Author: Yarden Hodes
Choice of Forum/Place of Proceedings
Dispute Resolution and Litigation
China’s trillion-dollar infrastructure and development project, the One Belt One Road (OBOR) initiative, raises new and significant questions on the nature of international arbitration, and who controls specific dispute resolution issues. The inevitable rise in claims associated with the One Belt One Road initiative predicate a power struggle between not only those countries directly involved, but also between the multitude of private funders and international viewers who stand to be impacted by such decisions. A particularly potent issue for observers in the international arbitration community is who should have the right to resolve disputes related to these infrastructure projects. Especially when dealing with countries that have not demonstrated fair corporate, social, or legal practices, such as China, it becomes more difficult to mitigate these issues.
The sheer size of China’s One Belt One Road initiative explains why so much attention now surrounds the project. OBOR, which was announced in 2013 by Chinese President Xi Jinping, envisions a contemporary version of the old Silk Road that would link China, its Central Asian neighbors, Europe, the Middle East, and Africa. The scope of the project, which aims to link more than 70 countries with an estimated cost of 1.3 trillion US dollars over the course of the next eight years, will undoubtedly result in a host of long and costly legal disputes. Furthermore, the cross-border nature of the initiative is sure to increase the complexity and duration of these proceeding, as decisionmakers will have to weigh a diverse set of laws from multiple jurisdictions and legal regimes. Each of the various parties involved has their own idealized form of resolution for disputes related to the OBOR Project. Unsurprisingly, these parties have conflicting interests and goals. How the parties resolve these issues will play an important role in Asia’s influence over the international arbitration landscape.
The One Belt One Road initiative, which is now enshrined in the Communist Party’s constitution, is part of China’s bigger plan to “march westwards” and become a formidable actor on the global stage. Given the nature and objective of its investment, it is no surprise that China aims to retain significant control over the dispute resolution forum as well as promote the use of its native language. That is exactly what China proposed when it announced the opening of “courts” in Beijing, Xi’an, and Shenzhen. On the other hand, foreign investors naturally seek a neutral arbitration forum, and within a jurisdiction of their own choosing. Thus, displacing these forums with a Chinese government-controlled court system may lead to a deterrent effect on future investment.
For foreign investors, arbitration offers unique benefits not otherwise guaranteed by the Chinese court system. To name a few, international arbitration is conducted in a neutral forum with arbiters who typically have expertise in the subject area, which contributes to the efficiency and fairness of the proceedings. Additionally, parties can stipulate for protections such as confidential proceedings; and, judgments are by and large enforceable in state court. Moreover, because international arbitration was formed and has been dominated by the west, the standard proceeding is conducted in English. Despite the benefits that modern international arbitration offers to foreign investors, not all arbitration forums are created equal. This is particularly true of the leading Chinese arbitration institutions, which lack many of the protections that initially attract parties to arbitration in the first place. For example, many of the Chinese arbitration forums, such as the China International Economic and Trade Arbitration Commission (“CIETAC”), are government-run. This differs from traditional international arbitration forums, which are run by the parties. Additionally, Chinese Arbitration Law and Civil Procedure Law create hurdles for parties attempting to enforce these judgments. For example, unlike the European model, Chinese courts are not bound to enforce interim measures or injunctions decided by these tribunals. Furthermore, other Chinese arbitration institutions, such as the China Africa Joint Arbitration Center in Johannesburg (CAJAC), present its own set of problems. CAJAC was created specially to deal with Chinese-African disputes, meaning these tribunals likely don’t have the capacity or expertise to deal with One Belt One Road issues.
The type of forum selected to adjudicate One Belt One Road disputes is a delicate and important issue impacting a wide array of stakeholders. The complexity and scope of the project will inevitably lead to multifaceted claims that have the potential to shape the international arbitration landscape for years to come. While the Chinese government seeks to control the disputes through its state-run court system, international investors are likely to prefer traditional arbitration tribunals. For the reasons stated above, these investors should consider the implications of turning to Chinese arbitration forums, and instead bargain for dispute resolution at established institutions such as the SIAC, HKIAC, or ICC.
 See Belt and Road Dispute Resolution, ICC Chamber of Commerce (last visited Mar. 5, 2019), https://iccwbo.org/dispute-resolution-services/belt-road-dispute-resolution/; Quentin Pak, One Belt, One Road: Legal finance and the rise in dispute resolution, Burford (Oct. 23, 2018), http://www.burfordcapital.com/blog/one-belt-one-road-legal-finance-dispute-resolution/.
 Arbitrators share views on Belt and Road and more, Global Arbitration Review (June 14, 2018), https://globalarbitrationreview.com/article/1170568/arbitrators-share-views-on-belt-and-road-and-more.
 Jane Perlez, China Looks West as It Bolsters Regional Ties, The N.Y. Times (Sep. 7, 2013), https://www.nytimes.com/2013/09/08/world/asia/china-looks-west-as-it-strengthens-regional-ties.html?module=inline/; Huileng Tan, China wrote Belt and Road Initiative into the party constitution. That makes it riskier than ever, CNBC (Oct. 31, 2017), https://www.cnbc.com/2017/10/31/china-wrote-belt-and-road-initiative-into-the-party-constitution.html
 Supra note 2.
 See The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 84 Stat. 692. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards is a United Nations convention with 159 parties and 24 signatories. Signatories to the convention pledge to give effect to private agreements to arbitrate and to enforce arbitration judgments in state court.
 See CIETAC Issues New Arbitration Rules: Interim Measures and Consolidation Among the Highlights, Jones Day (Apr. 2012), https://www.jonesday.com/cietac_issues_new_arbitration_rules/#.
 Supra Note 2.