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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. Disclaimers (many, many…)

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legal infrastructure and development dispute resolution in south korea

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

  • 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
  • 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
control over dispute system design
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).
south korea some background
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
private ordering dsd by the parties in korea
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
private ordering one party dispute system designs absent in korea
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
third party designs innovation in korea s institutional infrastructure
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
  • 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
current institutional structure in korea s courts
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
court s questions
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?
implications for economy
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.
korean national labor relations commission
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
current institutional structure of nlrc
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
nlrc s questions
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?
implications for economy16
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
public policy and environmental conflict
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
government s questions
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?
implications for economy19
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.
implications continued
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
the future reunification
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
more on reunification
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
  • (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.