China’s International Commercial Courts hear first cases

Almost a year since their high profile establishment in June 2018, the International Commercial Courts of the Supreme People’s Court (CICC) have recently conducted hearings on the first cases that were submitted to the CICC.

On 29 May 2019, the Second International Commercial Court of the Supreme People’s Court of China heard a case concerning a dispute over shareholder qualification, relating to the energy drink manufacturer Red Bull’s investment in China. On 31 May 2019, the First International Commercial Court of the Supreme People’s Court of China heard a product liability case involving an Italian pharmaceutical company and its Chinese distributor.

Background

In June 2018, the Supreme People’s Court (SPC) established two international commercial courts, in Xi’an and Shenzhen respectively, to handle international commercial cases, especially disputes arising out of projects under the Belt and Road Initiative. The courts offer a “one-stop shop” dispute resolution mechanism, with access to mediation, arbitration and litigation. See our posts of 4 July and 7 December 2018 detailed reports on the series of rules that set up the CICC and regulate the CICC’s proceedings (the CICC Rules), including:

  • Provisions of the SPC on Several Issues Concerning the Creation of the CICC (effective 1 July 2018);
  • CICC Rules of Procedure (trial implementation) (effective 5 December 2018);
  • Working Rules of the CICC Expert Committee (effective 5 December 2018); and
  • SPC’s Notification on the International Commercial Arbitration and Mediation Institutions Included in the “One-stop-shop” International Commercial ADR Mechanism (effective 5 December 2018).

Since December 2018, the CICC has accepted several cases concerning international commercial disputes, including, among others:

  • disputes over shareholder qualification and shareholder disputes concerning Red Bull’s investment in China (Red Bull Cases), and
  • a product liability dispute brought against an Italian pharmaceutical company Bruschettini S.R.L. by its Chinese distributor, Guangdong Bencao Medicine Group Co., Ltd., (Bruschettini Case).

CICC proceedings

The Red Bull Case

According to a webcast on the China Court Website (the official multimedia website managed by SPC), the case was initially accepted by a Beijing court in January 2017. Subsequently, the CICC took over this case in 2019, on the basis that the CICC had already accepted four other cases related to a shareholder dispute over Red Bull’s investment in China.

According to the webcast of the 29 May hearing, a pre-hearing conference was held on 15 and 27 May in accordance with the CICC Rules of Procedure. The procedural issues that were dealt with at the conference included:

  • clarifying the parties’ claims/defence,
  • identifying uncontroversial facts and evidence,
  • identifying the key issues in dispute that will be determined at the hearing,
  • exchange evidence and cross-examination opinion,
  • determining on the applicable law to the case,
  • determining whether the hearing will be open to the public, and
  • other procedural issues.

According to the webcast report on the SPC’s website, the CICC asked about the parties’ willingness to have their dispute mediated by the CICC Expert Committee. The parties had initially opted for mediation by the Expert Committee, but eventually the case moved on to the CICC court proceedings because one party gave up on mediation.

The 29 May hearing at the CICC Xi’an court concerned one of the Red Bull Cases, which involves a dispute over the shareholder qualifications of Ruoychai International Group Co.,Ltd.(a Thai company) and Inter-Biopharm Holding Limited (a BVI company) in the Chinese company Red Bull Vitamin Drink Co.,Ltd. The hearing was before a bench of five SPC judges, and lasted for about four hours. No judgment was rendered immediately after the hearing.

The Bruschettini Case

According to the CICC’s website, a pre-hearing conference was held on 29 April, during which, in addition to discussing and determining procedural issues, two judges of the CICC explained the “one-stop-shop” dispute resolution mechanism to the parties. The issues discussed and/or determined at the conference include:

  • procedural issues in the pre-trial mediation, including selection of the mediators and timeline for the mediation. The mediator candidates from the Expert Committee and the timeline for confirming the selection of the mediators were determined at the conference.
  • the likely hearing date, if mediation is not successful.

The 31 May hearing at the CICC Shenzhen court was a substantive hearing of the Bruschettini Case, which lasted for about three hours. Similarly, it was before a bench of five SPC judges, who did not render a judgment immediately after the hearing.

Conclusion

Even though these first two cases heard at the CICC are not specifically related to any Belt and Road projects, they are still of significant importance, as they are the first cases heard under the CICC Rules. They are helpful illustrations of how the CICC handles its cases. In particular, they help to demonstrate how the CICC uses pre-hearing conferences to ensure smooth conduct of the trial, the role that the CICC plays in mediation, and how the CICC can provide efficient resolution of international commercial disputes.

However, these cases do not show all of the interesting features of the CICC proceedings established by the CICC Rules. It remains to be seen, for example, how the CICC will interact with the one-stop-shop institutions for arbitration or mediation, and how mediation by the Expert Committee of the CICC will work in practice.

Helen Tang
Helen Tang
Partner, Shanghai
+86 21 2322 2160
Tracey Cui
Tracey Cui
Associate, Shanghai
+86 21 2322 2166
Briana Young
Briana Young
Foreign Legal Consultant (England & Wales)/Professional Support Consultant, Hong Kong
+852 2101 4214

Dispute Resolution in Asia-Pacific: Parties seek efficient processes and enforceable outcomes

Following our report on the Global Pound Conference series, which brought together over 4000 stakeholders at 28 conferences worldwide, our analysis of the Asia Pacific results reveals different demands in Asia and Oceania.

Six Asia Pacific cities hosted conferences to assess how dispute resolution can be improved: Singapore; Hong Kong; Chandigarh, India; Bangkok, Thailand; Sydney, Australia and Auckland, New Zealand. Each conference addressed the demand side (commercial party perspectives on dispute resolution); the supply side (what advisers and providers are delivering to commercial parties); the key obstacles and challenges; and what needs to be addressed to effect change.

In Asia the data revealed a clear desire for enhanced regulation of mediation compared to Oceania. At first blush, this could be said to be rooted in civil versus common law traditions. But only one of the Asian countries to host a GPC event, Thailand, has a civil-law system. The reason appears to be more complex: enhanced regulation, particularly around enforcement, would lend credibility to mediation in Asia as a viable alternative to litigation or arbitration. This is particularly so in the context of commercial cross-border disputes. UNCITRAL’s proposed New York-style Convention on the mutual recognition and enforcement of mediation settlement agreements is likely to be applauded in Asia and may hail an inflection point for the use of mediation.

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New dispute resolution rules for foreign investors in South Africa

South Africa’s draft regulations for investor-state mediation require refinement to work effectively with international arbitration.

Interested parties have until 28 February 2017 to comment on draft Regulations on Mediation Rules (Regulations) published by South Africa’s Department of Trade and Industry (DTI) on 30 December 2016, under the Protection of Investment Act, 2015 (Act).

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Launch of landmark global conference series on the future of dispute resolution

Herbert Smith Freehills is pleased to announce the launch of The Global Pound Conference (GPC) Series 2016-17.

The aim of this ambitious worldwide conference series is to build a global conversation about the current landscape of civil and commercial dispute resolution and how dispute resolution tools and institutions should respond to the needs of 21st century business.  In particular, it aims to gather standardised and actionable data on what users of dispute resolution mechanisms need and want and whether those needs are being met.

Over 25 countries worldwide have already committed to holding a GPC event, with more being added. The launch will take place at a two-day conference in Singapore on 17-18 March 2016 and the last event is scheduled to be held in London in July 2017.  Other cities will include Hong Kong, Paris, Dubai, Madrid, Sydney, New York and Frankfurt/Berlin.

The Series, which is being led by the International Mediation Institute (IMI), is being sponsored by Herbert Smith Freehills as well as other global partners: Shell,  AkzoNobel, the Beijing Arbitration Commission (BAC),  JAMS, and the International Centre for Dispute Resolution (ICDR).

Pivotal to Herbert Smith Freehills' pre-eminent disputes practice is a deep understanding of the importance of working with our clients to assess how they can best make use of the various dispute resolution mechanisms available to them.  We have therefore long been at the forefront of efforts to explore what corporates and other organisations actually need from dispute resolution processs and how the existing mechanisms can be improved to meet those needs.  In particular, our award-winning alternative dispute resolution (ADR) practice has undertaken extensive client research studies into how corporates develop strategies for using ADR and we were the lead sponsors of the pilot event for the GPC series, held in London last year. 

We are therefore proud to be the Global Platinum Sponsor of the GPC series.   Alexander Oddy, Partner and member of the GPC Central Organising Group said:

 "The GPC Series is a really exciting and unique opportunity for all stakeholders in the dispute resolution community to shape the way we do things in the 21st Century. It is a chance to understand what corporates and other organisations really need, to share ideas and learning and develop new processes that are fit for purpose.

"What we have today is a relatively developed set of dispute resolution processes but we need to understand how we can use those more effectively in combination and in culturally sensitive ways in the future."

Why the 'Pound Conference' Series?

The original Pound Conference, held in the USA in 1976 (and named in honour of Roscoe Pound, the reforming Dean of Harvard Law School in the 1920s and 30s), was the event widely credited as the stimulus for the development of the range of ADR processes used today. The new Global Pound Conference series is intended to be as ground-breaking and important for corporate dispute resolution as the 1976 conference was.  

Who will attend the GPC events?

Major stakeholders in dispute resolution will attend the GPC Series including businesses, lawyers, chambers of commerce, academics, judges, arbitrators, mediators, policy makers, government officials and others. They will collaborate at each of the conferences around the world to discuss how existing tools and techniques available in dispute resolution are working in practice. They will also stimulate new ideas and generate actionable data on the dispute resolution needs of corporates and other organisations, both domestically and internationally.

How will the GPC gather data? 

The events worldwide will share a common technology platform to enable all participants to vote on standardised core questions about the current and future dispute resolution landscape. The results of the voting for each question will be available immediately to delegates at each event, for analysis and discussion.

What will be the output of the GPC? 

The GPC Series will culminate in a report at the end of 2017, interpreting the data gathered globally to help shape how dispute resolution will be conducted for years to come. The resulting data from all of the events will be publicly available to anyone wishing to research stakeholder views on dispute resolution.  The data collected at individual conferences will be published following each event and we will be providing periodic updates on this blog throughout the 18 month period.

How can I get involved in the GPC?

The GPC gives all those interested in civil and commercial dispute resolution a say in how dispute resolution should evolve. We invite you to participate in this exciting project by attending a GPC event near you over the next 18 months.   The dedicated website www.globalpoundconference.org contains full information about the GPC, the planned events and how to get involved.

Click here​ to watch a brief video explaining the benefits of attend​ing the GPC Series.

Singapore International Mediation Centre is launched, offering parties an “Arb-Med-Arb” process in partnership with SIAC

The Singapore International Mediation Centre (SIMC) was officially launched on 5 November 2014. Set up following the recommendations of a Working Group chaired by Edwin Glasgow CBE QC and George Lim SC, the SIMC will supplement the array of international dispute resolution options available in Singapore. In particular, the SIMC will work closely with the Singapore International Arbitration Centre (SIAC) to promote mediation within international arbitration through a new ‘Arb-Med-Arb’ protocol (“AMA Protocol“).

Key features and procedure of the Arb-Med-Arb Protocol

The new model AMA Protocol allows a party to commence arbitration under the auspices of the SIAC, and then proceed to mediation under the SIMC. In practice, parties will, as they would in a regular arbitration, commence proceedings under the AMA Protocol by filing with the Registrar of the SIAC a Notice of Arbitration. The Registrar of the SIAC will inform SIMC of the arbitration within four working days from its commencement (or, if parties had not adopted the AMA Protocol at the outset, from the agreement of the parties to refer to their dispute to mediation under the AMA Protocol). After the filing of the Response to the Notice of Arbitration, and the subsequent constitution of the Tribunal, the Tribunal will stay the arbitration for mediation at SIMC. Upon receipt of the case file from the SIAC, the SIMC will fix a date for the commencement of mediation at SIMC (“Mediation Commencement Date“), which will be conducted under the SIMC Mediation Rules. Unless the Registrar of SIAC in consultation with the SIMC extends the time, the mediation shall be completed within eight weeks of the Mediation Commencement Date.

Under the AMA Protocol, the arbitrator(s) and the mediator(s) will be separately and independently appointed by SIAC and SIMC respectively, under the applicable arbitration rules and mediation rules of eac-h Centre. To ensure impartiality of both processes, the arbitrator(s) and mediator(s) will usually be different individuals, unless otherwise agreed by the parties. This represents a departure from the traditional understanding in Asia of the arb-med process in which arbitration and mediation proceedings are conducted by the same person.

It is also worth noting that all mediations conducted under the rules and auspices of the SIMC (which would include mediations under the AMA Protocol) are private, confidential, and without prejudice, unless otherwise agreed by the parties.

If the mediation is successful, the settlement is taken back to the tribunal to be recorded in the form of a consent award. A consent award is generally accepted as an arbitral award and, subject to any local legislation and/or requirements, is generally enforceable in the approximately 150 New York Convention member states. The non-justiciable elements of any mediated settlement (for example, settled disputes that fall outside the scope of the arbitration agreement and hence the tribunal’s jurisdiction) would need to be recorded in a separate settlement agreement (which would not be enforceable under the New York Convention). Parties who cannot settle their disputes through mediation may continue with the arbitration proceedings.

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ICC publishes in-house guide on effective management of arbitration

Practitioners and arbitral institutions alike are constantly looking for ways to smooth and improve the arbitral process. One of the latest contribution to this effort is a June 2014 guide from the International Chamber of Commerce (ICC) entitled “Effective Management of Arbitration: A Guide for In-House Counsel and Other Party Representatives” (the Guide).

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The ICDR amends its Mediation and Arbitration Rules: tackling some familiar issues and providing some novel solutions

The International Centre for Dispute Resolution (the ICDR), the international division of the American Arbitration Association has released a new version of its Mediation Rules and its Arbitration Rules (the Rules), effective 1 May 2014.

Many of the changes concern issues which have been the focus of many of the recent institutional rule changes – reducing the time and costs involved in resolving a dispute pursuant to the Rules, dealing with multi-party and multi-contract issues, and providing for emergency measures of protection before constitution of the tribunal. However, the revised Rules also contain some novel aspects. In particular:

  • The adoption of the “international” approach to document production in arbitration into the Rules themselves and confirmation that depositions, interrogatories and other US “discovery” procedures are “generally not appropriate” in an ICDR arbitration (Article 21);
  • Provision for joinder and the appointment of a “consolidation arbitrator” to determine whether multiple arbitrations should be consolidated;
  • An express description of the ICDR list procedure at Article 12(6) for the appointment of arbitrators (barring party agreement to an alternative method); and
  • Express inclusion of a default position on the question of privilege in international arbitration, adopting a highest standard of protection test (Article 22).

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JCAA introduces a new set of arbitration rules

The Japan Commercial Arbitration Association (JCAA) has introduced an amended version of its Commercial Arbitration Rules (the New Rules). The New Rules, which contain comprehensive amendments, came into force on 1 February 2014, following a consultation period. They will apply to all arbitrations initiated on or after that date. The changes are intended by the JCAA to update the rules in line with recent trends in the amendment of arbitration rules (such as the 2010 Amendments to the UNCITRAL Arbitration Rules). The changes largely achieve this aim, addressing current issues in international arbitration such as multi-party arbitration, emergency arbitrators and interim relief.

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