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 INTERNATIONAL COMMERCIAL DISPUTE RESOLUTION: THE
CHALLENGE OF THE 2 1 ST CENTURY

MARTIN HUNTER*

WHEN I REVEAL MY THEME for this lecture you may well think that, as an
arbitrator, I am a bit like the proverbial turkey extolling the virtues of Christmas. That
is because, looking into my crystal ball, I predict that over the next few years we shall
experience a proportionate decline in the engagement of third parties for assistance in
resolving mature international trade disputes. If I am right about this the current level
of expansion of work for arbitrators and mediators will decline, and there will be an
increasing demand for dispute management specialists rather than dispute resolution
experts. I propose to try to explain my views as to how the dispute resolution
community might react to this challenge.
From my perspective, as the 21st Century gets under way, we are already seeing a
movement away from the three classical forms of third party intervention in dispute
resolution - the judge in his court; the arbitrator in his hotel conference room; and the
mediator shuttling between the parties trying to get the parties to reach some form of
acceptable compromise settlement.
In Europe and the USA we now hear the phrase "dispute management" used almost
as often use as the traditional term "dispute resolution". "Dispute management" is a
relatively new term and I am not sure that we could all agree on what it means. For
me it means two things. First, and most important, it means dispute avoidance;
secondly, it means that where the parties cannot avoid falling into dispute, they enter
into a structured direct negotiation process designed to limit the occasions on which
they will need to involve a third party to the barest possible minimum.
My main purpose today, after explaining why I think this is going to happen, is to
take a look at the likely consequences for all of us who are from time to time involved
as practitioners or teachers in the field of dispute resolution in international trade. If
my prediction turns out to be right, what will it mean for lawyers, law firms and law
schools? And, of course, how can we position ourselves to make a useful contribution
to society at the same time as continuing to earn a modest living?

HISTORICAL FACTORS

To develop my theme I must first take a look at where we are today and how we got
here. People from all cultures and in all civilisations have needed some means of
settling disputes. It is not hard to think of examples. We are all familiar with the
biblical story of Solomon's proposal to cut the baby in half. Many ancient societies
referred disputes to village councils or tribal elders - Maori Tribes in New Zealand, for
instance, used a combination of both.' Similar processes can be seen in China,2

* Barrister, London; Sweet & Maxwell Professor of International Dispute Resolution, Nottingham Law School, The
Nottingham Trent University. This is the text of Professor Hunter's Inaugural Lecture. The author gratefully acknowledges
the invaluable research carried out by Daniel Kalderimis of the Victoria University of Wellington, New Zealand.
Disputes could be resolved on a Marae by a process under te tikanga o te marae. Decisions were usually reached by
consensus. Alternatively, disputes could be referred to a kaunatua as a type of third party mediator: (see Hudson, Tikanga
Maori & The Mediation Process (unpublished LL.M. Research Paper, Victoria University of Wellington, 1996).
2 Rulers after King Wu administered civil justice in China through committees during the Western Chou Dynasty (c 1100):
Choen, Edwards and Chen (eds.), Essays on China's Legal Tradition (Princeton University Press, 1980).
 Nottingham Law Journal

Mongolia 3 and Japan,4 and India; 5 traders from the Roman colonies could refer their
disputes to the Praetor Peregrinus.6 Subjects in Medieval England could seek the
sovereign's ruling at his court; 7 and so on throughout recorded history.
All of these procedures shared a common model; that is, resolution of disputes
between citizens by third party intervention after the dispute had become a significant
bone of contention between the parties.
I suggest that these two main features of the dispute resolution mechanisms used by
our ancestors - the process (third party intervention); and the timing (that is, after the
dispute has matured) - are still very much a part of today's landscape, and that the
arrival of a new century presents us with an opportunity to take a fresh look at
the validity of these features in the light of present conditions.

MODERN THIRD PARTY ASSISTED DISPUTE RESOLUTION

Most of today's commercial lawyers are 8

trained to participate in three quite different
types of dispute resolution techniques:
9
(i) Litigation in national courts;
(ii) Arbitration, designed to achieve a final and enforceable outcome;
(iii) ADR mechanisms such as mediation, conciliation,' 0 "mini-trial", "rent-a-
judge", "med-arb" and other "touchy-feely" ways of engaging the intervention of
a third party to achieve agreed settlements between the disputing parties.
Before I proceed with my main theme I need to say a few brief words about each
of these tools; their respective places in the overall spectrum of dispute resolution
mechanisms; and the uses to which they are best suited in the context of international
trade.

NATIONAL COURTS

Most of us would now accept that the days are gone when national courts are chosen
exvpressly by the parties as their forum for resolving disputes arising out of international
Village committees usually resolved Mongolian disputes after the turn of the 1st Century AD. Following the rule of
Genghis Khan, these disputes could be resolved according to national law, the Great Yassa: see Butler, The Mongolian
Legal System (Martiinus Nijhoff, 1982).
4 By the mid I Century AD Japan had a fully-fledged legal system under which officials applied the Taihoitsuro: see Seiichi
Inao, Biographical Dictionary of Japanese History (Kondansha' International Ltd, 1978).
India has a rich legal history. In the Smrti period (c. 300 BC) various courts of justice, from regal councils to informal
corporations of traders were set up under the authority of the king: see Indra Deva Shirama, Growth of Legal System
in Indian Society (Allied Publishing, 1980), in particular p. 14.
6 Not, as is sometimes assumed, a "travelling magistrate" but a commercial judge based in Rome who decided case between
travelling traders: Boardman, Griffin and Murray (eds.), Oxford History of the Classical World (OUP, 1993).
The Norman Conquest brought with it the feudal system of tenure. One of the chief consequences of this was the King's
right and duty, as supreme Lord, to hold a court for his tenants: see Holdsworth, History of English Law Vol 1 (3rd ed.,
Methuen & Co Ltd., 1922), in particular pp. 24-25.
8 Several highly respected institutions offer courses on negotiation, notably Harvard and Stamford universities

There is as yet no international court for commercial disputes, as the International Court of Justice deals only with
disputes between states.
'0 Some commentators consider that the difference between mediation and conciliation is that in conciliation the third party
makes a recommendation for a possible settlement, whereas in mediation he does not. However, this is not universally
accepted: see Mackie, Miles and Marsh, Commercial Dispute Resolution (Butterworths, 1995). A plausible explanation is
that mediation is an Anglo-Saxon word, whereas conciliation derives from civil law origins. The term mediation is used
generically to cover both for present purposes.
International Commercial Dispute Resolution: The Challenge of the 215' Century 55

trade. Their role in resolving international trade disputes usually now arises where the
parties have failed to make an express choice of forum in their contract." National
courts are therefore a default forum in the context I am addressing today.
Nonetheless, national courts generally do a good job when they are brought into
play, particularly where the jurisdiction concerned has a specialised commercial court
comprised of judges who have been promoted on merit from the local commercial bar.
This is so in many common law countries, but not so often the case in civil law
countries. There are some regions, and some countries, where the local courts cannot
be relied upon to handle commercial disputes to the high standard that is required by
the international trading community. A prime example is found in the Central and
Eastern European nations of the former Soviet bloc which were parties to the now
almost defunct Moscow Convention.
The judiciaries in those countries were not trained in commercial law. Their role was
to administer criminal justice and, to adjudicate on matrimonial disputes and other
rights and obligations of citizens. Trade, both external and internal, was conducted by
governmental organisations. Commercial disputes were directed to the so-called
"arbitration courts" of the national chambers of commerce. This was not consensual
arbitration as we know it in the capitalist world.

ARBITRATION

The general preference for arbitration in internationaltransactions has nothing to do

with the advantages of speed and cost saving, which are often emphasised at
arbitration conferences. In practice, these advantages apply only in the context of
domestic arbitration before a sole arbitrator and even then only in specialised fields
such as maritime, commodities, rent reviews, documents-only consumer arbitrations
and a few others.
The main reason why we see arbitration clauses in international commercial
contracts is that corporations and governmental entities engaged in international trade
are simply not willing to litigate in the other party's "home" court. This is not just
because of any perceived chauvinistic bias on the part of national judges. There are
other much more practical reasons for not playing an "away game" unless it is
absolutely essential. For example, all the documents and witness testimony must be
translated into the language used by the court in question. It may also be necessary to
engage lawyers with local rights of audience, which means that at least one of the
disputing parties will not be able to have its own trusted lawyers in the driver's seat.
The other positive feature of arbitration in the international context lies in the treaty
obligation for enforcing arbitration awards across national boundaries. By contrast, it
may be difficult to enforce a favourable judgement of a national court in another
country, as there are no multilateral treaties covering the reciprocal enforcement of
court judgements. As of June 2000, 121 countries had ratified the 1958 New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards;' 2 and
about 30 jurisdictions had enacted legislation based on the 1985 UNCITRAL Model
Law on International Commercial Arbitration, which provides a harmonised standard
for national legislation to regulate private arbitration processes.

National courts do, however, have important supportive and supervisory roles in relation to arbitrations held within their
territories.
2 5ee UNCITRAL's website (http://www.un.org.at/uncitra/english/status/index/htm).
 Nottingham Law Journal

Arbitration will thus always be needed where for one reason or another a final and
enforceable outcome is necessary. In my own career I have on a number of occasions
seen situations where the client needed an award- a final and binding solution imposed
by a third party - rather than an agreed compromise settlement or even a "consent
award". Often not just money is at stake. Sometimes one party may be bankrupted if
it does not achieve a complete victory. Matters of principle, or the positioning of a
party in a long-term relationship, may be in issue. Sometimes a minister, or a senior
governmental official, particularly in the less-developed countries, cannot afford to take
the political responsibility of being a party to a compromise settlement. To illustrate
the point I will describe a fairly typical example from my experiences in the mid-1960's
in the Arab states in the Gulf region. On several occasions, on advising that I believed
I could negotiate a more favourable outcome than the likely result if the case was
fought through to an arbitration award, the minister or official concerned would reply
to the effect:
...But, Martin, the public view is that this project was disastrously bungled by my
ministry. If I approve a settlement the newspapers and hostile deputies in the National
Assembly will attack me. I will even be accused of being bribed to pay the contractor 's
claims. It's not my money. If the arbitrators make a big award against us it doesn't matter.
I will simply send it down to the Ministry of Finance with a request for a cheque. In public
I will say that the arbitrators were incompetent.

MEDIATION

However, international arbitration is usually a lengthy and costly experience for the
parties, and the outcome will generally be "rights-based" rather than "interest-based".
I shall mention these two concepts again later. During the 1990's mediation and its
associated ADR offshoots, developed in the USA primarily for use in disputes without
any international element, have made a significant impact in the international arena
and have proved that they can work just as well there, at least in certain types of cases
that are susceptible to compromise solutions.
The reasons for using mediation as one of the preferred dispute resolution processes
are, first, the commercial clientele's disenchantment with the cost and time involved in
litigating in national courts and in arbitration; and, secondly, a growing feeling
amongst international traders that "interest-based" solutions may produce better
outcomes in the medium to long term than "rights based" solutions.
The result is that the major international arbitration institutions have been
developing their ADR facilities and capabilities with understandable urgency, because
these things are market-driven. The AAA, the ICC, ICSID, the LCIA and WIPO
all promote their own sets of conciliation or mediation rules; and there are now also
many domestic organisations around the world offering mediation services, particularly
in the USA and other parts of the common law world. Most of these organisations
offer training for budding mediators, and some of them offer diplomas or other
opportunities for mediators to put letters after their names.
Mediators bring many useful skills to the bargaining table. In particular, they bring
neutrality and a sense of structured informality to the proceedings. They may also
receive information that neither side is willing to impart to the other, and then use this
information as an element in their strategy to help nudge the parties towards
agreement.
International Commercial Dispute Resolution: The Challenge of the 2 1St Century 57

As part of the master's degree program run at Nottingham Law School for litigation
practitioners there has traditionally been a "mediation weekend". We have a rather
complicated case study that contains a number of different settlement possibilities, and
some dead-ends that cannot work out for one reason or another. There is no
satisfactory "rights-based" solution - one of the parties will be bankrupted if that route
is taken.
We divide the class into about eight hypothetical "law firms". Four of the law firms
represent the claimant, and four represent the respondent. Thus we have four groups
working separately and simultaneously on the same case study. Faculty members and
invited guests play the roles of the four mediators, eight clients and so forth, and the
scenario is played out over one and a half days.
We have experimented over the last four or five years with various different types of
mediators -judges, Q.C.s, senior litigation solicitors, professionally trained mediators
(many of them not lawyers), professors and some other guests from overseas,
particularly the USA.
On average, around three of the four groups achieve a settlement before the time
runs out. Where the process fails, most groups think that the process was positively
harmful in that hostile positions hardened. In some of the successful groups, one of the
parties often thought it had been "bullied" into an unfavourable settlement by an
over-aggressive mediator.
Some of the clients have felt that their lawyers were too focused on scoring points
over the other side and lost sight of the client's interests. Very often the clients and
their lawyers started to distrust the mediator in the sense that they suspected that he
was not conveying their position accurately to the other party, and that the other party
did not appear to move at all. This atmosphere of suspicion tends to be fuelled by the
seemingly long periods the parties are left waiting while the mediator is with the other
side. On a few occasions the parties terminated their mediation at an early stage and
proceeded by direct negotiation. On one occasion the clients fired their lawyers and sat
down together with the mediator - and reached a settlement almost immediately.
All the participants - students, mediators, clients and tutors - invariably leave on the
Sunday (a) exhausted and (b) with a lot of food for thought. It's not easy to formulate
any definitive results, but here are some tentative conclusions:

(i) Judges don't necessarily make good mediators - their approach tends to be
"rights-based", and their failure rate (in the sense of not achieving a settlement)
is rather high
(ii) Professionally trained mediators - with some notable exceptions - do no better
than the average
(iii) Litigation lawyers are often out way of their depth when representing clients
in mediations
(iv) Mediation is far from the universal cure for all ills that its evangelical
exponents would have us believe

Nonetheless, I happily accept that, like arbitration, mediation has a genuine and
valuable place in the spectrum of available dispute resolution mechanisms. There are
occasions where a properly trained mediator can produce a result that adds value for
the parties at a fraction of the cost of an adversarial process designed to achieve a
"rights-based" solution. I will refer further to "rights-based" and "interest-based"
solutions later.
 Nottingham Law Journal

THE INVALIDITY OF ENTRENCHED ASSUMPTIONS

It seems clear to me that these three dispute resolution tools - litigation, arbitration and
mediation - are all descendants of the ancient practice of resolving mature disputes
through the intervention of a third party who has substantial formal or informal
authority over the parties. Of course the role of the third party varies as between each
of the three different mechanisms, and the nature and progression of the dispute
resolution processes are different. However, the historic fundamental has remained the
same; and in my view we seem to have been brainwashed by our background into
assuming that the way our forefathers have always done it is the appropriate way in
today's circumstances.
The result is that for hundreds if not thousands of years lawmakers, judges and
litigation-orientated lawyers have steadfastly focused their attention - and earned their
livings - by developing and refining increasingly sophisticated rules of substance and
procedure. In the second half of the last century the problem was compounded by the
proliferation of electronic devices that enable huge quantities of words to be set on
paper and reproduced over and over again. These factors have had the cumulative
effect of making speedy, inexpensive and fair resolution of dispute largely inaccessible
to the small players engaged in international trade - and the pips are squeaking even
for the big players.
In the USA the low esteem in which the public holds "contingency fee plaintiff
attorneys" has driven businessmen into the arms of the of the thriving ADR industry.
But in turn that industry has itself generated a whole new and highly competitive
and self-interested ball game. The sun never sets on the daily progression around
the world of conferences promoting the causes and products of various ADR organ-
isations and the people who make their livings on their coat tails with messianic
zeal.
Nonetheless, although there are no statistics, I believe most of us would accept an
educated guess that - even taken together - the cases that involve the participation of
a third party are only the visible tip of a an enormous iceberg. Under the water-
line more than perhaps four-fifths of the ice mass represents the invisible bulk of
disputes that never get anywhere near lawyers. They are either "nipped in the bud"
before they can burst into flower; or they are resolved promptly by the parties
reaching an agreement on an "interest" basis rather than a "rights" basis. The parties
assess it to be advantageous to implement a solution reflecting elements (such as
fairness, maintenance of long term relationships and which of them will feel less
pain in "taking a hit"). These elements have little to do with contractual rights
and obligations; and the parties know, of course, that in at least the first two
of the classical "third party intervention" mechanisms referred to above the outcome
will necessarily be based on a third party's assessment of their legal rights and
obligations.
I am not suggesting that our existing third party dispute resolution mechanisms
are about to be consigned to a Jurassic Park, eventually to become as extinct as
the dinosaur. Far from it. All three will continue to have an essential role, albeit
perhaps in a diminishing proportion of the whole of the iceberg as it grows
larger. 13 It is inevitable that the iceberg will expand, because as international trade

3 So long as there is no truly international court of arbitration, national courts will always play an essential role in
enforcing arbitration agreements and awards, and supporting the arbitral process by appointing arbitrators and
compelling evidence where necessary: see Holtzmann, "Creating a New International Court for Resolving Disputes on
International Commercial Dispute Resolution: The Challenge of the 21I' Century 59

expands - as it must at least until we enter some form of new dark, perhaps
post-nuclear war, age - the number of disputes will expand. This follows as night
follows day.

THE INEVITABILITY OF CHANGE

I believe it is inevitable that international business will turn away from allowing
disputes to fester until they mature into a state in which third party intervention
becomes the only available option. We can already see examples. In 1998 I ran across
one where a senior in-house litigation counsel at General Electric - a very large
multinational corporation - explained at a conference that the company had developed
a mechanism for "early dispute evaluation". Essentially this involved an internal review
of all situations where disputes seem to be on the horizon, including objective
assessments of the facts and legal position by a special section of the legal department.
This assessment would then itself be reviewed by an internal panel which decides how
to go forward - with a predisposition to settle the problem by negotiation unless there
are clear indicators that a third party intervention mechanism should be brought into
play. To me it seems clear that this kind of change is inevitable. It will happen whether
we like it or not, and the competition between the existing approaches by the different
branches of the international dispute resolution industry is merely a battle for market
share in the proportionately diminishing cake of the visible 'above the waterline' sector
of the iceberg.
My proposition is therefore that the resources and effort lavished on arbitration and
mediation are essentially directed towards creating a series of refinements and
variations on a well-worn concept. That they are useful variations with genuine
application to certain situations is not in doubt, but nonetheless they are nothing more
than refinements or variations, and they do not face up to the inevitable changes that
lie ahead.

THE CHALLENGE

I now turn to discuss my suggested response to the challenge presented by these

inevitable changes under three headings:
(i) Attitude
(ii) Skills
(iii) Structures

ATTITUDE

When an international businessman consults his lawyer about a commercial dispute, his
main concern is what he should do next. Certainly he needs to have the best assessment
that can be given as to his rights and obligations; but he also wants to develop a
commercially orientated strategy for solving his problem.
the Enforceability of Arbitral Awards" in The Internationalisationof International Arbitration (Kluwer, 1995) pp. 109 et
seq; and Schwebel, The Creation and Operation of an International Court of Arbitral Awards in ibid., pp. 115 et seq. As
mentioned earlier, national courts will also be needed in default of a agreed choice of forum by the parties.
 Nottingham Law Journal

Most techniques adopted in legal education do not prepare the young lawyer to meet
this situation. It is apparent to me that we teach law as the study of litigation. In the
common law countries much of our law is created by celebrated appellate court cases,
and the system actually rewards students for focusing narrowly on the legal issues. In
general, litigation lawyers are taught to focus on rights, not interests; on victories over
enemies, not continuing relationships. However, the world of international commerce
does not operate that way. To "add value" in the modern world, lawyers need to
develop an attitude that is consistent with the real interests of their clients. It follows
that law students should be taught that the strict legal position is only one of the
elements, albeit a significant one, in making business decisions.
Current training courses on negotiation sometimes teach students and practitioners
to distinguish between the apparent problem and the underlying problem. For instance,
a dispute about a late payment can really be caused by tension over slow or shoddy
service. But they are still mostly taught to focus on rights and obligations, and these
are often not the best pointer to an interest-based outcome to a dispute between real
people.
One of the classic examples, albeit an over-simplified one, was expounded by Fisher
and Ury in their Harvard study Getting to Yes. 14 The authors describe a dispute
between two children about possession of an orange. Both children were adamant they
wanted the orange, and argue about their right to have it. It so happened that the two
children did not want the orange for the same reason. One wanted to eat the flesh, and
the other wanted the peel to take to school in order to bake a cake. Neither a complete
victory for one child nor a fifty-fifty (or any other) split would have maximised the
children's joint interests. Of course this is an idealised example, but it makes an
important point. Lawyers should learn from an early stage of their careers that
they are employed to protect their client's interests, not merely to defend their legal
rights.
This is what I mean by attitude. In my view the law schools have significant role to
play in changing the way that their graduates approach solving clients' problems; and
the law firms need to capitalise on a new breed of entrants by encouraging them to
develop this approach in their relationships with clients.

SKILLS

An appropriate attitude can make a significant difference to a lawyer's usefulness to his

client, but on its own it is not enough. If the legal profession is to retain its market
share in the dispute resolution field it needs to ensure that the next generation of
practitioners acquires dispute management skills. I referred earlier to two elements in
this context: dispute avoidance and direct negotiation. Although separate disciplines,
they both require broadly similar abilities. Insight into the needs and motivation of the
other party are crucial. In international trade disputes this requires a highly developed
understanding of cultural factors; this is, of course, much more profound than the
superficial advice that we should, for example, "never do business over breakfast with
an Englishman"; "never over dinner with a Mexican".
Cross-cultural awareness requires an understanding that we inevitably see the world
around us through spectacles fashioned by our own experience. This involves a web of
predispositions, assumptions, and behavioural patterns. An example is that we trust

"a Robert Fisher and William Ury, Getting to Yes (2nd ed., Penguin, 1991)
International Commercial Dispute Resolution: The Challenge of the 21st Century 61

people we like; and we like people whose thought-processes we believe to be similar to

our own. How often do you hear the expression "he 15 is on my wavelength"? If you
can "feed back" to the person you are communicating with his own body language,
tonality, words and phrases, you will have a good chance of having that person say to
themselves "I can do business with this guy, he talks my language". Some may
remember that this is what British prime minister Margaret Thatcher said publicly of
the Soviet leader Mikhail Gorbachev.
As a digression I should mention that all this is a far cry from my own experience
as a young litigator at Freshfields in the mid-1960's. I can vividly recall being taught
that any case that went to trial was a failure, and that the objective in all litigation was
to get the most favourable outcome that could be achieved without going to trial. This
seems alright so far. But the key phrase was "winning without trial"; and in each case
we would work out strategies for harassing the opposition with interlocutory
applications, such as trying to freeze assets, at the same time as imposing on them the
greatest possible burden with regard to discovery and so forth. The motto ran ... "If
you have them by the balls and squeeze hard enough, their hearts and minds will
follow."
Returning to cross-cultural matters, the negotiator dealing with a person from a
different culture must realise that the comfort zone in which he operates is not likely
to be the same zone in which the other party operates. The range of differences is of
course a study in itself, and I mention briefly just a few. In Western cultures the
contract tends to constitute a complete definition of the relationship between the
parties. Most of us are familiar with the so-called "entire agreement" clauses that are
inserted in commercial contracts, particularly by North Americans. However in some
other countries, such as Japan, a contract only represents one part of a wider business
understanding. 16 Similarly, people from different cultural backgrounds approach to
problem solving from entirely opposite directions. In Western cultures universal rules
or principles that are to be applied equally in quite different situations. 17 In other
cultures, notably in the former Soviet Bloc countries, more attention is given to the
unique circumstances of the relationship.' 8 Thus a Romanian might view a British
approach as inflexible and disrespectful to the personal ties involved; whereas the
Briton might view the Romanian approach as creating an unjustified exception in
favour of a friend. In the Arab Middle East emotional and family ties play an
important part in problem solving. Recognising and responding appropriately to these
cultural differences is an important element in negotiations.
There are also some more specific negotiation skills. The Fisher and Ury study made
a distinction between "positional" and "principled" negotiation. In the former,
negotiators barter competitively - asking for far more than they expect to get and then
giving way little by little until a position acceptable to the other side is discovered. In
the latter, the negotiator assesses what the other side really wants (or needs) and then
offers it in exchange for what he really wants himself.
Fisher and Ury also identified a number of "pathological" negotiation techniques. A
negotiator sometimes cannot resist the temptation to become involved in a battle of
egos, and is determined to gain the upper hand over his opposite number. In particular,
litigators called on to act as negotiators often get caught up in the adversarial process,

" The masculine description of course includes the feminine throughout.

16Trompenaars and Hampden-Turner, Riding the Waves of Culture: Understanding Cultural Diversity in Business (2nd ed.,
Nicholas Brealey Publishing, 1997), pp. 39-40.
17 Ibid. pp. 33-39.
'8 Ibid. pp. 33-39.
 Nottingham Law Journal

developing an adrenaline high from the "smell" of battle. They can sometimes become
so absorbed in the process itself that they lose sight of the client's objectives.
I used to play an occasional golf game with the chairman of one the UK's largest
commercial property development companies. He told me that they fell into dispute
with their joint venturer in connection with one of a number of ongoing property
developments. Each side retained equally large and blue chip London law firms, where
the opposing litigants were represented by young litigation partners who were sparring
with each other on various unrelated cases and didn't get on well personally. The result
was that the dispute escalated to an extraordinary level, notwithstanding several
reminders from the clients on both sides that they were good friends doing much
continuing business with each other. The matter was only resolved after the chairmen
of the two client companies met at an industry social function and agreed to seek a
joint meeting with the senior partners of the illustrious firms concerned, with a view to
"calling off the dogs".
I accept that the provision of skills training is not a primary objective for law schools
at undergraduate level. This is when the basic knowledge must be taught. At the level
of continuing legal education for practitioners, which is now compulsory for those not
grandfathered out, there is however strong case for the law schools to get together with
the profession to offer training in dispute management for young - or even senior -
litigators. The law schools would provide the physical and logistical infrastructure in
an academic setting; and the law firms would provide much of the faculty on a
part-time footing.

STRUCTURES

Finally, I turn to the structural changes that might be contemplated in connection with
dispute avoidance. My thoughts on this aspect may be best explained through two
recent examples.
The first, which has been rated as a substantial success, is the construction of the
huge new airport in Hong Kong. Many different parties were involved, operating under
a complex spider's web of contracts collectively worth many billions of US dollars.
Obviously the potential for conflicts over design, workmanship, delays, co-ordination
and so forth was enormous. However, the parties did not simply cover every
foreseeable eventuality in the contracts, and then leave disputes to be resolved when
they matured. They created a dispute management scheme that involved an indepen-
dent body called the Disputes Review Group. This Group was chaired by a former
9
Hong Kong judge, supported by experts from various disciplines.' They spent a good
20
deal of time on the site as the project progressed; and "sniffed out" potential conflicts
before they developed; and then defused them. It was a massive and intensive task,
undertaken with great skill and determination. The result was that the airport was
completed with only one substantial dispute referred to arbitration.
The second example is found in the contracts for the construction of the famous
tunnel under the channel between the UK and France. These contracts also made
provision for a "pre-arbitral review process" by a "panel of experts". Sadly the
procedure did not prevent a number of very substantial disputes being referred to
separate ICC arbitrations. Maybe the dispute management structure was inadequate;
19 Initially the DRG was composed of eight persons, but one dropped out early in the process and was not replaced.
20 Quarterly review meetings were held over the four and a half years of the project, each lasting four days and each
involving extensive site visits.
International Commercial Dispute Resolution: The Challenge of the 21s , Century 63

maybe the participants did not possess the necessary attitudes or skills. My old firm
was involved in some of these arbitrations, and it is not for me to make value
judgements. I merely comment that in one project the structure worked well; in the
other it did not. Whatever the success of such fledgling efforts, it is clear that the use
of dispute review boards, or similarly named bodies, is not simply another ADR device.
It instead represents the emergence of a significant structural change aimed at the
prevention of disputes - thus making that most modern of jargon phrases "alternative
dispute resolution" obsolete even before it has become a commonly recognised term in
the international language of professionals in the industry. 2 1
What sort of structures do I have in mind? Apart from pre-arbitral disputes review
boards of the type I have mentioned, I suggest as a beginning some simple and basic
ideas. Contracts might require a "cooling off period" before any third party
intervention is permitted. During that period the parties might commit themselves to
take the negotiations out of the hands of the individuals most closely involved in the
transaction and identify a trained "trouble-shooter" from each side, briefed to solve the
problem without recourse to third party intervention.
Another, linked, possibility would be for each side to create a small internal (or
external) team to undertake make a rigorous "risk analysis" of all the relevant elements
(including but not limited to legal rights). This team could be required to make a
presentation to a senior executives within the company, along the lines of the scheme
adopted by General Electric that I described earlier. Of course only the largest
corporations would be able to commit the necessary resources to a substantial exercise
of this type; but it should not be beyond the capabilities of small companies- advised
by their law firms - to develop structures that would be apt for the company concerned
and the type of transactions it undertakes.
These are just a few ideas. Some detailed applied research is needed in order to
evaluate these and other possible dispute avoidance structures. In my view this research
could be carried out under the wings of law schools with active support and
participation from law firms and representatives of international business.

CONCLUSION

Only genuine systemic change can alter the role that commercial lawyers, whether
international or domestic, in independent practice or in-house, should play in dispute
management. The reason that many lawyers do not negotiate well in a dispute
resolution context is because historically it has not been their job. They are litigators
who sometimes participate negotiation sessions, where they are often operating way
outside their comfort zones largely because they are circumscribed by their background
and training. Their overwhelming instincts are to "screw" the other side.
I foresee a new breed of lawyers becoming actively involved in preventing potential
disputes getting "out of hand" before they mature into intractable situations. I envisage
dispute avoidance groups being set up around the world, both as independent entities
and also as teams within major law firms and in-house legal departments in large
corporations. The investment required to design appropriate structures for individual
h
21 By the end of the 201 Century there was still no transatlantic acceptance of the meaning of the phrase "alternative
dispute resolution". Alternative to what? In Europe there was a clear consensus that the term "ADR" applied to
mechanisms that are "alternative" to procedures that lead to decisions of third parties that are final, binding and
enforceable against the parties (i.e. decisions of courts and arbitrators). In the USA the policy of the major arbitration
institutions tends to be that the term "ADR" should be applied to all dispute resolution mechanisms other that the judge
in his courtroom.
 Nottingham Law Journal

industries, and to create the resources to implement such schemes would surely be far
exceeded by the direct and indirect costs of the litigation costs that would have been
averted. The result should be that lawyers will be required to intervene in the dispute
management process earlier and with greater business understanding than ever before. 22
In Bleak House, Charles Dickens wrote an entire novel about an impossibly
convoluted Chancery suit that eventually ended in the lawyers absorbing the whole of
the successful litigant's damages in costs. Of the Chancery Court, the book warns:
"[sluffer any wrong that can be done to you, rather than come here!" Have our existing
methods of dispute resolution in international trade really broken out of this mould?
Private arbitration and mediation systems are undoubtedly useful refinements of
state-provided dispute resolution processes. They perform essential roles in appropriate
circumstances, and will always be needed. Nevertheless, they are no more than
refinements applied a system that has been in use for tens of thousands of years. They
are not truly innovative developments that are capable of providing a real response to
the rapidly changing environment in which international commerce is conducted.
It is unlikely that the current narrow focus on the third party intervention model will
last very far into the new century. As international business becomes more sophisti-
cated, so will its desire to solve problems fast and painlessly. This will require attitudes,
skills and structures designed to enable commercial transactions to be supervised
effectively with the aim of preventing disputes from arising; and, when disputes prove
to be unavoidable, for the parties to have available to them the separate but related
attitudes, skills and structures to resolve them promptly and fairly through direct
negotiation.
I hope that the next generation of international trade lawyers will be in a position
to be a part of this development. The challenge that confronts law firms and law
schools is to participate constructively in devising the type of structures I have
described and to find ways of teaching the next generation the attitudes and skills they
will need in order to operate successfully within those structures.

22 For a similar conclusion see Gilson and Mnookin, Co-operation and Competition in Litigation: Can Lawyers Dampen
Conflict? in Arrow, Mnookin, Ross, Tversky and Wilson, Barriers to Conflict Resolution (W W Norton, 1995), see in
particular pp. 197-199.