China Justice Observer

中国司法观察

International Commercial Dispute Prevention and Settlement Organization: A Quick Overview

Thu, 15 Oct 2020
Categories: Insights
Contributors: Jian Zhang 张建

International Commercial Dispute Prevention and Settlement Organization (ICDPASO, 国际商事争端预防与解决组织

 

Today, 15 Oct. 2020, the International Commercial Dispute Prevention and Settlement Organization (ICDPASO, 国际商事争端预防与解决组织) has been established in Beijing, China. As a non-governmental international organization, ICDPASO will provide legal services including commercial arbitration, commercial mediation, investment arbitration and dispute prevention for countries/regions around the globe.

I. Background: innovation of the international commercial dispute settlement mechanism

The Opinions on Establishing ‘Belt and Road Initiative’ Dispute Settlement Mechanism and Organization (关于建立“一带一路”争端解决机制和机构的意见) (hereinafter referred to as “the Opinions”) was passed on the second session of the Comprehensively Deepening Reform Leadership Group of CCCPC on 23 Jan. 2018. According to the Opinions, in order to further improve the international trade/investment environment and safeguard the Belt and Road Initiative (BRI), it’s of significant importance to establish an international dispute settlement organization, as well as a diversified dispute settlement mechanism featuring a synergetic use of litigation, mediation, and arbitration.

For this purpose, with four-year efforts, the China Council for the Promotion of International Trade (CCPIT) successfully facilitates the establishment of ICDPASO. With the “NGO-initiated and government-supported” nature, ICDPASO is committed to becoming an international commercial dispute settlement organization catering to the BRI.

Compared with other existing international commercial dispute settlement mechanisms, ICDPASO is featured by the following innovation: (1) in addition to dispute settlement, ICDPASO also attaches importance to dispute prevention; (2) ICDPASO not only accepts international commercial disputes, but also disputes between investors and countries; (3) apart from arbitration, ICDPASO also values the role of mediation in dispute settlement.

II. The design of ICDPASO

1. Name of the organization: inclusiveness and openness

The naming of ICDPASO mirrors its service scope, that is, not only having an international perspective, but also focusing on commercial disputes. First of all, CCPIT excludes the expression of “the Belt and Road”, because ICDPASO is designed to handle disputes focusing on but not limited to those from countries along the BRI. Secondly, ICDPASO not only provides dispute settlement services such as arbitration and mediation, but also highlights the dispute prevention. Therefore, the official name is determined as “International Commercial Dispute Prevention and Settlement Organization”.

2. Nature of the organization: internationality and non-profit

Firstly, CCPIT hopes to highlight ICDPASO’s internationality and keep it from being regarded as a domestic institution exclusive to a certain country. In this sense, ICDPASO distinguishes itself from other existing arbitration institutions in China. 

Secondly, CCPIT wants to distinguish it from a company. With its non-profit nature, ICDPASO is an organization dedicating to serving the parties involved in international economic and trade, commercial and investment disputes, as well as preventing and resolving international disputes.

In addition, ICDPASO is not an intergovernmental international organization initiated by the government, which needs to be based on the international treaties signed by various countries and is therefore difficult to establish within the short term. Instead, it is a non-governmental international organization initiated by CCPIT (also known as China International Chamber of Commerce), which is obviously more feasible.

3. Service scope: arbitration, mediation and dispute prevention all in one

ICDPASO provides diversified dispute settlement mechanisms, such as commercial arbitration, investment arbitration, dispute prevention, commercial mediation, etc. This is reflected in the following aspects: firstly, it draws on the experience of traditional international dispute settlement institutions; secondly, it gives full play to the Oriental culture, that is, it values negotiation and mediation; thirdly, it introduces the dispute prevention mechanism.

ICDPASO hopes to overcome the operation problems of existing dispute settlement institutions, as well as to promote the development of international dispute prevention and settlement.

III. ICDPASO’s pursuit

1. Non-government

Compared with the International Center for Settlement of Investment Disputes, an intergovernmental international organization, ICDPASO enjoys a non-government nature and will be more impartial and more likely to win the trust of commercial entities.

CCPIT, the initiator of ICDPASO, is an NGO supported by the government. Although CCPIT provides talent resources and operation experience for the establishment and operation of ICDPASO, it will not interfere with the specific daily affairs of ICDPASO. ICDPASO will charge a certain fee for the cases it accepts, but this is not for profit-making but only for self-development purposes.

2. Internationality

The rules and principles of ICDPASO are of an international nature, which enables it to overcome some uncertainties in the existing Chinese laws.

There are a few differences between China’s arbitration system and the international arbitration system. However, ICDPASO can innovate its arbitration rules, especially, it can absorb international arbitration rules. In addition, ICDPASO allows the parties to choose to settle disputes in Chinese, English or other languages, thus facilitating legal practitioners from different legal systems.

3. Impartiality

ICDPASO pays full attention to the demands of developing countries and improves the impartiality of its dispute settlement mechanism.

At present, the international investment arbitration focuses more on safeguarding the interests of foreign investors, while sometimes neglecting the actual situation of host countries, especially developing countries. [2]

In view of this, ICDPASO will absorb more arbitrators, mediators and council members from developing countries, so as to give a greater say in developing countries in international dispute settlement.

At the same time, ICDPASO will also tactfully utilize prevention and mediation mechanisms to balance the interests of the parties and enhance the substantive fairness of the dispute settlement results.

It should be noted that in investment and commercial arbitration, ICDPASO has set up an optional appellate body, so as to minimize the adverse impact of the arbitrator’s personal factors on the arbitration results. This reflects its emphasis on the impartial settlement of disputes related to the public interest.

IV. ICDPASO’s business features

1. Valuing mediation

With full consideration of Chinese traditional culture “end the dispute and resolve the divergence”(定分止争) and “harmony comes first”(以和为贵), ICDPASO will give full play to mediation to promote the efficient settlement of disputes.

By contrast, most of the existing international dispute settlement mechanisms focus on “end the dispute” rather than “resolve the divergence”. In fact, this litigation-like dispute settlement mechanism goes against the original intention of arbitration institutions, [3]which is not conducive to the maintenance of sustainable commercial cooperation between commercial entities, especially unfavorable to the interests of SMEs in international disputes.

As the Chinese old saying “harmony comes first”, the dispute settlement mechanism in China has been focusing on mediation for ages. Based on the experience of mediation at home and abroad, ICDPASO innovates in mediation personnel, mediation procedures, and mediation rules, so as to ensure the neutrality, transparency, impartiality, and efficiency of mediation.

In addition, ICDPASO will also establish the connection and synergetic cooperation between mediation and arbitration, in order to overcome the disadvantages of a single dispute settlement mechanism and further improve the efficiency.

2. Appreciating prevention

ICDPASO attaches importance to dispute prevention, so as to greatly reduce the legal risk faced by international commercial entities.

The existing dispute settlement institutions pay little attention to dispute prevention. However, CCPIT hopes to establish a dispute prevention mechanism based on an in-depth analysis of the trade and investment rules of various countries, trying to reduce the occurrence of disputes from the source.

3. Cost saving

ICDPASO attaches importance to the control of time and cost.

In recent years, the cost and time of international commercial arbitration cases have increased sharply. By referring to ICC Arbitration Commission Report on Techniques for Controlling Time and Costs in Arbitration (2007), ICDPASO has made innovations in controlling time and administrative cost, such as the introduction of expedited dismissal procedures, emergency arbitrator procedures, the discretion of the arbitral tribunal on cost allocation, etc.

V. Conclusion

ICDPASO caters to the latest development trend of the international dispute settlement mechanism, makes up for the shortcomings of the existing dispute settlement mechanism, and therefore promotes the efficient and fair settlement of specific disputes.

In terms of vision and pursuits, ICDPASO insists on its non-government and non-profit nature, with government support; to gain the parties’ trust, its rules and principles are international-oriented; and to increase substantive fairness, it pays full attention to the interests of developing countries.

In terms of specific affairs, ICDPASO values the role of mediation in the dispute settlement mechanism, and innovates mediation rules and procedures; it attaches importance to the dispute prevention mechanism and highlights connection and synergetic cooperation among multiple dispute settlement mechanisms; it establishes new mechanisms to reduce the time and cost of the parties.

 

 

 

 

[1] 《关于建立“一带一路”争端解决机制和机构的意见》提出,要建立“一带一路”争端解决机制和机构,要坚持共商共建共享原则,依托我国现有司法、仲裁和调解机构,吸收、整合国内外法律服务资源,建立诉讼、调解、仲裁有效衔接的多元化纠纷解决机制,依法妥善化解“一带一路”商贸和投资争端,平等保护中外当事人合法权益,营造稳定、公平、透明的法治化营商环境

[2] See Fabien Besson, Racem Mehdi, Is WTO Dispute Settlement System Biased Against Developing Countries? An Empirical Analysis, available at https://ecomod.net/sites/default/files/document-conference/ecomod2004/199.pdf.

[3] See 杨玲:《国际商事仲裁程序研究》,法律出版社2011年版,第196-197页。

 

 

Photo by Claire Chang (https://unsplash.com/@claire_0912) on Unsplash

Contributors: Jian Zhang 张建

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