5 May 2017
Under terms of the Belt and Road Initiative, the 60 or so countries that fall within the plan’s geographical remit are expected to benefit from an enhanced investment environment and streamlined trade arrangements. In practical terms, this will manifest in a number of jointly-developed Free Trade Zones, an expansion of existing trade activities, and moves to nurture trade in services and cross-border e-commerce. Overall, the Belt and Road is expected to set a new high water mark in terms of cross-border business activities, with an accompanying rise in the number of international commercial disputes.
Typically, these cross-border trade disputes revolve around such issues as breach of contract, quality-control problems, deferrals and difficulties related to customs procedures. Under established practices, such disputes are settled via expensive and time-consuming litigation, often across several jurisdictions.
Daniel Ying is a general mediator who has spent the last two years offering on-site arbitration services at the Canton Fair, China’s largest trade event. Two years ago, the fair – formerly known as the China Import and Export Fair – was chosen as the pilot zone to test a new initiative, one designed to settle cross-border trade conflicts between Chinese mainland companies and their overseas counterparts through an internationally-accepted mediation framework.
Under terms of this initiative, mediation is the first step for all parties concerned. Should this prove successful, the two sides then sign a settlement agreement before applying to a mainland arbitration court to endorse the arrangement. Once this step has been completed, the agreement is considered binding on all relevant parties under the terms of the New York Convention, an agreement covering the recognition and enforcement of foreign arbitral awards recognised by some 65 countries. Combining aspects of mediation and arbitration, this legally-binding model has proved highly effective in resolving trade disputes. As such, it is seen as a fast, effective and low-cost platform for resolving cross-border disputes between the mainland and its overseas trading partners.
According to Mr Ying, this globally-accepted model of facilitative mediation is very different to the form of advisory mediation favoured on the mainland. The international model focuses more on enabling all parties concerned to make their own decisions and evaluate their own situation, constantly facilitating communication between the various sides, while promoting an understanding of each other’s needs and perspectives. The mediator then guides the parties to discussing, creating and expanding upon feasible solutions, while gradually addressing any difficulties.
Once both parties reach a settlement, the mediator helps draft and formalise the final agreement. Overall, the mediation process is based on the principles of voluntariness, neutrality and confidentiality and looks to resolve the immediate conflict while fostering a long-term relationship between the parties.
According to Mr Ying, many of the overseas businesses that engaged the services of the Canton Fair arbitration centre welcomed dealing with a Hong Kong-based mediator, who is seen as a highly trustworthy route for resolving trade-related issues. Overall, Hong Kong service providers are seen as having had greater exposure to the international business environment, a clear asset when dealing with such situations.
Rising Demand for Dispute Resolution
As the Belt and Road and the mainland’s going-out initiatives continue to roll out, demand for cross-border dispute resolutions will inevitably rise. Addressing this issue, Hong Kong Secretary for Justice Rimsky Yuen told the Legislative Council’s Panel on the Administration of Justice and Legal Services in 2016 that every effort will be made to actively promote Hong Kong’s legal and dispute resolution services. It is hoped that this will encourage mainland businesses and those based in countries within the scope of the Belt and Road Initiative to use the services of the relevant Hong Kong professionals whenever the need arises.
Mr Yuen also committed Hong Kong’s mediation bodies to establishing a wide-ranging dialogue with their mainland counterparts in order to enhance the effectiveness of all concerned. Overall, he believes the extensive experience of Hong Kong’s international facilitative mediation service providers perfectly complements the mainland's arbitration-based cross-border commercial dispute resolution services and mechanisms. He also hoped that more companies operating in markets along the proposed Belt and Road routes will choose the mediation plus arbitration model to resolve commercial disputes, believing it will help mainland companies that are participating more fully in global business.
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