Chinese enterprises are increasingly active in international trade and investment under the Belt and Road Initiative (BRI). Faced with ensuing cross-border disputes, more of them choose to settle conflicts through international arbitration. The 2021 International Arbitration Survey by Queen Mary University of London and White & Case found that 90% of respondents opted for arbitration as their preferred method of resolving international disputes.
But international arbitration is procedurally complex and quite different from domestic arbitration, so enterprises need to know how to use the various tools in international arbitration to best advantage in dealing with international business and legal matters. This article discusses the main process and key points of international arbitration, providing references to formulate dispute resolution strategy.
Overview of basic process
Depending on the nature of individual cases and applicable arbitration rules, arbitration procedures may vary. But generally, the process includes the following steps.
Claimant submits notice of arbitration (also nominates arbitrator) → respondent submits statement of reply (also nominates arbitrator) → forms a tribunal, holds procedural meeting and issues procedural order no. 1 → claimant submits detailed statement of claim → respondent submits statement of defence → document production → one or two rounds of submission of witness testimony and expert report → submission of hearing documents, including hearing bundles, dramatis personae, chronology of events and outline of opening statement → evidentiary hearing, mainly examination of factual and expert witnesses → tribunal issues arbitral award.
Selection of arbitrators
There is a well-known saying in the arbitration community: “An arbitration is only as good as the arbitrator.”
Unlike in domestic arbitration, most international arbitration institutions adopt an open roster of arbitrators, meaning that parties can freely choose the arbitrators they think fit, even if they are not on the arbitration institution’s panel of arbitrators. It should also be noted that although international arbitration procedure prohibits a party from unilaterally contacting an arbitrator, a party is allowed to interview a prospective arbitrator for the purpose of selecting arbitrators.
According to article 8 of the Guidelines on Party Representation in International Arbitration developed by the International Bar Association (IBA), a party representative may communicate with a prospective or appointed party-nominated arbitrator to determine his or her expertise, experience, ability, availability, willingness, and whether there are potential conflicts of interest. An interview with a prospective arbitrator helps assess whether the arbitrator is fit for the case and ensures a professional and impartial hearing of the dispute.
Document production is a key step in international arbitration, especially those with complex facts. Document production refers to a process where a party discloses the documents in its possession, or control to the other party on request, either voluntarily or on the order of the arbitration tribunal.
Since document production is not part of domestic litigation or arbitration, and documents required to be disclosed may disadvantage the disclosing party, in practice, some parties may attempt to refuse to disclose, or conceal or destroy, requested documents. Once such an act is discovered, the arbitration tribunal may take punitive measures including drawing adverse inferences on related facts, and deciding that the party violating the order of document production bears the relevant arbitration costs. At this step, parties must therefore fully communicate with their attorneys, assess possible legal consequences of the document disclosure, and adjust strategy in a timely manner.
To the extent allowed by relevant laws and rules, parties could also try to reject the request for document production according to the circumstances of each case, including invoking privileges, restrictions on outbound data transfer, and other grounds within the legal framework.
Witness testimony and hearing
Unlike domestic litigation and arbitration, which attach great importance to written evidence, in international arbitration witness testimonies often constitute the core evidence, playing a vital role in fact-finding. Accordingly, hearings in domestic litigation and arbitration focus on cross-examination of written evidence and oral debate in court, while international arbitration focuses on the hearing of evidence through the examination of witnesses.
As a matter of fact, cross-examination of witnesses takes up the vast majority of hearings, which commonly last over a week in international arbitration, much longer than in domestic cases.
Examination of a witness is generally in three parts: examination-in-chief, cross-examination, and re-examination. In examination-in-chief, the attorney representing the party asks their witness to provide clarification on particular matters, if any. Next, in cross-examination, the witness is cross-examined by the other party’s attorney, generally with “leading questions” requiring the answer “yes” or “no”. Finally, the attorney representing the party may re-examine their witness to clarify any points made in cross-examination.
As domestic litigation and arbitration generally do not require witnesses to appear in court, Chinese parties often lack experience in giving testimony, which may lead to some problems such as false or contradictory statements due to unfamiliarity with the facts or examination process. These problems may undermine the credibility of the witness or expose the facts against the calling party.
Therefore, when preparing for the hearing, on one hand it is necessary to select the most suitable witnesses, according to case circumstances and the ability of witnesses to express themselves. On the other hand, to the extent that the law and rules allow, it is also important that the witness is properly prepared by an attorney with regard to the hearing procedure and other matters that need attention.
The above-mentioned is just a summary of several key issues in the international arbitration process, and many other points require attention. It is therefore highly recommended that before participating in the arbitration process, parties should know the applicable procedural law and evidence rules, to take the greatest possible initiative in procedural matters.