Government
of Canada
Government of Quebec
Japan External Trade Organization
Export Food Products Seminar for Japan
Montreal, P.Q., Canada
February 15, 1990
“Conflict Resolution: Japan and North America Harmonized”
by
Jack R. Miller
“Among the more persistent fictions about dispute resolution in Japan
and other countries in East Asia is the notion
of a shared preference for arbitration over litigation.
As explained at the outset of this chapter, Japanese
demonstrably prefer voluntarily negotiated or
mediated settlements to any form of third party
adjudication, such as both arbitration and litigation,
in which the parties lose control over the outcome.”
CCH
Japan Business Law Guide
We
know from statistics that the vast majority of
conflicts and disputes are resolved and settled
by the parties themselves, sometimes with the
assistance of third parties, and in any event
before adjudication to the extent of 90–95%.
However,
too often, this happens in an unsatisfactory way
after much wasted time, effort and money. There
are now a significant number of new techniques
for getting the job done better, faster and with
less waste. These new techniques have had the
effect of sharpening the old techniques so that
now we have a whole new tool box.
I
have counted 34 tools in that tool box. I have
annexed a list to my paper. There is a tool which
could match the need for most jobs and if a tool
does not quite fit, then a new tool can be fashioned
on the spot. The effect is increased value in
terms of interests at stake, especially future
relationships, such as relationships with customers.
I
call this comprehensive approach a technological
breakthrough. It is known in the profession as
“ADR”, Alternative Dispute Resolution, although
I prefer the term Appropriate Dispute Resolution.
The idea is to examine the need and design a system
for it, rather than to make all needs fit into
one system. Each system has its niche and appropriateness.
Sometimes several approaches work in combination
and produce a synergy which gets the job done.
ADR is of particular interest in trade relations
between North America and the Far East because
ADR offers the opportunity to harmonize intercultural
dispute resolution. ADR creates a common ground,
if we can believe the CCH Japan Business Law Guide
and I see the CCH assessment corroborated by other
experience and reports.
In an article in Psychology Today, November 1987,
two American clinical psychologists, Cathy Colman
and David McGill, working in Japan made the following
observations about their experience:
“There, the theories derived from a culture that stresses individuality,
independence, directness and verbal expression
met a culture that values group identity, deference
to authority, indirectness and intuition.”
“I think I understand much more the power of introducing things indirectly,
in ways that allow listeners to make choices on
their own,” McGill said. “In our society, we’re
so used to talking in ways that emphasize our
separateness. To live in Japan is to learn about
empathy and really joining other people in their
world.”
“There is the continuing wonder at the meaning of things unexpressed.
“If I met you here,”, Colman explains, “I’d want
to know about you, about your work, your kids.
But if we were Japanese, we’d want to find out
how to enter a space together. We might talk about
how beautiful the temple is in moonlight. Do you
know, we got a postcard showing a full moon from
our landlord. All he said was, ‘The moon touched
the blossoms,’ and he signed his name.”
Empathy
is one of the resources that ADR harnesses for
conflict resolution and dispute settlement, seeing
the other person’s point of view and perspective
without giving up or losing sight of one’s own
outlook.
Recently, at the American Bar Association Annual
Meeting in Honolulu, I observed a demonstration
of ADR between Japanese and American interests.
It was a mini-trial.
A mini-trial is one of the new techniques which
has become widely known. Originally, it was developed
and used to resolve a complex patent infringement
suit. In its original form, it was called an information
exchange but a New York Times reporter labelled
it a mini-trial and the name has stuck. The mini-trial
is really a structured negotiation which takes
into account the different dynamics of conflict
resolution and dispute settlement.
Anachronistically, the standard dispute resolution
clause in many transnational contracts has not
evolved to take into account the availability
of these new methods. The standard clause provides
for arbitration, which may be appropriate for
some disputes, especially if an updated modern
arbitration model is adopted such as that proposed
by the Center for Public Resources in New York,
but arbitration may not be appropriate for all
disputes.
I
have developed a clause with the assistance of
clients and opposing counsel providing for multiple
options. I think that it could be applied in Canada-Japan
trade with a few cosmetic changes. Here is the
clause in the form in which it has been used in
a transnational contract:
“In the event of a dispute related
in whole or in part to this Agreement, the parties
agree to proceed to settle the dispute in an efficient
and effective manner. The claimant shall have
the choice of procedure which may include judicial
adjudication, arbitration, conciliation, mediation
or any other procedure for settling disputes.
The respondent shall have the choice of third
party to assist the parties in settlement of the
dispute, provided that the third party has no
bias and is perceived by the claimant to have
no bias. The resulting agreement shall constitute
a transaction having the authority of a final
judgement.”
«Advenant un différend relié en tout ou en partie à cette entente, les
parties s’engagent à procéder à la solution des
conflits et au règlement des différends par les
méthodes les plus appropriées. Celui qui revendique
aura le choix de l’option; les options peuvent
inclure l’adjudication judiciaire, l’arbitrage,
la conciliation, la médiation ou tout autre processus
pour la solution des conflits et le règlement
des différends. Le défendeur aura le choix de
la personne neutre, pourvu que cette personne
neutre n’ait pas de préjugé et ne soit pas perçue
comme ayant un préjugé. L’entente qui pourrait
résulter sera une transaction ayant l’autorité
d’un jugement final.»
The
multiple options can be classified for purposes
of use in two basic groups: adjudicative and facilitative.
Adjudicative options, such as trials, hearings,
arbitrations and private judging, involve the
third party resolving the conflict and settling
the dispute for the parties after due process.
Facilitative approaches involve a third party
in a supporting role to the parties as principals.
The job of the third party is to assist the parties
to themselves resolve the conflict.
ADR
focuses on relationships and tries to build relationships
as a setting for conflict resolution and dispute
settlement. The concept of principled negotiation,
the modern approach to negotiation which is gradually
displacing positional negotiation, as reported
in the now classic work by Roger Fisher and William
Ury entitled “Getting to Yes – Negotiating Agreement
Without Giving In” widely available as a Penguin
paperback, emphasizes the importance of being
‘soft on people – hard on issues’.
The
old notion of negotiation as ‘give and take’ is
limited in its application to a relatively few
situations. This is the classic win–lose, zero
sum approach. The modern notion is ‘win–win’,
finding solutions which work for both parties.
How is it possible to reach agreement most of
the time ‘without giving in’? This is the subject
matter of ADR. ADR employs a wide variety of techniques
to achieve these goals, borrowing from a wide
variety of disciplines such as psychology, economics,
management, engineering, political science, medicine
and, of course, law. The goal is not only to settle
the dispute but also to resolve the underlying
conflict and open up the way for future dealings.
Dr.
Dennis Pirages of the University of Maryland stresses
the following cross cultural differences between
North America (He was speaking of the U.S.A. but
we Canadians can develop the Canadian counterpart!)
and the Far East:
“1.
Differences in social structure – ascribed status
vs. achievement. Asian negotiators have a rigid
social structure and expect us to respect it.
2.
Business and pleasure – Asians are interested
in multidimensional relationships – therefore
heavy emphasis on entertainment and non-task sounding
activities.
3.
The time frame in Asia is different – Things worth
doing are worth doing slowly. Agreements are expected
to be of long duration – negotiations can’t be
rushed.
4.
The role of the individual is different – the
lone ranger is fine by American standards – the
Asians see themselves as part of the team and
really can’t engage in freelancing. Less destabilization
on a Japanese team.
5.
The need for consensus is strong in Asia – much
time will be spent clearing proposals at all levels
so that consensus can be built – Americans are
much more likely to disregard the need for harmony.
6.
Asians pay much more attention to formality –
easily offended by firstname informality – Official
signing of agreements.
7.
Somewhat paradoxically Americans are more interested
in formal legalisms – Asians operate with a handshake.
Americans want to spell out in contractual detail.
The U.S. is seen as a nation of lawyers – very
few in Japan.
8.
Asians have difficulty with confrontation – can’t
say no – Americans relish the combat – have strong
feelings about “winning” a negotiation.
9.
American table teams have much more authority
than those in Asia – Asians can’t cut deals at
the table.
10.
Asian concern with personal evaluation of counterparts
– Americans will do business with anyone.
11.
Situational ethics in Asia – what applies in one
context might not apply in another – there is
no “complete” moral code.”
In
an article by Nathaniel B. Thayer and Stephen
E. Weiss entitled “The Changing Logic of a Former
Minor Power” in a series of articles on National
Negotiating Styles published by The Center for
the Study of Foreign Affairs, Foreign Service
Institute, U.S. Department of State, the authors
compare negotiating behaviour as follows:
“DIFFERENCES
IN NEGOTIATING BEHAVIOR BETWEEN
JAPANESE AND UNITED STATES OFFICIALS
UNITED
STATES STYLE
1.Establishing
a first position is almost a public process with
executive agencies, Congress, and interest groups
involved – each fighting to have its interests
recognized. No particular attempt is made to exclude
the Japanese from this process.
2.The
first position is sometimes overstated to allow
for retreat. Economic positions are often cast
in harsh, challenging language.
3.Final
formulation of the first position is hidden. Revelation
made at first negotiating session.
4.Americans
respond to newsmen on an “if–asked” basis. There
is an adversarial relationship between officials
and reporters. Officials favor the domestic press
only slightly over the foreign press.
5.Americans
try to maintain secrecy over the course of the
negotiations until the end of a negotiating session.
6. Americans
like to establish a principle and then search
out a solution based on that principle.
JAPANESE
STYLE
1. Formulating
a position is an internal process with an active
attempt to keep Americans out of the process.
Japanese spend much time reaching consensus among
themselves.
2. The first position is rarely overstated, though
sometimes fuzzy. Japanese like to regard their
position as reasonable for both sides.
3. The Japanese position is usually leaked to some
American before it is formally revealed.
4. Japanese officials initiate encounters with the
press. They expect, and often get, editorial sympathy
from the domestic press, at least in foreign economic
negotiations. Officials isolate foreign press
from domestic press.
5. Japanese usually reveal the tenor and substance
of the negotiations and sometimes the details
as the negotiations go along.
6. Japanese like to talk about practical solutions,
resolving matters case–by–case. They allow the
solution to precede the principle.
UNITED
STATES STYLE
7. The
American tendency is to compromise too soon, particularly
if Japanese negotiators recognize the American
principle.
8. Americans
place great value on winning an argument.
9. Americans
are adversarial.
10. Americans
cast negotiations in terms of victory/defeat.
11. Americans
tend to conduct their business in the negotiating
hall, though they are aware that activities outside
can be important.
12. Americans
see the negotiated solution as final and implementation
naturally flowing therefrom.
JAPANESE STYLE
7. Japanese
find compromise difficult. They often create a
fictive principle or offer meaningless concessions.
8. Japanese
try to stress areas of agreement.
9. Japanese
try to avoid contention.
10. Japanese
negotiate to avoid failure.
11. Japanese
would like to conduct real negotiations away from
the formal negotiating hall, using formal session
to announce agreements reached elsewhere.
12. Japanese
see the negotiated solution as one more stage
and implementation as a subject for further negotiation.”
In
conclusion, I recommend a multiple option approach
to dispute resolution in order to be able to use
the approach most appropriate to the circumstances
and needs of the parties. The accent is on improving
the quality of the result in terms of currency,
time, flexibility, knowledgeability, confidentiality,
etc. and keeping waste to a minimum.
An
example of the flexibility of ADR and its responsiveness
to needs is that the product of a mediation could
by agreement be converted into an arbitration
award in order to benefit from international enforcement
mechanisms. This is the option known as ‘med–arb’.
Japanese
conflict resolution methods and several North
American ADR options will prove congruent and
create a common ground for conflict resolution
and dispute settlement, leading to continued and
healthy business relationships for the future.
***
