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Four Points Need to Be Done for the Establishment of a Positive Settlement Mechanism for Foreign-Related Disputes

2018-11-6 14:23:51

The Chinese export enterprises encounter a lot of problems in dealing with foreign-related disputes, including the delay of related laws and regulations, the shortness of bilateral and multilateral cooperative legal mechanism and the absence of the mechanism for international judicial cooperation and exchanges. A few days ago, at the Belt and Road Forum for Commercial and Legal Service under the campaign of “Foreign-related Commercial Law Service in Eight Fujian Cities”, Mr. SHI Xianfeng, a lawyer from Yingke Law Firm emphasized that under the Belt and Road (B&R) Initiative, it is crucial to establish a positive settlement mechanism for foreign-related disputes.

According to Mr. SHI, an appropriate dispute settlement mechanism should encompass a uniform and diversified dispute settlement mechanism, a penalty and monitoring mechanism and a risk prevention mechanism.

“For the uniform dispute settlement mechanism, we should overcome the language barrier. There are about 2,488 languages used by the B&R countries, so it is suggested to select just one language, disputing parties may, according to their own needs, translate the language on their own accounts”, said Mr. SHI. Besides, an effective and smooth capital settlement system shall be in place to avoid exchange rate risk so as ensure the stability and security of investment in the region. It is of critical importance to establish and apply a mediation system that is in line with litigation and arbitration. The B&R countries are mainly in East Asia where the culture of mediation is of great influence. Therefore, a mediation system is conducive to develop partner relationship between enterprises of China and B&R countries.

Besides, the dispute settlement mechanism shall meet the various demands of enterprises. “we should respect the countries’ practice of resorting to ways of resolution such as negotiation, consultation, mediation and litigation in a diversified dispute settlement mechanism, so as to create a cross-border dispute settlement landscape that covers multiple levels and dimensions with positive interactions”, added Mr. SHI.

Mr. SHI proposed that in regarding to the penalty and monitoring mechanism, a standing body should be established to track the progress of dispute settlement. The standing body may be comprised of representatives from the B&R countries who would set out the details for the mechanism. When it comes to alternative plans, the combination of compensation (such as arbitration compensation for investment) and retaliation (such as the trade retaliation system of WTO) may be taken into consideration under the conditions where agreements cannot be effectively implemented to avoid the risks posed by the fail of effective implementation.

Mr. SHI added “Meanwhile we should analyze the legal risks of investment in stages like foreign capital market access, assets operation and assets withdrawal. By establishing an intelligence information system against political risk, setting up a cooperation mechanism for multilateral investment guarantee and fully conducting the legal due diligence prior to market entry, we shall establish a legal risk prevention mechanism on foreign-related disputes.”