Dispute resolution provisions within AIIB contracts

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The Asian Infrastructure Investment Bank (AIIB) was created in 2015 with clear aims to support the building of infrastructure and establishment of multilateral developing agencies in the Asia-Pacific region. For stakeholders with the AIIB, the risks of entering into disputes in the course of investing, trading and fulfilling contracts are inevitable. This calls for ample attention when drafting dispute resolution provisions.

International investment and trade challenges

First, legal systems among AIIB member states vary drastically. The jurisdictions of AIIB member states run from civil law to common law and Islamic law. The difference are exacerbated in areas which the AIIB focuses on: infrastructure and investment.

Second, member states may not recognize and enforce foreign judicial awards. After undergoing a torturous litigation process in the investing state, a transnational investor may find the enforcement of the judicial award completely dependent upon the assistance of a foreign court, which further hinges on the differences between the judicial systems and the existence of a Foreign Assistance Arrangement between the two states. The enforceability of judicial awards is therefore subject to immense uncertainty.

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Yang Rui is a case manager at Beijing Arbitration Commission/Beijing International Arbitration Centre. BAC/BIAC’s intern, Joshua Ngai Jun, also contributed to the article.