What is being proposed?
A conciliation and mediation facility administratively housed within the WTO with a light administrative footprint, overseen by an expert board and a financial accountability committee of donor Members. It will have three mandates:
- Development of model rules, modalities, and parameters
- Provision of mediation and conciliation services to the Members of the WTO on cost-recovery basis
- Training, outreach, and technical assistance
What’s the difference between Conciliation and Mediation?
Conciliation and mediation refer to the different ways Members can resolve disputes without going to litigation.
“Conciliation” and “mediation” are sometimes used in the same framework, and sometimes they are so used interchangeably. The differences between “conciliation” and “mediation” appear to be contextual or institutional rather than conceptual. At the same time, for both analytical and institution-building purposes it would be useful to maintain a distinction between the two modalities based on the nature and extent of a third-party’s engagement in the resolution of the dispute.
In this context, “conciliation” may be defined:
- as against arbitration, as a voluntary process; and
- as against mediation, involving third party conciliators that could variously:
- help clarify the issues,
- propose potential solutions for consideration by the parties,
- serve as subject matter experts,
- issue neutral “evaluations” of the matter before them, or
- make recommendations.
“Mediation” is a voluntarily facilitated bilateral negotiation. The mediator acts as a “facilitator” for the negotiating parties. This could involve “relationship-building or procedural assistance”, although mediation remains fundamentally an informal process.
The mediator encourages parties to explore options they not had not been previously contemplated or propose such options. Confidentiality of the process is a key element of mediation – this is as between each party and the mediator, between the two parties, and externally.
What are the costs of conciliation or mediation?
Non-adversarial procedures such as conciliation or mediation are typically designed to last no more than two or three months, with one or two meetings between the mediator/conciliator and the parties. They are meant to be light on process, without the formalities or the volume of evidence of litigation. Trade policy officials, rather than lawyers, typically take the centre stage to find an interest-based solution to a bilateral commercial problem. For all these reasons, conciliation and mediation costs are a fraction of the costs of litigation.
Are there not cases that will inevitably end up in formal dispute resolution?
The foundational premise of alternative dispute resolution in the context of the WTO is twofold:
- There are trade or commercial issues that will need to be resolved through formal formal dispute resolution because of legal complexity, systemic or bilateral trade policy concerns, economic or political sensitivity, or other reasons.
- The vast bulk of trade and commercial issues between Members do not result in a formal dispute because Members tend to be selective and discerning about which cases they take to litigation.
Formal dispute resolution has functioned, and continues to functions, for larger economies, and in respect of politically sensitive or economically significant disputes. It is less functional and effective for less developed and most developing Members
A conciliation and mediation facility (CMF) does not compete with formal dispute resolution; properly structured, it complements the adjudicatory function.
Why not simply operationalise Article 5?
Article 5 of the DSU already provides for “good offices, conciliation and mediation”. To be invoked, Article 5 requires a request for consultations. Structurally, this is problematic, because it means that a Member must already have legal counsel, make a preliminary assessment of its legal case, and then launch a dispute against its trading partner making an allegation of treaty violation.
A properly structured conciliation and mediation facility would be available for use outside the context of a dispute. It would be an extension of diplomatic engagements, mediated by independent, third party experts, to help parties arrive at win-win solutions.
As well, unlike the panel or the Appellate Body process, and unlike all other international alternative dispute resolution frameworks, Article 5 does not set out modalities: no rules, no structures, no transparency in the choice or qualification of mediators, and no agreed principles on which conciliation or mediation would take place. Given the already overloaded agenda of the dispute settlement negotiations, it’s not practical for Members to start negotiating mediation rules of procedures, modalities, parameters, and mediator nomination, to name just a few issues that need to be sorted out.
What is the impact on multilateralism?
As a practical matter, by complementing existing mechanisms for the benefit of less developed and developing Members, and by making operational mechanisms that have so far been dormant, the CMF will be a net positive to multilateralism.
At a more conceptual level, the proposal does ask Members to have a more nuanced and innovative approach to multilateralism and dispute resolution. By ensuring close connection to the WTO framework and with Members, institutionally and substantively, the CMF would serve the interests of multilateralism.
Conciliation and Mediation have rarely been used – what makes this different?
As noted above, the structure of Article 5 is one of the reasons why conciliation and mediation have not been used in the WTO. Add to that the fact that the WTO does not provide for any structures for conciliation and mediation.
The CMF would provide a framework that could, and would, operationalise these dormant functions.
Some Members consider a binding ruling as a necessary step to effect major policy changes. How would that work within this context?
The outcome of conciliation and mediation depends on willingness to resolve a dispute bilaterally and through third-party assisted non-adversarial processes.
Conciliation and mediation are voluntary; the final agreement will be voluntary; this is the best incentive for implementation.
Some Members have had experience with WTO mediation – and it was not positive. How will this be different?
The conciliation and mediations framework of the WTO is not well-developed. The CMF seeks to respond to existing shortcomings, taking into account the experience of Members, to ensure that new procedures will, indeed, be used and appreciated both by the principal targets – developing and less developed countries – and existing users of the WTO dispute settlement framework.
There are, of course, instances – trade disputes – that are not susceptible of speedy resolution through diplomacy or conciliation and mediation. These are purely voluntary and facilitative processes and will in no way interfere with instances where a Member considers a formal dispute to be the best approach for the resolution of its matters of trade concern.
If diplomacy does not help, then how would mediation?
There are two answers to this question.
First, not all matters of trade concern end up in a formal dispute when diplomacy fails. Some are raised in committee; most go unaddressed. The CMF would provide an additional framework for the resolution of trade disputes where: diplomacy has failed to resolve a trade irritant; the irritant continues to affect bilateral relations; and the complaining Member assesses that launching a dispute is not in its national interest.
Second, this paper hypothesizes that for these types of disputes, conciliation and mediation might well form a viable path to the resolution and settlement because third-party non-adversarial processes:
- represent an escalation from bilateral diplomacy without plunging the parties into legal and juridical procedures and engagements; and
- can be valuable in itself in clarifying issues of a commercial nature, and focusing minds and attention on the most salient problems that are capable of resolution, rather than win-loss findings of legal violation.
The presence of a disinterested third-party can in principle help disputing parties:
- correct, to some extent, an imbalance of power between them in a purely diplomatic context;
- establish an agreed or common understanding of the underlying facts that could form the basis of settlement negotiations;
- identify potential win-win solutions that may not be apparent to them, given each party’s incomplete information about the other’s position, or given parties’ entrenched focus on “rights” or “legal positions” rather than “solutions” and “interests”; and
- provide a degree of external pressure on responding countries – in the form of a credible solution with some authority behind it – that may help them to overcome internal blockages to a negotiated outcome.
There is quantifiable value in third party non-adversarial approaches: where mediation exists, 80% of disputes are resolved.
What if the question at issue is the interpretation of a legal obligation?
Where a concern is purely legal and the issue may be characterised as systemic, then a formal dispute may be inevitable. The proposed CMF would not prevent Members from doing so. Mediated settlement generally works better where the core concern is commercial.
Nevertheless, where even where the core question is the legal interpretation of an untested provision, conciliation – in the form of engaging a neutral third-party expert to assess the question and advise the disputing parties in a confidential, non-binding framework – may well give the disputing parties additional information to help settle their dispute.
Some domestic processes – such as antidumping investigations – are subject to domestic procedural rules and no implementation is possible without a panel report. How could conciliation and mediation be useful in this context?
Where there is no discretion at all in a process, then no diplomatic resolution is possible. In that case, a disagreement will either result in a dispute or frustration for the Member that has a complaint but that, for resource or other reasons is not in a position to launch a complaint.
Conciliation and mediation are facilitated diplomacy. On the whole, the assumption is that where a particular commercial concern is not of a nature to result in a formal dispute, third-party assisted non-adversarial processes could help address commercial problems and reduce trade tensions between Members.
At which point could the process be launched? That is, is there going to be interference with WTO dispute settlement?
A properly functioning CMF would be available to Members throughout the life of a commercial problem. Ideally, it is a dispute avoidance mechanism, to enable Members to address matters of trade concern that have not been resolved bilaterally through third-party assisted non-adversarial processes.
Of course, where, in the course of an active dispute, Members consider that conciliation or mediation would be useful, they could either go through Article 5 (requiring ad hoc negotiation of rules) or use the CMF’s already developed procedures.
What about the Chair’s Text currently being discussed in the WTO?
There is much to commend in the negotiated text – in particular, it is the first negotiated dispute settlement document that seeks to tackle “alternative” dispute settlement. It should be noted, however, that the text is not a consensus document.
Why does the White Paper discuss “complementary” dispute resolution, whereas Title I of the Chair’s Text refers to “Alternative Dispute Resolution”?
In a real sense, mediation and conciliation complement and re-enforce formal dispute resolution, providing a full suite of procedures, rather than serving as an “alternative” to the dispute resolution mechanism.
Why do the White Paper and the Chair’s Text depart on the definition of Conciliation and Mediation?
As set out in Annex III of the White Paper, the literature, state practice, and the practice of international organizations such as ICSID generally provide that “conciliation” is an expert-driven exercise and mediation as facilitated bilateral diplomacy. These are, however, issues of nomenclature and easily resolvable.
Given the Chair’s Text, why do we need a Centre of Excellence, as discussed in the White Paper?
The Chair’s Text has some way to go before it is adopted. Given the consensus model of decision-making, and the importance of ensuring that all interests are addressed in the final Decision, the final shape of Chapter, or indeed its date of adoption and implementation, are far from certain.
More to the point, we can identify at least four challenges with the Conciliation and Mediation Chapter.
First, and most important, the proposed procedures appear to be based on a theoretical model of adversarial dispute resolution:
- Section III: “Request for information” ignores the fact that, if state practice to date is any guide, recourse to dispute resolution necessarily comes after diplomatic engagements in the course of which parties will have exchanged information as well as legal positioning. It is doubtful in the extreme that in the context of what ought to be a non-adversarial procedure, a formal request subject to a deadline would be conducive of cooperation.
- Section IV: “Initiation [] of procedures” compounds the problems of Section III by turning what ought to be a bilateral and non-adversarial procedure, sought and consented to by both parties, as essentially a complaint.
By following the patterns of formal dispute resolution, Sections III and IV constitute a category error on the part of the proponents.
Second, elements of the draft appear to have benefited from neither from the near-thirty years of experience of the parties in the WTO nor the established and consistent practice of Members at the forefront of “alternative” dispute resolution options and models. Section VI: “Appointment of good officer, conciliator or mediator” is a particularly instructive example.
Paragraph 24 requires (“shall”) agreement within a certain time-frame. It then sets out a number of options, the first two of which are:
a. pre-established list of conciliators and mediators, which the DSB may adopt at any time;
b. the indicative list maintained under Article 8.4 of the DSU; …
The prospects of consensus agreement on a list aside, the question remains whether the indicative list has ever been used as such for panel selection – and why the drafters would consider that more multilaterally agreed lists would be more useful for ADR purposes. As well, considering that conciliation and mediation are essentially voluntary enterprises, paragraph 25 appears at best redundant:
Unless the parties agree otherwise, a conciliator or mediator shall not be a citizen of, or affiliated with, either party.
More important, though, paragraph 25 connotes a continued attachment – based on a fundamental category error – to the existing formal framework that is at odds with both the character and function of ADR mechanisms.
Third, the qualifications – and required training – of conciliators and mediation should follow from their functions, which are fundamentally different from adjudication. (For which panelists do not get training in any event.) This is why a three-line “definition” is inadequate to the task of identifying the parameters of each function, and why we should expect more from an appointment procedure than being on the DSU Article 8.4 indicative list.
Finally, the model rules of procedures set out in Appendices 1 and 2 are a good start. However, they are both too much and not enough. Too much in the sense that what are essentially bilateral, informal, and voluntary procedures should not be multilateralised in the form of a negotiated model rules of procedure. Not enough because, in fact, such rules of procedures do not reflect the full set of circumstances in which conciliation or mediation may be required or sought.
This is the first time the organization and its negotiators have spent any time meaningfully negotiating a framework for complementary non-adversarial dispute resolution and they should be commended for their efforts. The outcome of the multilateral process underlines, however, the need for a specialized centre of excellence.