Regional commercial arbitration for the new landscape

By Cheng Wen, Langfang Arbitration Commission

With the global disposition of Chinese enterprises in recent years and various Chinese regional strategic development policies being put into place, the arbitration industry is also welcoming a brand new development situation.

To create an agglomeration of world-class cities with Beijing at its core is the overall positioning and overarching objective of the co-ordinated development of Beijing, Tianjin and Hebei. As this development idea becomes a state strategy, it has become one of China’s most closely watched developing regions. Located here are some of China’s premier science and technology, cultural and talent resources, and financial institutions. The headquarters of enterprises under the central government are also concentrated here.

Deputy Director and Secretary-General
Langfang Arbitration Commission Board

Following in the footsteps of the Shenzhen Special Economic Zone and Shanghai Pudong New Area, the development of the Hebei Xiongan New Area is another project with national significance. The co-ordinated and joint development of the Beijing-Tianjin-Hebei and Beijing-Tianjin-Xiongan regions is accelerating, creating opportunities for the realization of co-operative and win-win situations for market entities, and bringing inspiration and prospects for enterprises in those regions to go global.

Under the new economic situation – boosted by such factors as the Belt and Road Initiative, international production capacity co-operation, the development of bi-directional investment, the establishment of aviation logistics, industrial parks and smart cities, and the promotion of internet finance, e-commerce and artificial intelligence technologies – a new situation is gradually taking shape in the business investment market. Particularly under the current situation, where global capital flows are slowing down, overseas investments by Chinese enterprises have continued to maintain healthy growth.

In such an economic tableau, Chinese enterprises, while contributing Chinese wisdom to the transformation of the global governance system, will also face various substantial legal risks in their cross-border investments. Subject to respecting international rules and various countries’ laws and regulations, the protection of one’s investment interests to the greatest extent possible is a common issue faced by Chinese enterprises and international foreign-related legal service persons. And the resolution of disputes arising in connection with investment is perpetually one of the most prickly issues.

The resolution of disputes in the business investment sector is a specialized and systematic task, and arbitration, due to such features as its efficiency, flexibility, confidentiality, enforceability, etc., is looked favourably upon by many investing entities.

With the increasing number of Chinese enterprises going global, and the bringing in of foreign funds and technologies, the arbitration cases arising in connection with investments with these international (foreign-related) elements have become key service content of commercial arbitration institutions in the Beijing-Tianjin-Hebei region.

Particularly since 2017, the Supreme People’s Court has, through the issuance of a series of judicial documents, endeavoured to create a judicial environment in China that supports arbitration and increases the confidence of parties to international arbitration in China’s arbitration system and judicial environment. The move by the Supreme People’s Court to establish international commercial courts further provides a paradigm for the “one stop” organic integration of international commercial arbitration and the Chinese judiciary.

Additionally, an increasing number of arbitration institutions are attempting to create innovative arbitration mechanisms and enhance their own capabilities. The Langfang Arbitration Commission in the Beijing-Tianjin-Hebei region (Langfang) for example, is satisfying users’ demand for efficient and economical arbitration through a sound and rapid procedure and a small-charge system. Through the establishment of a professional and international panel of arbitrators and the revision of the arbitration rules, it has, to the greatest extent possible, maintained consistency with common international practice. And through the creation of an online arbitration case system, voice trial hearing system and cloud security, it has tried for a multi-faceted, full-time, comprehensive service platform. While realizing arbitration that services the area, it is satisfying the demand for handling foreign-related cases and the demand for servicing such specific areas as Xiongan New Area.

An increasing number of parties are showing their favorable acceptance of arbitration. Among the cases that have been accepted by Langfang to date, those in which the parties have executed an arbitration agreement or supplementary arbitration terms at short notice account for 36.3 % of all accepted cases.

The cross-industry and cross-regional development of commercial activities has caused the source of parties in arbitration institution cases to far exceed the boundaries of the cities where they are located. The maintenance of institutional neutrality and the enhancement of their professional capabilities have allowed arbitration institutions to establish mutual trust with a greater number of parties. Taking Langfang as an example, 32% of parties in accepted cases currently come from outside the city where the commission is located.

Additionally, international (foreign-related) elements in regional commercial arbitration are continuously increasing. The resolution of disputes arising in connection with investments in the region, particularly those with international elements, has drawn the close attention of the commission (for example, disputes between investors and governments, particularly concerning such issues as tax subsidies, preferential policies, environmental protection, etc.). With the improvement in state laws, policies have also undergone changes, which necessarily has an impact on enterprises. For local governments, how to address the above-mentioned issues in the course of policy revisions also presents numerous headaches. Actively servicing domestic and foreign users, and extensively carrying out research on the resolution of regional disputes, have allowed arbitration institutions to enhance their capabilities while resolving issues.

Under the new situation of governing the country in accordance with the law and promoting multi-faceted opening to the outside world, and by relying on major strategies, such as the Belt and Road, and policies on regional development, regional arbitration institutions are actively exploring the path of international development. While strengthening exchanges and co-operation with international institutions, arbitration institutions need to continue innovating arbitration development ideas, strengthen the development of equipment and soft power, and attract high-end talent. Under the new economy characterized by global co-operation and built on consultation, collaboration and sharing of benefits, regional arbitration institutions will more calmly meet the challenges faced by legal and business circles in different legal jurisdictions and against different cultural backgrounds.

Cheng Wen is deputy director and secretary-general of Langfang Arbitration Commission, and a member of the China Academy of Arbitration Law. She can be contacted on +86 31 6233 9717 or by email at [email protected]