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Philip Yang: Prospects of Post Covid-19 dispute resolution mechanism for international commercial disputes

From:          Updated: 2020-12-23   

Editor's Note: The Second Seminar of the International Commercial Expert Committee of the Supreme People's Court and Appointment of New Members of the International Commercial Expert Committee was held successfully on December 8, 2020. The theme of this seminar is the Latest Developments of International Commercial Dispute Resolution Mechanism and the Research on Relevant Issues on International Law. The participants, on site or virtually, had discussions on the two topics, the Development of International Commercial Dispute Resolution Mechanism: New Situation and New Challenges and the Research and Application of International Law Related Issues in the Post-Pandemic Era, respectively. The texts of speeches delivered by the participants would be posted on the CICC's website. 

Prospects of Post Covid-19 dispute resolution mechanism for international commercial disputes

Philip Yang Liangyee

I am honored and privileged to be invited by CICC to deliver this speech in this very important event, i.e. The Second Seminar of International Commercial Expert Committee of the Supreme People’s Court of China. I shall first forward my wholehearted congratulations to my new Colleagues, the second group of expert members, and I look forward to working together.

It is with profound regret that I cannot attend in person in coming to Beijing for the reason that is obvious. But regrettably, I cannot even attend virtually because of an arbitration hearing which has been fixed a long time ago. This leaves me with the only choice of preparing a video in advance.

Turning now to my assigned speech, I have to say that I have no crystal ball about what will happen with international disputes resolution post Covid-19. Indeed, I have no idea when this worldwide pandemic will come to an end. I suppose I can only guess (and hope) that it should not be far off, with positive news such as the development and application of vaccines.   

But of course I can pick some lessons from history in predicting the future. At my age, I have inevitably been through several crisis. Take the latest one which most of us have also encountered, it is the 2008 Financial Tsunami started in the US and spread to the world.  I recall a large number of commercial disputes has developed, most if not all having to do with parties trying to shift the market risk and disastrous losses caused by the Financial Tsunami to other parties in attempts to cancel commercial contracts entered into during the booming months prior to end-2008. Inevitably, some cancellations were supported by sound legal excuses but others are not. 

The enormous increase of work has kept a lot of friends and colleagues, including me, in international (especially London and Hong Kong SAR) arbitration fraternity busy for the subsequent 10 years or more. This has also affected China severely. For instance, some 2,000 cases of shipbuilding contracts were cancelled by shipowners and most disputes ended up with arbitration in London.

So now predicting or guessing what the future will be post Coivd-19, I say:

1) This pandemic lasts longer and is causing deeper harm to the world economy than the 2008 Financial Tsunami, as I was told by many experts. 

2) China’s volume of activities in international trade and commerce is a lot higher than in 2008.

3) The world has become more confrontational and divisive.

Based on the above, then amongst the three (3) main mechanism of disputes resolution in international context, I reckon their prospects are as follows:

(A) For mediation, it is a hot topic in recent times, no doubt because of the Singapore Convention on Mediation 2019. But with the current international environment as I have just mentioned, it seems not to be favorable. Afterall, for mediation to work successfully, it would require elements of good-faith, compromise in willing to give-and-take, and less divisive.

(B) As to international arbitration, which has been the main mechanism in resolving international commercial disputes since globalization in the past 40-50 years, I believe it will continue, post Covid-19 with enormous growth of cases as I have predicted, to grow from strength to strength. In that sense, I count myself very lucky to have developed my career in the field of international commercial arbitration. We all have heard a lot of "bad" news of AI taking over human works. I have also recently heard experts predicting the dire news of 1/3 of the types of work would disappear forever post Covid-19.   

(C) Last but not least, I come to the international commercial courts established in recent years by many sovereign states, including the CICC by China. I thought this dispute resolution mechanism is very hopeful and timely, providing an alternative to international arbitration. Many of the criticisms and defects of international arbitration may be eliminated and/or reduced as a result. For instance, the lack of transparency due to the perceived advantage of confidentiality in international arbitration. Admittedly, the investment arbitration rules with ISCID and ICC are opening up to give more transparency. But arguably, many mega commercial cases should warrant the same treatment. I have no allotted time to go deeper into these issues. I just say that the International commercial courts, having had overcome the previous disadvantage of international enforcement of judgments by the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters,  are now better equipped to cure a lot of the defects in arbitration. Such as: open court, control of costs, consolidation and/or joinder, appeal to correct egregious errors by first instance decision (optional in some courts), etc., etc. 

But the international commercial courts, including CICC, must go through the process of putting its house in order, including but not limited to making sure the system, procedurally and substantially, is familiar, receptive and trusted by the international commercial community.  

Thank you for the attention!   

Philip Yang Liangyee

Related Links: 【研讨会主题发言四】杨良宜:后疫情时代国际商事纠纷解决机制的发展


*The original text is Chinese and has been translated into English for reference only. If there is any inconsistency or ambiguity between the Chinese version and the English version, the Chinese version shall prevail.