Throughout the world, many regions have established permanent regional dispute settlement mechanisms (DSMs). However, the Asia-Pacific region is yet to establish either a permanent DSM to resolve their regional disputes, or a court-style mechanism for States/Economies to seek resolution of their regional disputes.

We argue that the current dispute settlement mechanisms are insufficient to handle State-to-State (Economy-to-Economy) disputes for the Asia-Pacific region for the following reasons:

1. Some States are reluctant to bring contentious litigation (for example an ICJ case) so as not to have their sovereignty subject to an international mechanism that imposes an adjudicated solution.

2. Some States prefer not to internationalize their regional disputes. Hence they are not interested in submitting their disputes to a multilateral dispute settlement mechanism.

3. Although the WTO dispute settlement mechanism is highly effective, it can only address WTO disputes, not other overlapping or additional disputes outside its area of jurisdiction.

4. Regional dispute settlement mechanisms (such as those provided in FTAs) have limited jurisdiction (being only able to handle the specific FTA disputes, not other disputes).

The proposed ARMO has the following features:

1. It is a regional inter-governmental organization.

2. It provides neutral mediation facilities for Asia-Pacific States (Economies) to help handle their State-to-State (or Economy-to-Economy) disputes in a friendly, consent-based manner.

3. The ARMO facility focuses on mutually-beneficial outcomes, rather than an exclusively “rule-based” process, thus recognizing the inherent interconnectedness of the issues in a dispute.

4. ARMO is based entirely on consent – a dispute can only be mediated where the disputing parties expressly agree to the mediation process, and any mediated resolution will become binding only when the disputing parties agree to the terms of the settlement agreement.

5. The “substantive rules” governing a dispute (such as an international treaty in the field of the dispute) will not serve as the exclusive basis for the resolution of the dispute. The most important task for the ARMO is to help the disputing parties find a mutually acceptable or advantageous solution to resolve their dispute.

6. ARMO’s procedural rules are designed to be flexible to avoid technical procedural issues and to allow the disputing parties to be the focus of the dispute resolution process, with the help of experienced mediators.

7. ARMO services can be used by Asia-Pacific States (Economies) independently of any international agreement. For instance, WTO or FTA Members can seek mediation of their dispute by ARMO, and have their agreed settlement implemented in the WTO or under the relevant FTA.

ARMO is designed to hold the trust of Asia-Pacific States and Economies due to the credibility, impartiality, professionalism and trustworthiness built into the mechanism:

1. The ARMO mediation is designed to be impartial in handling the disputes. The organization only provides services. It does not have a power to dictate the substantive outcome of the dispute.

2. The ARMO process is designed to be consensual, based on voluntary agreement between the disputing parties. No party can be forced to enter into the process, nor forced to accept any suggestion during the mediation. There is thus no risk in mediating a dispute, as there is no possibility of an adverse decision.

3. The procedure offers flexibility so as to accommodate the needs of different disputing parties, depending on the nature of their disputes. Mediators can be more active or less active, depending upon the mutual expectations of the parties.

4. The ARMO offers a panel of experienced mediators who are trained to professionally and efficiently assist in the resolution of complex international disputes.

5. ARMO mediation is designed to offer parties a substantial return on investment. Even where are mediation cannot resolve all of the issues in dispute, it will still clarify and limit the scope of the dispute, so that parties can proceed more efficiently and economically to resolve the dispute through other fora.

In sum, we consider that the Asia-Pacific region is uniquely positioned to take global leadership in providing non-adjudicated solutions to some of the most pressing global and regional issues. We argue that the region has the capacity to offer an alternative, less rights-and-power-based approach to peaceful co-existence. The creation of a new, permanent mediation mechanism will ultimately support the peace and prosperity of this unique and vital region.