International arbitration typically refers to proceedings conducted by arbitration institutions outside China. As a mechanism for resolving civil and commercial disputes between equal subjects, it highlights the principle of party autonomy.
The confidentiality, neutrality, finality and enforceability of arbitration make it a popular choice for resolving cross-border investment and transaction disputes. Parties tend to include dispute resolution and governing law provisions in their agreements to establish the applicable rules.
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BZW Law Firm
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Statistics show that arbitration institutions in jurisdictions such as Hong Kong and Singapore rank among the top in handling cases involving Chinese parties.
When engaging in international arbitration, parties must weigh the claims, duration, jurisdiction and governing law, and plan for award enforcement in the future. Leveraging international arbitration rules within permissible bounds is a longstanding focus for practitioners in this field.
Given the confidentiality of arbitral proceedings, successful application of the rules often depends on the extensive experience of the counsel team.
The process
The international arbitration process typically involves 13 stages: filing the arbitration request; service of documents; respondent’s defence and counterclaims; objections (to jurisdiction, consolidation, etc.); constitution of the arbitration tribunal; case management conference; interim measures; comprehensive submissions and defences; document disclosure; pre-hearing preparations; hearings; post-hearing filings; and issuance of the arbitral award.
This process may be adjusted based on the case circumstances, with certain stages potentially overlapping or inapplicable. For instance, objections and requests for interim measures may arise at different stages of arbitration.
In practice, practitioners must carefully calibrate each step to align with the case details and client needs.
Key aspects
Each stage of the international arbitration process warrants in-depth analysis and discussion. Three key aspects are briefly examined below.
Jurisdictional objections. Jurisdictional objections are a critical and complex stage in international arbitration. Cases often involve arbitration claims arising from multiple agreements, requiring counsel to assess whether such claims raise jurisdictional issues against the client’s objectives. By eliminating improper jurisdictional factors, they ensure clients achieve a fair resolution.
Jurisdictional objections should be raised at the earliest opportunity, typically alongside submission of the statement of defence, otherwise they would be deemed waived.
Such objections often serve as a key arbitration strategy to delay proceedings or avoid arbitration.
Grounds for jurisdictional objections include: (1) invalid or unenforceable arbitration agreements, or lack of proper parties; (2) non-arbitrability of the dispute; and (3) unsuitability of the arbitral institution.
When a case involves multiple agreements without jurisdictional conflicts, the scope of the arbitration agreement may sometimes be extended in the Fiona Trust principle. Derived from English law, this principle assumes that rational businesspeople have intended to resolve all disputes under related contracts in a single litigation or arbitration.
However, if the transaction documents contain differing dispute resolution clauses, the application of the Fiona Trust principle may be limited. Lawyers must closely examine the agreement texts and objective evidence to ascertain the parties’ clear intent to arbitrate.
In practice, parties should ensure clarity in arbitration intentions through precise contract wording during the drafting stage, and retain objective evidence to support their intent.
Consolidation of arbitrations. Consolidation of arbitrations refers to the resolution of disputes arising from multiple agreements by a single arbitration tribunal, aiming to enhance efficiency, reduce costs and ensure consistency of the arbitral outcome. Given that transactions often involve multiple agreements, the consolidation of related arbitrations has effectively become an accepted procedural mechanism in international arbitration.
Any party may request consolidation. If all other parties agree, the following procedures will be straightforward. In case of objections, however, the requesting party should first demonstrate that conditions for consolidation under the applicable arbitration rules have been met. The arbitral tribunal, once constituted, will then arrange hearings and issue a decision on the matter.
Requests for, or objections to, the consolidation of arbitrations should be raised promptly. While such requests can be made after the tribunal is constituted, they must be submitted within a reasonable timeframe to avoid disrupting the overall arbitration process.
Consolidation of arbitrations may impose additional burdens and increase complexity, particularly for respondents. Requestors often base their arbitration requests on multiple agreements, potentially forcing respondents to accept the pre-defined framework in the application, thereby undermining their right to challenge the consolidation of disputes across multiple agreements.
Document disclosure. Crucial to international arbitration proceedings, document disclosure serves as a key enabler of arbitration strategies and goals. Parties use tools like the Redfern Schedule to outline the scope of requested documents, their relevance and significance to the dispute, and evidence of their possession or control by the other party.
Disclosure timelines are typically set during case management conferences, although parties may request disclosure at any stage, or through interim measures on reasonable grounds.
The respondents may raise objections, citing reasons such as irrelevance or insignificance, overly wide-ranging disclosure, excessive burden, lack of possession or control, and suspected phishing expedition by the requesting party.
Additional justifications for non-disclosure may include legal impediments, claims of privilege, and protection of trade secrets.
Arbitration tribunals typically follow the IBA Rules on the Taking of Evidence in International Arbitration to assess the parties’ arguments and render specific decisions on document disclosure.
As there is no established concept of document disclosure under Chinese law, parties tend to resist disclosing unfavourable documents. Non-compliance with tribunal orders, including concealing and destroying documents, may result in adverse inferences or financial penalties.
Concealing or falsifying evidence may also constitute fraud, in which case many jurisdictions may annul or refuse enforcement of the awards on the grounds of serious procedural misconduct violating public policy.
Bai Xiao is a partner at BZW Law Firm. She can be contacted at +86 10 5178 3535 or by e-mail at xiao.bai@zwlawyer.com
