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Renaissance of K-International Commercial Mediation

Updated: Nov 13


Common Preconception

A common preconception about mediation is that it's likely a waste of cost (time and money). As most principals try to resolve the dispute by settlement first, de facto mediation is already consummated primarily by in-house legal as a mediator before bringing the case to litigation or arbitration. Thus, the success rate of mediation is not high. However, this might be wrong.


Hidden Card

In the settlement attempt, principals have hidden cards. Both parties know their weakness, but the counterparty may miss some of them. Thus, each party disregards its weak point in the negotiation, assuming the absence of the counterparty's knowledge. As both parties would rather not disclose their frailty, they keep such until the end of the litigation or arbitration, anticipating the judge or arbitrator's overlooking (especially in the jurisdiction where the Discovery is unavailable).


My story – Active Asset Management

While spending 11 years as in-house legal in an asset management company, I have encountered numerous disputes as 30+ portfolio asset companies are under our management. I have dealt with portfolio company disputes (as part of active asset management), holding company shareholder disputes, fund-level investor disputes, and asset management company disputes. In most cases, my role was partially a mediator.


Numbers reveal the best interest of our investors. Thus, we can actively try to settle if a settlement can show better finances. However, some institutions may need to consider other factors, including responsibilities and internal politics. Therefore, the settlement is not simple as '1+1=2'. Further, however, in my view,


“relying on the 3rd party authority (judge or arbitrator) to avoid the responsibility” can be construed as a breach of fiduciary duty if the settlement had delivered a better result.


History – Takeda Shingen (武田信玄)


Around 20 years ago, I read an interesting Japanese historical fiction, “Warrior (武士){formerly known as Yamangpaeja (野望覇者)}" written by Motohiko Izawa. The story is about Takeda Shingen (武田信玄), who was one of the three heroes who lived in Sengoku Jidai (戰國時代) (Takeda Shingen, Oda Nobunaga, and Tokugawa Ieyasu). Unfortunately, as more than a decade passed, I recall little but one clear sentence.


“On battle, 100% win inevitably brings 100% to lose next battle; therefore, the best strategy is 50% win, enabling you to keep the tension with preparation for the next battle.”


Both litigation and arbitration are a game of winner takes all, but mediation is a win-win game.


Benefit 1 – Holistic Approach

The scope of litigation and arbitration is limited to a claim itself. Neither the judge nor the arbitrator can consider other valuable facts or circumstances if it is logically irrelevant to the merit.

The frame traps the principals.

However, mediation has no such confinement and can consider all related valuable specifics if it's helpful to resolve the current dispute. Therefore, the mediator and parties can take a holistic view to resolve the dispute. Undoubtedly, it increases the possibility of resolving the conflict.


Benefit 2 – Psychological Effect

Both litigation and arbitration are combat, and the judge or arbitrator decides the justice. As it's not only a zero-sum game but there is a possibility of misjudging. Thus, it's hard for the losing party entirely accept the result. In contrast, mediation is a negotiation. Hence, the result is based on the principal's decision, assisted by the mediator. It's a win-win game. As principals' free will is engaged,

the consequence of mediation is a result of mutual agreement.

Therefore, the mediation not only makes both parties satisfied with the outcome but provides minor damage to the relationship.


Litigation and arbitration are a hunger game, but Mediation is a game of mutual satisfaction.

Benefit 3 – Idea Bank

Some mediators and especially well-trained mediation advocates are idea banks. A good idea comes from diverse experiences. When we see lawyers developing a viable solution, we call them creative, but they just bring those ideas from different backgrounds based on their experiences. Thus, all good mediators and mediation advocates have various experiences in diverse industries, unlike principals who only have their own industry experience. Therefore, the mediator and mediation advocate can

nudge the solution the principals never thought of.

Renaissance

More than a thousand years ago, Seo-Hee (서희(徐熙)) resolved the war between Korea and Khitan (거란) by mediation. We call him a diplomat, but Seo-Hee was also a mediator between the King of Korea and Khitan. Both countries resolved the dispute amicably thanks to his brilliant ideas and mediation. While watching Sae-Youn on YouTube, I dreamed of International Commercial Arbitration Renaissance in Korea.

Not only as we are descendants of the great International Mediator, but mediation is our survivor kit due to Korea's geopolitics in the middle of Empires.

The mediators' blood runs through our veins.

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