GLOBALIZATION.DebraOliver.

## Mediation, Arbitration and Globalization

### by Debra Oliver

| "So, what do you do for a living?" they ask. "I'm a mediator," I reply. "Oh, so you do arbitration." "No, I do mediation." "What's the difference?" It's huge," I answer. And in our current political and economic climate, the difference has become vital, need-to-know information. Our system of common law has its roots in the Magna Charta of 1215, the first charter of liberties to guarantee fundamental rights and privileges to common people. From this foundation, grievances pressed in courts of law further evolved the rights of citizens, long before representational government existed. Today, precedents set in our courts moderate and enhance laws created in our legislatures. Though imperfect and often time-consuming, our courts remain the primary forum for the defense, refinement and expansion of human rights. Mediation has its roots in ancient tribal customs of consensual decision-making, such as the "talking stick." Throughout history there have been natural mediators who adopted what William Ury calls the "Third Side," a compassionate point of view that equally encompasses the needs and the dignity of all parties to a conflict. Mediation re-emerged in modern times from grassroots efforts toward peace making and community building. It incorporated new communication and listening skills plus refinements in negotiation techniques. Mediation grew because people became weary and wary of excessive litigation and felt they needed a greater measure of participation in the process of resolving their own conflicts. It grew because people sought empowerment through understanding and being understood. According to the Oxford English Dictionary, arbitration has its historical roots in the summary justice exercised by land barons, with the blessing of kings, pre-dating the Magna Charta. With the growth and stabilization of common law, arbitration fell into disuse until the late 1800's. The American Arbitration Association (AAA) came into being in 1926, setting high ethical and training standards for an emerging profession. Unfortunately, outside the ethical bounds of AAA, the recent exponential growth in the use of binding arbitration is part of a wider investor-friendly thrust to usurp civil rights in the workplace, to curtail collective bargaining and to shrink public access to redress of grievances through lawsuits, especially against corporations. Though innocent enough on its surface as a quick and cost-effective method of alternate dispute resolution, binding arbitration has recently become the darling of the globalization movement, with potentially devastating results. For example, it was the dispute resolution mechanism of choice for NAFTA and the un-dead Multi-Lateral Agreement on Investment (MAI). The latter has now re-emerged from the grave in the form of the Free Trade Area of the Americas (FTAA) now secretly being negotiated in Ontario, Canada. If the final draft of the MAI gives any indication of things to come, the globalized use of binding arbitration will exhibit a clear and present danger to fundamental principles of sovereignty and representational government. If ratified, the final draft of the MAI would have ensured and codified the right of investors to sue sovereign governments in the exclusive forum of a private and binding arbitral panel for "non-conforming behavior." The MAI proposed that the panel of arbitrators would have been drawn from the membership of the International Chamber of Commerce, the very group who first concocted this ill-conceived treaty. Citizens would have no representation and the proceedings would have been secret. Decisions taken would rarely have reached the press and the intended extent of public participation in the process was dutifully to live with the outcome. The ground rules for these binding arbitrations were already laid down in the treaty. The only exemptions for "non-conforming behavior" were: times of war; national security or police emergency; observance of treaties regarding non-proliferation of weapons of mass destruction and "essential" security interests. Non-conforming behavior solely on the grounds of economic interests of a nation were considered invalid "disguised restrictions" on trade and investment. Signatory governments to MAI were obliged to agree to two principles: "Stand Still" and "Roll Back." Stand Still would have placed a moratorium on any new legislation involving expansion of rights for the labor force and environmental protections. Roll Back was the principle that, once a perfect stand still was achieved, legislation would then be systematically rolled back to achieve an ideally liberal environment for investors. Once ratified, investors would have been empowered to sue governments in a secret court of arbitration for non-conforming behavior on the grounds that labor and environmental laws had the effect of expropriating the investor's assets, or of being a disguised restriction on trade and investment. More recently, the U.S. Supreme Court ruled on March 21, 2001, that employers may require employees to sign a binding arbitration agreement as a condition of employment. [Circuit City Stores, Inc. v. Adams (99-1379)]. If employers exercise this option, cases involving hostile work environment, sexual, racial, religious, age or other discrimination or harassment will rarely see the inside of a court room in the future. This will place severe restrictions on setting new legal precedents in the realm of labor law, a major objective of the MAI. The Supreme Court brought us much nearer to the MAI goal of Stand Still for investors regarding court precedents in labor law, again using the instrument of binding arbitration. What makes binding arbitration so appealing to the globalization movement? The answer can be found in Black's Law definition of arbitration: "The submission for determination of a disputed matter to a private unofficial person selected in a manner provided by law or agreement (and) the substitution of their award or decision for the judgment of a court." Binding arbitration is a substitute for a court, whether it is a court of local jurisdiction or of international law. In arbitration, there is little or no interface with the courts, nor with the vast body of law evolved since the signing of the Magna Charta; there is no appeal and no method of creating new precedents or new bodies of case law. To participate, one must agree to waive his rights to a court proceeding and to take the decision of the arbitrator as final and binding. These definitions bestow on the arbitrator the same power and authority as that of the entire nine-member body of the U.S. Supreme Court, in addition to the combined wisdom and diversity of every judge and jury encountered along the way! The arbitrator need not be schooled in law, nor trained to be fair and impartial, though AAA strives for these qualifications and refuses to serve organizations that do not subscribe to their Due Process Protocol. In too many other instances, the arbitrator need only be "private and unofficial" and selected by agreed-upon terms. To be fair, many practicing arbitrators abide by high ethical and training standards set forth by AAA. But many are untrained, non-neutral and, well, arbitrary. Should these individuals be held up as a comprehensive substitute for the rule of law when it comes to important matters such as labor rights, civil rights and the environment? This is what the MAI proposed and what the FTAA may envision for our future. In my opinion, corporate interests have too many loop-holes and opportunities to select arbitrators who are not only ill-trained in impartiality, but who have a vested interest in the outcome of the dispute. For example, in 1997, the Swiss Bankers Association set up an arbitration process in response to public outrage that these banks had retained $42 million in assets belonging to Holocaust survivors. The Association hired former U.S. Federal Reserve Bank Chairman Paul Volcker to oversee the arbitration process. Corporations using arbitration to settle workplace disputes frequently draw their panel of arbitrators from untrained members of upper management within the corporation. According to Chris Parsons of Morgan Stanley Dean Witter, all investment brokerages in the U.S. use binding arbitration, which can only be conducted by the New York Stock Exchange, the National Association of Securities Dealers or the Municipal Securities Rule-Making Board. Fairness and impartiality are not always guaranteed in these venues because corporations continue to stack the deck with arbitrators steeped in the corporate ethos. What is so different about mediation? First and foremost, ethical, well-trained mediators never render decisions, least of all binding decisions. Mediators are trained to encourage a dialogue between disputants, so that these parties themselves may come to a mutually-crafted resolution. Mediation is non-binding and voluntary. This means if the parties involved do not voluntarily reach a joint decision, they have not waived any of their rights to redress, including litigation. A court may order people to attend mediation, but it may not mandate people to reach a resolution. Though mediators may or may not be trained in the law, their function is never imposed as a substitute for the law. Mediators have no power to dispose of a lawsuit; the participants alone hold that power and then only if their decision is consensual. Mediation is a compliment to the judiciary, not a substitute for it. Unless there is an agreement to pursue binding arbitration in the event an agreement is not reached, the use of mediation leaves people free to pursue their day in court if they cannot reach consensus through negotiation. Mediated agreements arise out of an in-depth dialogue between people in conflict, which is not possible within the court setting. In court, by necessity, evidence and emotions expressed must be immediately relevant to the legal particulars at hand. In mediation, people are encouraged to speak their minds fully, whether it appears to be relevant or not, whether they can prove their concerns or not. They are facilitated to let off steam constructively, identify their needs, negotiate on the grounds of their mutual interests, hear one another's point of view and get creative together about their options. Many lawsuits consist of 10% disputed law and 90% interpersonal conflict for which there is no legal precedent -- shouting matches. Courts are often relieved to have the option of mediation to turn to, so that resolutions may be made that can include the many legally uncharted realms of interpersonal dynamics. Mediation fosters good faith negotiation; courts enforce good faith when it is alleged to be absent. In both cases, if a satisfactory outcome is not achieved, the right to appeal is held sacrosanct. Like arbitration, mediation is effective in a variety of venues. Peer mediation programs in schools have proven effective in de-escalating campus violence. Divorce mediation is wildly successful nationwide, when fully employed. Small businesses and state agencies rely on mediators to settle thorny workplace and contract disputes. Federal mediators routinely forestall labor strikes without curtailing workers' rights. And despite the regional tensions surrounding the intifadas in the Middle East, the Camp David Accords mediated by Jimmy Carter between Egypt and Israel have never been breached. Unlike arbitration, mediation focuses on the magic of dialogue between individuals and peoples. In mediation, understanding of one another and the needs of each party is the chief goal. Cultural, economic and political issues may be put onto the table for discussion alongside the more obvious issues at hand. Because it addresses the whole person sitting at the table, not "just the facts, Ma'am," mediation is experienced as empowering for all involved. Active probing for common ground is the primary technique used. Resolution is, more often than not, the natural outcome. Nationwide, over 90% of all cases that go to mediation are resolved to the satisfaction of all parties concerned. Mediation and arbitration are two very different paradigms lumped together in people's minds because they are related within the broader field of alternate dispute resolution (ADR). Both paradigms are an effective alternative to litigation. Both disciplines save time and money. However, the methods used are consistently different and the social impact achieved is often radically divergent. Debra Oliver is Founder of Common Ground Mediation Services in Santa Fe. She has been a practicing mediator since 1989, in Arizona, Texas, and New Mexico. |
"...outside the ethical bounds of AAA, the recent exponential growth in the use of binding arbitration is part of a wider investor-friendly thrust to usurp civil rights in the workplace, to curtail collective bargaining and to shrink public access to redress of grievances through lawsuits, especially against corporations."