Different legal regimes may have very different procedural approaches in dispute resolution mechanisms. In international arbitration, such diversity is even more obvious and sometimes can even have a genuine impact on the outcome of the case. This article aims to give a brief introduction regarding the differences between international arbitration (common law based) and Chinese domestic arbitration.
Generally speaking, key differences between international arbitration and Chinese mainland arbitration may be seen in writing approach, disclosure, cross-examination, hearing duration, interim measures and the way to direct the arbitral tribunal.
1. Writing Approach
In Chinese mainland arbitration proceedings, the parties are used to follow their own roadmap and write their own story to argue the case.
But in international arbitration (especially common/English law based), any reply (statement of defence, reply, rejoinder, surrejoinder, etc.) generally follows the roadmap of its previous counterpart and replies on a “paragraph-by-paragraph” basis.
Besides, in international arbitration, it is very common that the parties submit quite long written submissions, with a suggested reading time around several hours or even half/one day. However, in Chinese mainland arbitration, parties tend to submit much shorter written submissions. We may suggest that it’s better to limit a piece of written submission within 20 pages.
In Chinese mainland arbitrations, normally, parties will only voluntarily submit materials which are favourable to their own case. However, in many international arbitration proceedings, disclosure is widely used, under which parties shall not only disclose their own “evidence”, but all the “materials” associated with the case. This means that the parties may even need to disclose materials against themselves.
This difference is quite substantial and critical. Clients may need assistance from their counsels to help them fully understand the essence and importance of this procedure. It is imperative to make sure that Chinese clients understand that if they do actually hold the materials but still refuse to disclose the relevant materials, this kind of action may cause negative suspicious attitude from the tribunal, which is very likely to put that party in a more disadvantageous position.
In Chinese mainland arbitrations, the factual background of cases is generally narrated by counsels in their legal writings supporting by the related documentary evidence. While the technical problems in the case are usually demonstrated by way of submitting written expert reports. However, expert witnesses are very rarely called to the hearing and take the stand. But in international arbitration, there is a higher probability for factual witnesses and expert witnesses to give testimony in person during the hearings and cross-examination is widely used.
Counsels should help their domestic clients to get used to mechanism of cross-examination and help their clients to understand the importance to build up credibility during the cross-examination process.
4. Hearing duration
There are two kinds of hearing modes in international arbitration cases: document-only or oral hearing. Document-only hearing applies to simple cases in which arbitral tribunals can hear cases just in accordance with the arbitration documents and the attached written evidences submitted by both parties. If an oral hearing is used, quite often, the hearing may last for several days.
However, in Chinese mainland arbitrations, tribunals usually adopt the oral-hearing mode but he length is much shorter — a half-day oral hearing is more common though, in some cases, the hearing can last for one day.
Time allocation is also an essential element when set forth the advocacy strategy. Having a proper estimation regarding the hearing duration may help the parties to fully address their arguments in the limited time frame.
5. Interim measures
In many jurisdictions, when it comes to international arbitration proceedings, an arbitral tribunal has the power to issue orders to grant interim measures. However, under Chinese law, an arbitral tribunal does not have such power and all it can do is to transfer parties’ application for interim measures to competent courts. Besides, while courts in some jurisdictions are willing to enforce an interim order issued by a foreign-seated tribunal, Chinese courts are more reluctant to do so. However, some updates have been seen recently.
Under Chinese law, if necessary, parties can apply for property preservation. Parties can apply for preservation before or during the arbitration proceedings. It shall be noted that if the applicant fails to apply for arbitration within 30 days from the adoption of preservation measures by the competent Court, the competent Court shall discharge the preservation.
Where a party applies for property preservation, the arbitration commission (i.e. arbitration institution) shall submit the application to a competent court. Where there is a wrongful application, the claimant shall compensate the respondent for losses incurred during the property preservation procedures.
In Chinese mainland arbitrations, if the party makes an application for property preservation, which is submitted to a competent court by the arbitration institution, the local court (the courts of the first instance) of the domicile of the respondent or the locality of the properties shall decide the case and enforce the property preservation order.
In foreign-related arbitrations, if the party makes an application for property preservation, which is submitted to a competent court by the arbitration institution, the intermediate people's court of the domicile of the respondent or the locality of the properties for which preservation is applied shall decide the case and enforce the property preservation order.
Under Chinese law, where evidence is vulnerable to being destroyed or lost and would be difficult to recover, the parties may apply for the preservation of the evidence.
In Chinese mainland arbitrations, where a party applies for evidence preservation, the arbitration commission shall submit the application to a competent court of the locality of the evidence.
In foreign-related arbitrations, the foreign-related arbitration commission shall submit the application to a competent intermediate court of the locality of the evidence.
Other Interim Measures
There is no specific provision of interim measures except for property preservation and evidence preservation under Chinese law. If parties apply for property or evidence preservation in accordance with Chinese law, arbitration commissions shall submit the application to a competent court which has the jurisdiction (the arbitral tribunal has no power to make the decision).
Meanwhile, an arbitral tribunal can make decisions pursuant to the specific rules made by the arbitration commission regarding those interim measures that are not provided in the law. However, such decisions have been extremely rarely seen in the real practice.
Recent support to interim measures from the China International Commercial Court
As for interim measures ordered by foreign-seated tribunals, very rare case has been seen that such measures have been recognized and enforced by Chinese mainland courts. Therefore, the prevailing view is that although mainland courts may have discretion in supporting such interim measures, they are more reluctant to do so.
However, some support has been seen in this regard from the China International Commercial Court. On 1 July 2018, the Regulation on Several Issues regarding the Establishment of China International Commercial Court came into effect. Under article 11 of the regulation stipulates that the Supreme People’s Court chooses a group of qualified international commercial arbitration institutions while article 14 further states that if parties choose arbitration administrated by the selected international commercial arbitration institutions selected according to Article 11, they may apply to the International Commercial Court for evidence, property or injunction (behaviour preservation) before or after the commencement of the arbitration proceedings.
These provisions show the support from the China International Commercial Court regarding recognition and enforcement of interim measures issued in the proceedings of international arbitration under Chinese law. Therefore, one could expect that a certain type of interim measures issued in foreign arbitration proceedings may be enforced in China in the near future.
6. The way to direct the arbitral tribunals
In international arbitration, the parties and arbitrators are usually from different jurisdictions and have different social, cultural, and legal backgrounds. Therefore, there are many cases where an arbitrator from another different jurisdiction is not academically and professionally trained under the governing law jurisdiction but is just familiar with the relevant law. In such cases, the way counsels direct the arbitral tribunals may very likely substantively affect the final result of the case.
In Chinese mainland arbitrations, in most situations, arbitrators have the same background with the parties and counsels. Therefore, counsels may just quote some basic principles without further detailed illustration regarding the principles. However, in international arbitrations, more often, people come from different legal regimes where some basic legal principles may be totally different. As a result, sometimes, it is imperative for counsels not to take for granted that the arbitrators are fully understand the legal principles in the related jurisdiction and to give more detailed illustration and analysis on basic legal principles
For example, while the principle of good faith is the cornerstone and widely recognized by Chinese law and many civil law regimes, such principle is not recognized in many common law countries. Therefore, although a quick reference of this principle in Chinese mainland arbitrations is sufficient to draw attention from the tribunals, such brief quote in international arbitrations (especially when the arbitrators come from common law regimes) may cause serious misunderstanding.
Hence, when applying the principle of good faith and when the arbitrators are from common law countries, it is necessary to further explain the principle in detail. First, emphasize that such principle is recognized (quote some articles in codified law). Then, illustrate how such principle should be applied in the current case. In this way, counsels can direct and assist the arbitrators to understand the principle in a right way and then apply the principle to the case in the related jurisdiction.
The above mention situation is one example. Actually, many international commercial disputes involve disputes of different understanding regarding law and commercial practice, which are closely related to the social and cultural backgrounds of a particular region. Counsels should not only advocate for law but also act as bridges to fill gaps among different backgrounds and direct arbitral tribunals to understand the corresponding issues based on the relevant background.
The above-mentioned points are several critical points relating to the different case management approaches between international arbitration and Chinse domestic arbitration. Of course, given the limited space, the list is not exhausted and different practitioners may have different personal understandings and views on this issue.
Nevertheless, it is imperative to keep in mind that counsels should not only focus on the case itself, but also need to be aware that they are bridges between different cultures and jurisdictions, bridges between the arbitral tribunals and the client, and playing a positive role in communication and guidance among these parties.