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Legal Infrastructure and Development: Dispute Resolution in South Korea - P...

Overview. Disclaimers (many, many

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Legal Infrastructure and Development: Dispute Resolution in South Korea

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Legal Infrastructure and Development: Dispute Resolution in South Korea

Lisa Blomgren Bingham, J.D.

Keller-Runden Professor of Public Service

Director, Indiana Conflict Resolution Institute

Indiana University

Bloomington, Indiana

Overview l.jpg


  • Disclaimers (many, many…)

  • Definitions (private dispute resolution, legal infrastructure)

  • Categorizing dispute systems by who controls their design

  • Korea: some background

  • Changing infrastructure: dispute resolution in the courts, labor relations, and the environment

  • Implications for economic development: Reunification of North and South Korea

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  • Legal infrastructure

    • Substantive property, contract rights

    • Economic freedom

    • Civil rights, democracy

    • Institutions for enforcing rights and resolving disputes, public AND PRIVATE

  • Private dispute resolution: Resolution by those who are not judges, courts, or administrative agencies, even if court-annexed

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Control over Dispute System Design

  • Private ordering: The parties design it together (international commercial arbitration, labor relations, diamond dealers, cotton industry).

  • Private ordering: One party designs it alone and imposes it on the other (adhesive or mandatory arbitration in US, designed unilaterally by employers and businesses, enforced under FAA, preemption)

  • Public institution-building: Third parties design it for disputants (governments, courts, agencies, or NGOs like Court of Arbitration for Sport)

  • Control over DSD affects rules and outcomes of system. More of a problem for arbitration than for mediation programs (Bingham 2004).

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South Korea: Some Background

  • The flowering of democracy in past decade

  • Economic crisis 1997-1998 (500% leverage)

  • Chaebol corporate structures: massive conglomerates closely held de facto if not de jure

  • Top 30 control 41% of economy

  • Legal infrastructure improvements in substantive law in response to crisis

  • More transparency, accountability on corporate boards, but still problems

  • South Korea rates lower than other industrial economies on international indices of corruption and bribery (Transparency International)

  • Reunification desired: 2-10 years

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Private Ordering: DSD by The Parties in Korea

  • Limited use and experience with ADR

    • Board of Commercial Arbitration 300 cases a year

    • No courses in law or business schools on ADR

    • No negotiation skills training; interest-based negotiation is a novelty.

    • De facto limits on disputing through cultural traditions and chaebol interdependent conglomerate structures

  • Contrast US: CPR Institute, Fortune 500 sign CPR Pledge

    • Impulse comes from corporate counsel within companies to limit transaction costs

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Private Ordering: One Party Dispute System Designs absent in Korea

  • There appears to be no precedent for this

  • No equivalent to the FAA permitting adhesive arbitration and enforcing awards

  • Suppression of conflict within organizations

  • Contrast US:

    • Mandatory adhesive arbitration viewed as a means to manage risk and reduce exposure to jury awards

    • Mediation viewed by a few enlightened firms as possible new high performance work system practice

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Third Party Designs: Innovation in Korea’s Institutional Infrastructure

  • Paradigm shift underway

  • Courts, National Labor Relations Commission

  • Public Policy and Environmental Disputes

  • New substantive laws

  • President is former union lawyer

  • Government agencies gearing up to comply

  • Institutional infrastructure is weak or absent

  • Knowledge economy, beginning to benchmark

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  • Korean Supreme Court Task Force on Civil Justice Reform

  • Overseeing move toward common law from civil code tradition through experiment with jury system

  • Undertaking dispute system design for entire national court system to implement ADR

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Current Institutional Structure in Korea’s Courts

  • Civil code system

  • Dramatic growth in caseload, increasing individualism with improvement in economy and democracy

  • No tradition of independent mediation practice, limited use of arbitration

  • Judges mediate their own cases; concerns about confidentiality and appropriateness of dual roles

  • Concerns about efficiency of courts as dispute system

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Court’s Questions

  • Training and qualification of neutrals

  • Are mediators court employees or outsiders?

  • Who pays and how much?

  • Are mediation and arbitration outcomes enforceable in the courts? How?

  • What kind of ADR? What timing?

  • Relation of courts to labor arbitration?

  • What might court need to fund that parties will not pay for?

  • Where is ADR held? What is relation of court to ADR? Rules on confidentiality?

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Implications for Economy

  • Legislative mandate for juries framed as ‘public participation’ in governance

  • Caseload growth

  • Implicitly, concerns about economic competitiveness

  • Reducing transaction costs

  • They wanted to know what evidence there is of benefits: The Galanter Vanishing Trial Study was persuasive.

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Korean National Labor Relations Commission

  • Convened first ever national conference

  • Attended by 80 people from NLRC and all its regional offices

  • Chairman is at level of a cabinet minister

  • President has pursued legislation that will

    • Permit government workers to form unions

    • Permit contract and temporary workers to file complaints of discrimination with NLRC

  • NLRC anticipates dramatic growth in caseload

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Current Institutional Structure of NLRC

  • National office and regional offices

  • 11 percent rate of private sector unionism

  • Increasingly adversarial labor relations

  • Wall to wall units capable of shutting down entire industry in a strike

  • Evaluative mediation style

  • Descriptions sound more like advisory arbitration

  • Proud of their settlement rates

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NLRC’s Questions

  • Benchmarking dispute system designs

  • What is USPS system? (Bingham 2003)

  • How does mediation work?

  • What evidence is there of its outcomes?

  • Models of training? Interest-based negotiation? Mediation training? Sources?

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Implications for Economy

  • Making substantive changes in legal infrastructure concerning individual worker job security

  • Moving in direction of more flexible hiring and firing

  • Political quid pro quo is discrimination law for temporary and contract workers

  • Want to make it work efficiently - not have excessive transaction costs

  • Building on existing institutions to enforce new rights

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Public Policy and Environmental Conflict

  • New substantive proposed law:

    • Conflict Assessment OR Conflict Impact Assessment (which is unclear)

    • Deliberative Polling (Fishkin)

    • Mediation

  • Agencies

    • Korea Environmental Institute (assessment)

    • Institute for dispute resolution skills training in government

    • National law for every agency; will need capacity to mediate

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Government’s Questions

  • Commission on Sustainable Development funded KDI School & MIT to hold comparative conflict resolution studies conference

  • Benchmarking comparative legal infrastructure for public conflict resolution

  • Benchmarking practice infrastructure, how to develop a profession of mediation and dispute resolution

  • Korea Environmental Institute: What is US practice in environmental conflict resolution?

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Implications for Economy

  • Having difficulty getting major public development projects done

  • Buddhist nun on hunger strike stops major highway

  • First ever environmental mediation of Han-tan River Dam project turns into binding arbitration and then one stakeholder group repudiates award. Project halted.

  • Need projects to build hard infrastructure for economy: flood control, water quality, transportation of goods.

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Implications continued

  • Legislation touted as democracy-building, on same theme of public participation as jury system

  • Object is to anticipate and either avert or resolve conflict in major development projects

  • Transaction costs

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The Future: Reunification

  • Commentators are planning for it; some propose a hybrid of German reunification, Poland’s privatization, with limited elements from Russian and Czech privatization experiences

  • North Korea will likely inherit South Korea’s legal infrastructure

  • Corporate law reforms will aid transition

  • With reunification could come another wave of disputing: claims for natural restitution of nationalized property by heirs in North or South

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More on Reunification

  • Restructuring North Korea’s state-owned businesses will require more flexibility in hiring and firing workers

  • Could see new wave of North Korean unionism coming out of socialist history

  • Will need major hard infrastructure development, transportation system, environmental restoration

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  • (Remember disclaimers) No data.

  • In South Korea, legal infrastructure followed both economic growth and a period of economic crisis.

  • South Korea is developing its legal and institutional infrastructure in anticipation of needs for future economic growth.

  • The process is a dynamic complex system.

  • Current econometric models are underspecified.