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ADR for the Belt and Road

Updated on January 2, 2018
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An experienced legal practitioner with a demonstrated history of working in the alternative dispute resolution industry.

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Aspirations for ADR within the Belt and Road

  1. The Belt Road Initiatives are based on the Silk Road spirit which evolved for thousands of years in the spirit of peace and cooperation, openness, inclusiveness, mutual learning and benefit. It was the first established notion of international trade and cross border transactions in the world. Many years later, the Belt Road Initiatives comes again as a transformative idea that will once again herald in the era of peace, development, cooperation and mutual benefit. The Belt Road Initiative comes as a boost to the global economy to aid its speedy recovery whilst maintaining the complexities of international and regional situations. Of course, the success of Belt Road Initiatives depends largely on the support from the “laws” or the dispute resolution regime in particular.
  2. The Government of China announced the initiative to promote connectivity of Asian, European and African continents to establish multi-dimensional partnerships and to promote independent, balanced and sustainable development in these countries. History, they say repeats itself. It is therefore but evident that the success of this ambitious initiative will depend on the existence of a smooth, multi-layered, harmonized dispute resolution mechanism in all the countries involved in this initiative. With this comes boundless opportunities and opportunities for countries across the route. It is here, that in line of the theme of the conference, cooperation and capacity building between countries, jurisdictions and arbitral institutions have to work together to bring about the success of the belt road initiatives.
  3. There is no doubt that economic growth in Asia is now the driver of the world economy and there is a constant expansion of activities across the world. It is said that the areas covered by the Belt and Road cover a population of 4.4 billion people accounting for 63% of the entire global population accounting for more than 30% of the world GDP. This becomes indicative and reflective of the opportunities and challenges abound in this Initiative, particularly for the dispute resolution regime. There is going to be a marked increase in commercial disputes, demand for world class arbitral institutions, professional services and a ADR system that ceaselessly transverses boundaries.

Slikroad then... Belt Road now

The 'Appropriate Dispute Resolution' Mechanism

  1. Arbitration and subsequently other forms of Alternative Dispute Resolution arose as a response to increasing trans-national business amongst parties and countries alike. With the growing global economy, ADR has revitalized and reformed itself to become the primary dispute resolution mechanism in the world of international trade and business. The success of Arbitration began with the harmonization of the process through UNCITRAL texts and the New York Convention. Arbitration soon became a successful way of overcoming existing disparities in national laws governing international trade. ADR has now evolved to become a “collaborative” practice of law. In the past, the world of Alternative Dispute Resolution has risen to every challenge successfully evolving to becoming a sustainable alternate.
  2. Enough has been said for us to already recognize the fact that arbitration has become, and is, an indispensable part of international commerce[1]. What originally emerged as an alternative to the court and litigation process has slowly gained currency and has now become an integral part of the dispute resolution process. Not just that, it has expanded beyond its original scope of arbitration and now encompasses various methods of dispute resolution. It is for this that some experts, including the RT Hon’ble Justice Sundaresh Menon, Chief Justice of Singapore, now prefer to refer to the term ADR as that which stands for “Appropriate Dispute Resolution[2].”
  3. We are once again at the threshold of a new beginning. The implementation of the Belt Road Initiatives will bring with it, a unique set of opportunities and challenges, which need to be addressed to ensure the relevance of ADR and its contribution to the success of the belt road initiative. Development or change of the ADR mechanism as a response to the Belt Road Initiatives must be sustainable and built on a solid foundation of awareness, training, collaboration and innovation that is uniformly spread across all regions.

China's future megaproject

Elements for Growth and Development of Legal System

  1. Resistant to change is the biggest battle in any transformative process. Generally, the elements needed within a legal system that would ensure the kind of economic development and growth I refer to, are as follows: (i) reliable hearing by a “nation’s national courts [to] honor written arbitration agreements and refuse to hear claims within the scope of an arbitration agreement, (ii) “clearly defined and limited possible occasions of judicial involvement in arbitration proceedings, and (iii) reliable recognition and enforcement of arbitration awards without reviewing or “second guessing” the merits of the award[3]. All of these factors would ensure that there is an effective ‘business climate and reputation of the nation as a preferred destination for foreign direct investment’ which in turn would lead to growth in economic and social aspects in the nation. All this would also ensure the growth of laws in tandem with the belt road initiatives. It has been established that only nations that have well established laws and a reliable legal system can be involvement with the efficient administration and enforcement of legal judgments, particularly arbitration disputes. To this equation, I would like to add the fourth most crucial element which is, an inclusive, dynamic and innovative arbitral practitioners fraternity and institutions that cements the other three elements together.
  2. The development of arbitration along the belt road should also be balanced between the “fast followers” and the “first movers”. The differences, especially due to the financial situation in one country and another, are huge. It is necessary to move forward along, keeping track of the new improvements and rushing to avoid being behind the tail of the tiger. This geopolitical and financial difference in Asia and other regions is a fact to be demarcated and addressed properly, to uniformly grow, and not only in arbitration but in all forms of ADR that serve both the domestic and international market. Although arbitration still remains the most preferred form of dispute resolution, the future is towards a more inclusive and solid ADR framework. Laying the foundations of and growing an arbitration regime in any region cannot be a homogenous process. Therefore, success of ADR/Arbitration lies in the stakeholders understanding the differences and implementing them accordingly.
  3. It is not just the responsibility to acknowledge and take charge of their changing role but also bear in mind that growth and development will precipitate an increase in the responsibility that comes with this. This responsibility should be borne individually and collectively.
  4. Legal development and economic development go hand-in-hand[4]. Cultivation of a conducive business climate and regulatory framework help to expand the reputation and development of the individual nation. Countries like Singapore, Malaysia and more recently countries like Philippines stand testament to the same.

Regional Perspective

  1. From a regional point of view, it is paramount to consider the status of other South East Asian nations. Cumulatively, the amounts of FDI that goes into the ASEAN region make it in the largest recipient of FDI in the world. This has generated a high demand for efficient and high-level centres for the alternative resolution of disputes. Many nations including Philippines have become very active in terms of reviewing and/ or updating their local arbitration law. Stepping up for the international spotlight, these nations regularly oversee their internal practice is at the level of and adapts to international needs and standards. The success of ASEAN serves as a good model for the Belt Road Initiative and it is hence that this conference is of paramount importance. All ASEAN nations stand to play a crucial role in the success of the Belt Road Initiatives.
  2. Now, ASEAN member states, practitioners and ADR institutions should no longer just be a dispute resolution service provider, but must transcend boundaries to play a more proactive and dynamic role. Apart from being innovators, the role is to become that of “integrator.” Despite the different jurisdictions, in the past, the success of the arbitration has been on the basis of UNCITRAL or the focus on “harmonization.” The focus now should be that of integration between the regions, particularly in the field of dispute resolution.
  3. Along with all development, comes a need to ensure awareness of these developments, capacity building and collaboration to establish a network of dispute reolution centres across the belt road route. There should be a continued focus on dispute resolution rules tailored to the specific needs in the jurisdiction. This indicates a need for specialised training and perhaps standardized accreditation of such practitioners. Capacity building and inter-regional co-operation will be the clear and decisive indicators of the continued success of alternate dispute resolution in ASEAN and other regions that are members of the Belt Road initiative. The quest for global credibility can only be achieved with this continued focus on development and expansion and development that is not just rapid but also sustainable.

Unification of Laws and Policies

  1. Unification of law such as UNCITRAL Model Law and NYC have now been elevated with policies like the ASEAN Community and with soft instruments such as the Chartered Institute of Arbitrator guidelines, IBA Guidelines on conflict are all responses from practitioners to further unification. Such mechanisms should not just be adopted but also be modified to fit the unique demands of the region. Taking an active role in creating soft law such as the IBA Guidelines, CIArb guidelines is also a huge step in promoting this knowledge sharing and creating a uniform standard that keeps in mind that the formula for ADR can never be “one size fits all.” Already, developments in the fields of negotiation and mediation have taken the forefront. The recent UNCITRAL Convention on the ENFORCEMENT of Meditated Settlements are yet another positive step to accommodate the changing landscape of dispute resolution.
  2. I draw inspiration from a study conducted by the University of Pepperdine which was titled “Living with ADR: Evolving perceptions and use of mediation, arbitration and conflict management in fortune 1000 corporations.” The fascinating study titled the original spurt of arbitration as the “Business Arbitration Revolution.” Thereafter, from the late 90’s, it characterized the evolution of arbitration as “ Quiet revolution” which indicated a shift in the attitude and mindset change in the perception of ADR. The present era is being referred to as the “judicialized arbitration era”. To this I would like to add, that with initiatives such as the One Belt One Road, the evolution of arbitration should be characterized in the coming years as the “Sustainable ADR Era” revolution.
  3. Countries, Institutions, Organizations and stakeholders should not just be actively involved in this transformative process, but should become part of the transformation in itself. The accelerating pace of change that the Belt Road Initiatives will bring with an inevitable need of identifying best practices, collaborations and capacity building to achieve not just harmonious development of ADR but a harmonious implementation of the ADR regime in different regimes. As one of the topics in the conference is set to explore, the role of Arbitral Institutions in this development will also be crucial.
  4. Not many years ago, the vision by a certain group of stakeholders that International Arbitration would permeate the fabric of legal society across the world was met with reluctance, doubt and some times event contempt. Yet as the world stands today, Arbitration and ADR have permeated the fabric of most nations across the world. Similarly, the belt road initiatives might seem ambitious, but time will soon ensure that it permeates all aspects of world trade including Alternative Dispute Resolution. It is here that while embracing the development, there is a need to maintain balance between regional interests, international harmonization and overall development, while remaining true to the foundation of ADR. It is for this reason, that I urge today, that development must be transformative and sustainable for it to be successful.
  5. It is also the most opportune moment for me to reiterate that while challenges will arise, it is not insurmountable as can be gleaned from our past. It is the focus on the core principles, cooperation, innovation and development that will pave a definite way to continue the success of ADR in the coming era.
  6. Luke Nottage in a research paper coined the term “Glocalisation” to describe commercial arbitration. This loaded word encompasses the spirit of international arbitration as it stands today, the harmoniser and harbinger of globalisation with localisation. The Belt Road Initiative will bring about the “glocalisation” of ADR and ensure that the new wave of ADR is inclusive and also one that permeates within its boundaries and across the world.
[1] (1. ICC on arbitration: http://www.iccwbo.org/products-and-services/arbitration-and-adr/arbitration/; 2. ‘arbitration has become exceptionally strong and widely accepted as a means of resolving disputes’: Advantages Of International Commercial Arbitration by Maurice Kenton and Peter Hirst, Clyde & Co, http://www.mondaq.com/x/416416/international+trade+investment/Advantages+Of+International+Commercial+Arbitration
[2] (GLOBAL POUND CONFERENCE SERIES 2016 – SINGAPORE “SHAPING THE FUTURE OF DISPUTE RESOLUTION & IMPROVING ACCESS TO JUSTICE”, 17 March 2016, The Honourable the Chief Justice Sundaresh Menon, http://www.supremecourt.gov.sg/Data/Editor/Documents/[Final]%20Global%20Pound%20Conference%20Series%202016%20-%20'Shaping%20the%20Future%20of%20Dispute%20Resolution%20%20Improving%20Access%20to%20Justice'.pdf).
[3] (Philip J. McConnaughay, The Role of Arbitration in Economic Development and the Creation of Transnational Legal Principles, available at: http://www.pkulaw.cn/fulltext_form.aspx?Gid=1510130988&Db=qikan).
[4] (‘As cross-border trade and investment continue to expand in Asia, the need for neutral and reliable dispute resolution systems will grow in tandem’, pp. 3-4, The SICC Handbook).

© 2018 Ram Di Mitr

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