Lecture presented on 15 June 2018 at the International Symposium On International Commercial Arbitration Service organised by the International Commercial Arbitration Service Center of the National Kunming Economic And Technological Development Zone, Yunnan, People’s Republic Of China.
First of all, let me thank the organizers for organising an excellent seminar and panel of very high quality eminent experts and academics on the theme of “International Commercial Arbitration under the Belt And Road Initiative”.
I had originally planned to speak on “International Mediation In Belt And Road Projects”. As the previous speakers have done an excellent job and covered the subject so well, and in view of the limited time available, I will focus on the dispute avoidance and management part of my presentation.
I will begin with a story, and then cover three main points.
China’s Belt And Road Initiative is the biggest and most important infrastructure development in the world today. Last November, I spoke at a conference in Shenzhen on how to assist Chinese companies to venture abroad successfully. One of the sessions was on the “Go Out” experiences of four (4) Chinese companies. Among them, two (2) had various disputes, the remaining two (2) had no disputes. Those with no disputes had hired PWC, EY and other professional advisers such as law firms to assist them in implementing their “Go Out” plans.
Based on their differing experiences, I concluded that those with no disputes had prepared their “Go Out” plans well. So adequate preparation by Chinese enterprises before they venture out to invest and do business overseas is critical and is the master key to the success of Chinese “Go Out” companies. Those who prepare well will have few or no disputes.
The first main point that I wish to make on dispute avoidance and management is that the parties to a dispute know best how to solve the dispute.
Economist Marc Galanter in 1981 explained the theory of “Legal Realism” as follows:
“Most disputes including many that under current rules could be brought to a court, are resolved through self avoidance, self-help, and the like…. in many instances the participants can devise more satisfactory solutions to their disputes than can professionals constrained to apply general rules on the basis of limited knowledge of the dispute”
According to Galanter, and also consistent with my observations of legal disputes in my 33 years of legal practice in South East Asia, the parties themselves are best equipped to resolve disputes.
Lawyers, mediators, arbitrators and judges are of necessity third parties with limited knowledge of the disputes and constrained to apply general rules. Most disputes are resolved by parties through self help and avoidance.
My second point is that Belt And Road Projects are international win-win economic and business activities. If there is no dispute (i.e no arbitration or litigation), the Belt And Road project is a big success. For the parties and also lawyers who advised on and structured the Belt And Road Project, any dispute is a sign of failure.
In other words, dispute resolution services such as arbitration and litigation services are “funeral” services for which the lawyers and experts earn an “undertakers burial fee”. For disputes to be referred to arbitration or litigation, it will mean that the relationships between the parties have failed beyond repair and the Belt And Road Project will end up in failure. It is not in the interest of the parties to have disputes. We must avoid and keep disputes to a minimum.
The third and final point I wish to make is that Belt And Road disputes are different from purely commercial disputes and domestic arbitrations in the following ways:
- Intergovernmental Relations:
Often, the projects are government sponsored, and any dispute will affect intergovernmental relations between China and the host country. In such situations, the intergovernmental relationship will be bigger and more important than the project itself, and diplomatic resolutions and mediation will be the preferred solution.
- Cross border Legal Issues:
Belt And Road Projects are cross border projects involving the laws of two or more countries. Choice of governing law of contracts, choice of court jurisdiction, enforcement of judgements and arbitral awards, differences in legal traditions such as common law versus civil law systems, Bilateral Investment Treaties and the referral of disputes to the International Centre For Settlement of Investment Disputes (“ICSID”) are difficult issues that must be resolved.
- Cross Cultural Issues: As the projects are cross border in nature, parties with different backgrounds and from multiple religions, languages and cultures make the management of successful projects and the resolution of any dispute much harder.
- Social media impact and public opinion:
Belt And Road Projects are sometimes sensitive and not well received in host countries. Those who oppose the projects will use social media and influence public opinion when the projects fail and end up in disputes. So any potential failure or dispute needs careful management to avoid harm to intergovernmental relations.
In conclusion, Chinese “Go Out” enterprises must prepare well to avoid disputes. If disputes cannot be avoided or settled between the parties, then international mediation is the way to resolve them to avoid harming the relationships between the parties. The Belt And Road Initiative is a paradox – the fewer the disputes, the more successful the projects. Let us help the parties in Belt And Road Projects achieve great success in their projects by avoiding and keeping disputes to a minimum.
新加坡 Just Law律师事务所顾问
首先, 在1981年经济学家Marc Galanter提出的 “法律现实主义” 的理论讲到:
我的第二要点是，一带一路倡议是一项实现双赢的国际经济和商业活动。 如果没有争端（即不需要仲裁或诉讼），那么一带一路倡议将是一个巨大的成功。 对于为一带一路倡议提供建议和架构的各方以及律师，任何纠纷的出现都是其工作失职的表现.
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