Korea as well as solutions to activate ADRs based on understanding of ADR systems through definition and types of ADRs. In Korea, the fact that there are merely few cases which are resolved through ADR systems and that a standard act to apply to all ADR cases is absent indicate that ADR systems haven’t been activated yet. In order to operate ADR systems in an effective and organized manner, the fundamental ADR law should be enacted as soon as possible, and a number of civil ADR institutes such as the Korean Commercial Arbitration Board have to be installed, so that each institute can be connected to one another. However, above everything else, the most primary premise for activating ADR systems in Korea is public consensus to ADR systems and its effects in dispute resolutions. Continual education and active promotion as well as expert training would be needed for raising public awareness, and the government would have to proactively support this cause.