A friendlier framework to deal with Asia-Pacific’s state-to-state disputes has now been proposed. Jacopo Dettoni reports. 

Local legal experts have drafted a concept paper on setting up an Asia-Pacific Regional Mediation Organisation (ARMO) to deal with state-to-state disputes, and prevent them from escalating to arbitration or litigation.

“Litigation is in the culture of the US [but] not so much the case for Asia… That’s why people might prefer to negotiate,” said Julien Chaisse, law professor at the Chinese University of Hong Kong and one of the promoters of the project. He described it as ensuring “what could be done to minimise the risk of a state to be sued; what could be better for business, worked on idea of mediation framework”.

Currently, there are several active state-to-state dispute settlement mechanisms (DSMs) under international or regional frameworks. Yet Asia-Pacific countries are often hesitant to bring contentious cases before international DSMs such as the International Court of Justice, and do not use regional DSMs extensively. Overall, the DSMs are insufficient to address possible disputes occurring in the Asia-Pacific region for various practical reasons, say the experts backing the ARMO. 

The ARMO would thus be an intergovernmental organisation created specifically to provide mediation facilities for Asia-Pacific countries or economies and handle their state-to-state (or economy-to-economy) disputes in a friendlier manner.

The ARMO is designed to resolve disputes exclusively through mediation, focusing on a mutually beneficial – rather than an exclusively ‘rule-based’ – process. States would voluntarily submit to the ARMO’s jurisdiction. In this way, the ARMO would arguably become a more reliable and trusted way to address state-to-state disputes in the region, and minimise the risk of decisions by international or regional DSMs not being respected.

“The fact that decisions are not respected is, per se, a call for mediation. A mediation decision is not only driven by the law, but they bring together the two parties, and produce an outcome in the light of their respective interests and what they can do in terms of compromise. When you can deal with a dispute by mediation, you won’t have any problem in terms of enforcement,” Mr Chaisse said. He added that the proposal was now being presented among different stakeholders, and it would take about five years for it to gain traction if endorsed by countries in the region. 

As the Asia-Pacific region cements its position as an economic powerhouse at the heart of global supply chains, litigation and arbitration cases involving Asia-Pacific countries are on the rise, and enforcement can sometimes become a major issue, as it was the case with a ruling by  a tribunal at the Permanent Court of Arbitration against its claims in the South China Sea, which was strongly refuted by the Chinese government. 

Mediation could offer countries a more effective ways to deal with investment, trade and even political issues, and for that reason, the ARMO may do well.

This article is sourced from fDi Magazine
fDi Magazine

Global greenfield investment trends

Crossborder investment monitor

fDi Markets is the only online database tracking crossborder greenfield investment covering all sectors and countries worldwide. It provides real-time monitoring of investment projects, capital investment and job creation with powerful tools to track and profile companies investing overseas.

Click here to find out more about fDi Markets

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.

Click here to find out more about fDi Benchmark

Research report

fDi Intelligence provides customised reports and data research which deliver vital business intelligence to corporations, investment promotion agencies, economic development organisations, consulting firms and research institutions.

Find out more.