Impact of Cultural Differences on the Effectiveness of Arbitration and Mediation Processes

Upon the advent of colonialism, litigation became the primary mechanism for maintaining peace and order among members of the society.

Unfortunately, this mechanism came with strict procedural rules, exorbitant costs, and long trials process. To mitigate these complexities, Alternative Dispute Resolution system was established.

This system, specifically its mechanisms, arbitration and mediation paved the way for swifter trial processes, flexibility and confidentiality in conflict resolution. It is therefore unsurprising that the ADR system has become the preferred upon among disputants.

However, in certain instances, most especially in international arbitration, the differences in culture pose unique challenges that affect arbitration and mediation proceedings as well as jeopardise the enforcement of rendered awards.

For example, the expectation and the subjective perception of a participant in arbitration and mediation proceeding is not often shared by another participant who is from different culture owing to the fact that arbitrators and parties involved act based on their cultural lenses.

Therefore, it may be said that the diverse cultural variables of the participants in a proceeding irrefutably have a striking impact on the efficacy of arbitration and mediation procedure. Against this backdrop, this essay highlights the intricacies of arbitration and mediation vis-a-vis cultural nuances, the cultural clogs affecting the effectiveness mediation and arbitral procedure, and the pathways to navigating cultural differences for effective arbitration and mediation.

The Intricate Dance: Arbitration and Mediation vis-a-vis Cultural Nuances

From the inception of time, There is sheer complexity and comprehensiveness in one culture, to say nothing of interaction of cultures in dispute resolution. The diversity of culture expresses itself at every stages of dispute resolution. Specifically, it pervades the manner of mediation, degree of formality, conduct in interpersonal relations and approach to truth in arbitration and mediation proceedings.

However, many countries had been forced to close their door back against arbitration owing to the fact that, the supposedly advantages arbitration and mediation; impartiality, confidentiality and win-win nature, seems to have, has been impeded by cultural difference.

Achieving Effective Arbitration and Mediation: the Clogs in the Wheel

Foremost, analysing the problems arbitration and mediation experiences in various cultures will be imperfect if one does not look at the role of communication, especially language – the most basic ingredient of arbitration and mediation, plays.

The manner in which arbitrator and disputing parties frequently communicate verbally and nonverbally differs across culture. Although, participants in an arbitration frequently converse in the same language but sometimes do not fully understand the meaning of or the reasons behind what is said, resulting in them talking past each other. For instance, The South Asians shake their heads to mean an affirmation of a point rather than a denial. This incompatibility of languages and other means of communication could turn language, a prominent tool in arbitration proceeding to Achilles heel that could make arbitration and mediation procedure ineffective.

Secondly, part of the fundamental difficulties arbitration and mediation face, majorly, in international dispute is public policy and religion. Sociologists opined that: ‘cultural norms, beliefs and tradition shape a nation’s laws and policies’, which means different cultures tends to have different policies.

Furthermore, this diverse in countries policies arbitration proceeding as each disputing parties operates i in accordance with their countries’ policies. Ironically, ‘Article V (2(b)) OF UNCITRAL, New York Convention, 1958’ which permits rejection of an arbitration award on the basis of the public policy of the country, has been seen by the disputing parties as an escape root to reject an award by proving its incompatibility with their nations’ policies and make the enforcement of award; the last and cogent procedure of arbitration proceeding ineffective.

Lastly, even though parties to an arbitration and mediation generally agree on the rules that lay out the basic procedures for the proceedings. Yet, the cultural diversity makes the process of persuading the tribunal often complex , due to striking difference between the legal traditions in which most legal systems belong – that is common law and civil law.

An arbitrator from Australian jurisdiction with a common law heritage would be more accustomed to exhaustive pleading, which is considered as essential part of arbitration, than Italian arbitrator, who come from a background where pleading plays a less important role.

Unsurprisingly, Australian arbitrators would understand Australian witnesses better than counterparts because of their legal system proximity but, consciously or unconsciously could misunderstand the argument of Italian witnesses as reticence and lack of candor, which might lead to more conflict rather than resolution.

Navigating Unchartered Water: Leveraging Cultural Differences for Effective Arbitration and Mediation

Development of cross-cultural competency skill is imperative for all mediators and arbitrator. Therefore, it recommended that arbitrator and mediator should be self-critical regarding their understanding of other cultures as well as their own deep-rooted culture and beliefs, so as to be able to foresee some of the difficulties likely to arise ahead of time and address them from the outset, so as to render an enforceable award. For example, In 1973, a sole arbitrator, rendered an award in the successful arbitral proceeding between Liamco v. Libya, in which he reasoned not only in English and French law but also in Islamic law.

It is also recommended that the parties and the arbitrators should hold first organizational meeting before normal proceeding, so that language barriers and any other cultural differences related issues would be discussed and ameliorated.

Given that flexibility is one of the hallmarks of arbitration, the first organizational meeting should presents an opportunity to adopt procedures that are appropriate for the particular circumstances of the case, and by anticipating and addressing these issues early the parties will not be surprised at a later stage of the proceedings when language and translation issues arise.

Conclusion

In conclusion, Frantz Fanon, a French philosopher generally express that “To be ignorant of the cultures of others is to be ignorant of one’s own.” This statement encapsulates the need for cultural understanding for effective arbitration and mediation processes, as each culture serves as a mirror for another.

Although, cultural differences may present challenges in arbitration and mediation processes. But, by being aware of these differences and taking proactive steps to bridge the gap, the arbitrators and mediators can ensure a fair and transparent process for involved parties, ultimately leading to a more effective arbitration proceeding.

Bibliography

1. ARTICLE V(2(b)),1958 NEW YORK COVENTION. <here> accessed March 24,2024.
2. Babak Barin, Andrew D. Little & Randy A. Pepper, ‘The Osler Guide to Commercial Arbitration in Canada: A practical Introduction to Domestic and International Commercial Arbitration.’
3. Black Law Dictionary, 11 Edition.
4. Bu, Q. (2020). ‘The cultural sensitivity in harmonisation of international arbitration: lessons from China (Version 1). University of Sussex.’ <here> accessed March 25,2024.
5. CAO, L. 2016. ‘Culture in Law and Development: Nurturing Positive Change’, Oxford University Press.
6. Global Arbitration Week, ‘Cultural Considerations in Advocacy: East Meets West.’ <here> accessed March 24, 2024.
7. Howard, M. ‘The Impact Of Cultural Difference On International Arbitration Based On The Example Of Iran’. <here> accessed March 25, 2024.
8. Julia Ann Gold, ‘ADR through a Cultural Lens: How Cultural Values Shape Our Disputing Processes’, 2005 J. Disp. Resol. (2005). <here> accessed March 24, 2024.
9. Karen Mills, ‘Culture Differences & Ethnic Bias in international Dispute Resolution: An Arbitrator/ Mediator’s Perspective’ prepared for Chartered Institute of Arbitrator, Malaysia Branch International Arbitration Conference, 2006.
10. Lexology, ‘Cultural Difference In International Arbitration.’ <here> accessed March 25, 2024.

11. Lexology, ‘How Do Cultural Differences Influence Mediation.’ <here> accessed March 25, 2024.
12. Libya v. Liamco case. <here> accessed March 25, 2024.
13. Raymond Cohen, ‘Negotiating Across Cultures: Communication Obstacles In International Diplomacy’ (1991).
14. Section 19(d), 1999 Federal Republic of Nigeria Constitution (as amended).
15. Tibor Varady, John J. Parcello III & Arthur T. Von Mehrren, ‘International Commercial Arbitration – A Transnational perspectives’ 2^nd ed. (US, Thomson West 2003).
16. University of Plymouth, ‘An analysis of how culture influences the arbitration process used to resolve disputes on construction projects in Saudi Arabia.’ <here>. March 25, 2024.

About Author

Egbetade Elijah Aanuoluwa is a sophomore student at the Faculty of Law, Obafemi Awolowo University. He demonstrates a strong interest in international arbitration, corporate law, and international humanitarian law. He is a campus ambassador at LawGlobal Hub.