Editor's note: Since its establishment, as a regional, non-governmental, non-profit international organization in the field of finance, the Asian Financial Cooperation Association (AFCA) has been committed to promoting experience and information sharing among various financial industries and fields in the BRI region, building an international platform for financial business exchange and cooperation and common governance. AFCA, on thebasis of Belt and Road Financial Cooperation Committee (BRFCC), conducts Asian Financial Cooperation Association Belt and Road Financial Cooperation Practice Report. With the business sector as the entry point, the report systematically reviews the cooperation in recent years, deeply analyzes relatively prominent problems and challenges, and offers practical suggestions in line with the actual needs of partner entities.

Copyright Statement：Belt and Road Financial Cooperation Committee of Asian Financial Cooperation Association owns the copyright on this report, including all the text, images and data. No organization or individual is permitted to use the above-mentioned work by reproducing, extracting or in any other ways without the authorization of the Committee. Those who have been authorized by the Committee to use the workshall use it within the scope of the authorization, and the quoted content shall be marked with “Source: Belt and Road Financial Cooperation Committee of Asian Financial Cooperation Association”. Those who violate the above statement will be held legally responsible by Asian Financial Cooperation Association.

Chapter 10 Investment Protection and Dispute Settlement on the Belt and Road Initiative

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Suggestions for Promoting BRI Investment Protection and Dispute Settlement

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01

Establishing a diversified dispute resolution mechanism

Perfecting a diversified dispute resolution mechanism is conducive to responding to various disputes and contradictions occurring during the BRI advancement. On June 29, 2016, the Supreme People’s Court issued “the Opinions of the Supreme People’s Court on People’s Courts on Further Deepening the Reform of Diversified Dispute Resolution Mechanism of the People’s Courts”. It demonstrated that the international development of a diversified dispute resolution mechanism should be promoted, taking full advantage of various dispute resolution approaches, as well as respecting and supporting parties at home and abroad to choose these approaches voluntarily to satisfy their multiple requirements on dispute settlement, thus providing judicial services and protection for BRI construction.

Adopting mediation is able to reduce terminations of commercial relations caused by disputes, facilitate commercial parties to manage international business, and save national judicial administration payments. The concept of mediation is to explore the common interests of the parties involved and to create a community of interests between the parties. Compared with litigation and arbitration, which are dispute resolution mechanisms aimed at resolving existing problems, mediation is more concerned with ensuring future development. Therefore, the concept of mediation emphasizes on maintaining harmony future cooperation between two parties rather than being limited to dispute resolution. This coincides with the pursuit of common development and mutual benefit of the BRI. It can be said that mediation, as the first choice for resolving commercial disputes, is in line with the future development trend of the BRI dispute resolution mechanism.

There are several measures to improve Chinese diversified dispute resolution mechanism, but following problems should be solved in priority. First, to improve the effective connections between mediation and arbitration, and between mediation and litigation. A diversified dispute resolution mechanism embodies in these two models of connections, with main forms of mediation followed by arbitration, or mediation followed by litigation. Under the model of mediation and arbitration, if the mediation is successful, an application can be made to the arbitral tribunal for an award in accordance with the mediation agreement concluded between the two parties; while under the model of mediation and litigation, the compulsory power of the court can be used to provide judicial protection for the mediation. These models not only save unnecessary payments, but also help to reach a settlement agreement quickly assisted by professional mediators, thus providing coercive force to protect the agreement. Second, to accelerate the legislative work for commercial mediation in China. After the “Singapore Convention on Mediation” enters into force, China will face problems concerning the connection of the judicial system. China does not have a specific “Commercial Mediation Law”, or legal provisions on the foreign enforcement of commercial mediation. The enactment of the unified “Commercial Mediation Law” will be beneficial to confirm the validity of settlement agreements made by commercial mediation institutions including private mediation organizations, and provide legal protection for the enforcement of settlement agreements at home and abroad. Third, to strengthen international cooperation among mediation institutions. Commercial mediation institutions with international competitiveness and influence should be established to improve the BRI international commercial mediation mechanisms. For this purpose, it is recommended to encourage qualified chambers of commerce, trade associations and commercial arbitration institutions to establish commercial mediation organizations. More importantly, international communication and collaboration should be reinforced between our country and mediation organizations of BRI countries, thus enhancing international competitiveness and influence of Chinese commercial mediation institutions through some cooperation ways such as building cross-regional joint mediation centers. Fourth, to lower the mediation costs of parties through online mediation or other innovative mediation forms. BRI International Commercial Mediation Center, initiated and established by DeHeng Law Offices, set a good example for these innovative mechanisms. It accepts but not limited to international commercial disputes concerning the BRI, and carries out institutional innovation in establishing the pre-mediation procedures, building an online mediation system and setting up a platform on connection between mediation and litigation. Thus, combined efficiency improvement with cost reduction, it contributes unique “Chinese approach” to settle BRI civil and commercial disputes through mediation.

02

Innovating BRI commercial arbitration mechanism

Following aspects should be stressed to innovate BRI commercial arbitration mechanism. First, to improve the coordinative support for “Arbitration Law of People’s Republic of China” (“Arbitration Law”). That means improving the “Arbitration Law” on the grounds of extensive absorption of foreign advanced legislative practices, introducing advanced international systems such as ad hoc arbitration and amiable arbitration, and protecting the parties’ reasonable expectations to resolve disputes through arbitration, thus creating a friendly environment for arbitration in China. “Ad Hoc Arbitration Rules of (Guandong) Pilot Free Trade Zone Hengqin Area of Zhuhai”, Chinese first ad hoc arbitration rules promulgated on April 8, 2014, broke through the limitations for ad hoc arbitration from the “Arbitration Law” for the first time, guaranteeing the smooth implementation of the ad hoc arbitration system in the free trade zone from the institutional norms. The China (Shanghai) Pilot Free Trade Zone Arbitration Rule, published on April 8, 2014, introduced the amiable arbitration system for the first time. The rule allows the arbitral tribunal to make an award based on ex aequo et bono with the consent of the parties, serving as an important model for the future development of Chinese arbitration system.

Second, to integrate and utilize current arbitration resources and develop leading international arbitration institutions as well as strengthen professional and refined development of arbitration. The existing platform can be used to conduct international cooperation and improve the bilateral or multilateral arbitration cooperation mechanisms between China and arbitration institutions from BRI countries. As for the institutional settings of the BRI commercial arbitration mechanism, China is firstly supposed to provide appropriate guidance to various arbitration institutions timely, integrate existing forces effectively, build the BRI commercial arbitration brand actively, and enhance the overall competitive edge of domestic arbitration institutions in resolving civil and commercial disputes along the BRI. Next, to strengthen professional and refined development of arbitration on the basis of available platforms. That means establishing targeted arbitration mechanisms in the BRI areas with frequent disputes, so as to attract BRI parties to submit their disputes to Chinese arbitration institutions for resolution. Furthermore, in virtue of existing platforms to promote international cooperation, the bilateral or multilateral arbitration cooperation mechanisms between China and arbitration institutions from BRI countries can be improved. Also, it is encouraged to build transregional arbitration centers based on the different characteristics of the BRI regions to enhance the international competitiveness and influence of China’s arbitration institutions.

Third, to enhance the credibility and influence of arbitration institutions. On the one hand, it is recommended to improve the independence of arbitration institutions, fully play the role of judicial support and supervision to arbitration, and create an arbitration-friendly judicial environment while ensuring the legitimacy of arbitral awards with uniform judicial review standards. On the other hand, it is necessary to form a professional and international arbitrator team, expand the scope of arbitrator selection and mutual inclusion, increase the proportion of foreign arbitrators from BRI countries in total arbitrators. For example, we can learn from the open roster of arbitrators adopted in the Shanghai Free Trade Zone to include people with professional backgrounds in relevant fields in dispute resolution based on the recommendations of the parties. At last, the design of the arbitration rules should be innovated, taking into account the recent experience of major international commercial arbitration institutions in revising their rules. In order to meet the requests of dispute resolution focusing on efficiency, convenience and autonomy, the arbitration rules should incorporate advanced systems such as expedited procedures, emergency arbitration procedures, ad hoc arbitration and amiable arbitration.[1]

[1] QI Tong, RUI Xinyue, “The Study of the Mechanism Innovation of Civil and Commercial Dispute Resolution in the Belt and Road Initiative”, Chinese Review of International Law, Issued 5, 2017.

03

Speeding up the construction of International Commercial Court

Amid the irresistible globalization, economies and countries have established international commercial courts in an attempt to better respond to the requirements for dispute resolution. Some countries have built their national international commercial courts, such as Dubai (the Dubai International Financial Centre Tribunal in 2004), Singapore (the Singapore International Commercial Court in 2015), the United Kingdom (Business and Property Courts of England and Wales in 2016), and the Netherlands (the Netherlands Commercial Court in 2019). These courts avoid the drawbacks of traditional litigation mechanisms manifested by cumbersome procedures and unnecessary procrastination, providing more options and possibilities for settling international commercial disputes professionally and efficiently. Thus, the development of international commercial courts has become the newest and most important area of competition in the global commercial dispute resolution market. The Singapore International Commercial Court aims to be a leading commercial dispute resolution mechanism in Asia and the world, with the Business and Property Courts of England and Wales as its target; Situated in the special economic zone and financial enclave, the Dubai International Financial Centre Tribunal and the Astana International Financial Centre (AIFC) Court of Kazakhstan constructed international financial courts which are completely independent of the domestic court system; European countries like Belgium, Germany and France have started to or prepared to enhance their competitiveness in the field of national commercial dispute resolution by establishing international commercial courts in view of the possible weakening of London’s advantages and status in resolving international commercial disputes after Brexit. [1]

To resolve successive disputes in foreign trade, foreign investment, infrastructure construction, and foreign aid, Chinese academic circles have recently been discussing whether and how to establish such a dispute settlement mechanism. On June 28, 2018, the First International Commercial Court and the Second International Commercial Court of the SPC were inaugurated in Shenzhen and Xi’an respectively, and officially started to operate for accepting international commercial disputes between equal commercial subjects.

China can learn from the experience of the Singapore International Commercial Court under the BRI framework. The Singapore International Commercial Court (SICC) is designed, with advantages of litigation and arbitration, to create a new borderless, efficient and elite international commercial dispute resolution mechanism that is different from both traditional international commercial litigation and international commercial arbitration. SICC can accept cases with international and commercial characters, cases that the parties have agreed in writing to be under the jurisdiction of SICC, and cases transferred by the High Court.[2] The judges of the SICC are international and elite, with 19 Singaporean and 12 non-Singaporean judges.

Chinese international commercial courts can develop institutional construction and innovation in the following aspects. First, to explore and construct litigation procedures resembling arbitration. That means building flexible, efficient and convenient litigation procedures considering the latest system of international commercial arbitration as a model, respecting the autonomy of the parties while ensuring the characteristics and advantages of the judicial mechanism itself. Second, the China International Commercial Court can be used as a pilot project and support to improve the diversified dispute resolution mechanism, achieving the integration and docking among mediation, arbitration and litigation of BRI civil and commercial disputes. Third, to adhere to professional and international development road. On the one hand, the internationalization level can be enhanced by establishing a pool of high-level foreign lawyers, arbitrators and judges, exploring how to play their practical role in dispute resolution (especially in mediation and arbitration) within the existing legal framework; on the other hand, a high-quality talent team can be built through training and selection, emphasizing expert adjudication, and giving full play to the active role of the Supreme Court in promoting professional adjudication, so as to create an environment for the BRI construction. Finally, to make a headway in judicial credibility. The uniformity and predictability of case results by improving the transparency of case processing and setting up necessary error correction mechanisms. Thus, the BRI International Commercial Court will be built as a dispute resolution institution with international influence in the midst of promoting fair and efficient resolutions of BRI civil and commercial disputes along.[3]

[1] YANG Linping, “Research on the Belt and Road International Commercial Dispute Settlement Mechanism -- Centered on the International Commercial Court of the Supreme People’s Court”, The People’s Judicature, Issued 25, 2019.

[2] Same as above.

[3] QI Tong, RUI Xinyue, “The Study of the Mechanism Innovation of Civil and Commercial Dispute Resolution in the Belt and Road Initiative”, Chinese Review of International Law, Issued 5, 2017.