Arbitration can facilitate various dispute-settling methods, says Ulrich Kopetzki
A less combative, more collaborative, interest-based dispute resolution is trending over traditional position-based dispute resolution in arbitration at the International Chamber of Commerce (ICC), says Ulrich Kopetzki, an Austrian lawyer and acting director for ICC Dispute Resolution Services.
Interest-based dispute resolution is conflict management that focuses on identifying the needs and priorities of the parties in the dispute to achieve what they want to get out of it. This contrasts with position-based dispute resolution, where the parties establish a position based on their legal rights, often without revealing why that position suits their purposes or their underlying interests.
As an adversarial dispute-resolution process, arbitration has historically been characterized by a position-based approach because the arbitral tribunal decides how to resolve the dispute based on the applicable law and the parties’ legal rights, says Kopetzki.
“Lawyers are usually good at arguing why they are right. This is what they learn at university, and often, fighting is the only tool in their toolbox.
“But for the business, there are huge benefits of actually making use of the full versatile dispute resolution toolbox and all the tools that are available to them. That includes mediation. It also includes negotiation,” he says.
The preference for conflict is magnified by the typical “overconfidence bias,” says Kopetzki. Lawyers believe they are more likely than their counterparts to persuade a decision-maker to rule in their favour. These factors combine with “incentive-based biases” – that a lawyer will earn more money in a long fight than in a collaborative settlement early in the dispute – and lawyers tend to reach instinctively for the “combative tool,” he says.
“The arbitral process provides the disputing parties with large flexibility to combine the arbitration process with other tools and procedures that allow them to reach an interest-based resolution.”
Steering a dispute toward arbitration does not entail a “one-way street” for the parties, Kopetzki says, since the process is much more varied and versatile than people think. Parties can structure their arbitration’s procedural timetable to include windows for negotiation and mediation. This gives the process fluidity, beginning in arbitration and then resolving individual aspects of the dispute via mediation before returning to the arbitration.
At the outset of an ICC arbitration, the parties assemble a document called a “terms of reference,” which defines the various elements of the dispute and describes the positions of either side. Unique to the ICC, it is a valuable document, says Kopetzki, because it focuses the parties and their lawyers on which points to make and what pleading to prepare. It delineates the issues the arbitral tribunal considers relevant in deciding the case. It also clarifies for the parties what disputes and issues they must address, what evidence they must submit and when, and which issues can be set down for negotiation or mediation. The terms of reference document is revisited and refined throughout the proceeding as a fuller picture of the dispute becomes apparent.
“We see that in cases where this is used, the proceedings are conducted in a much more efficient manner,” he says. “It means that the arbitrators are already very much into the case and very educated about the case when they are entering the hearing. Also, as I mentioned, it gives opportunities to the parties to settle the dispute or to settle parts of their dispute.”
Approaching an arbitration with a collaborative, rather than a combative, mindset will benefit both parties, says Kopetzki. Rather than focusing on the past, i.e. who is wrong and who is right, collaboration is future-oriented and focuses on the opportunities that remain in the relationship.
It usually does not make sense for a party to hide their underlying interests because it closes the possibility that the other side would be open to a solution that would meet those interests, says Kopetzki. On the other hand, there are situations where one side knows that the other is not amenable to a solution that furthers their interests, and in such a case, there may be no room for an agreement. But to conceal the underlying interests to trick the other side into a deal they would not otherwise make could plant the seeds of a future conflict, he says.
But when there is no trust between the parties, it is sensible for one party to be cautious about what they share with the other.
“This is a situation where it can make sense to include a mediator,” says Kopetzki. “Because a mediator can solve that problem of lack of trust by arranging for separate sessions with the parties, where the parties can talk in confidence to the mediator and disclose their priorities and interests to the mediator, who will keep them confidential.
“Then the mediator can assess whether there is a zone of possible agreement.”
