Question

Uncle Barney owns and is the key sales contact of an outdoor furniture business. His principal supplier is Bing Fabric Manufacturing Company, a publicly listed company in China. Barney and Bing have been in talks about some collaboration to ensure that Bing gets paid in a timely fashion and increased sales opportunities in Canada. Barney is interested in preferential pricing manufacturing.

Barney also plans on retiring in 5 years when his daughter graduates from medical school. Barney and Bing are at the cusp of an agreement where Barney would sell part of his company to Bing, whereupon he would be hired as Bing’s executive director of North American sales and marketing for 4 years, after which Bing will buyout Barney and he can retire. The parties have almost completed the due diligence for the purchase and are keen to proceed but have reached a bit of an impasse. Barney is obviously concerned about making sure that he will continue to have a job for the next 4 years (as those medical school bills are high). Being a public company in China, Bing’s owners insist that the choice of law and jurisdiction for all transactions have to be Chinese law. Also, because Bing is a public company, all disputes must be submitted to confidential arbitration in China.

Different legal regimes have different procedural approaches in dispute resolution. Chinas mainland arbitration is different from international arbitration in a number of notable ways. This sometimes can have a genuine impact on the outcome of Barney's business endeavor. Are you aware of the major features of arbitration in Chinas mainland in comparison with international arbitration? The following article could be helpful:  Jiang Liu, Minli Tang, and Meng Sha, Differences between international arbitration and Chines mainland Arbitration (2018).

Answer 1

The difference between the international and Chinese arbitration process can be highlighted using various segments :

1. Writing Approach - The parties in Chinese arbitration proceeding used to follow their one roadmap and write their own to argue the case, but in international arbitration, any reply such as "rejoinder, surrejoinder, statement of defense, etc" follows the roadmap of its previous counterpart.

Besides, in Chinese mainland arbitration, parties tend to submit shorter written submissions. However, in international arbitration, the parties submit quite long written submissions, with a suggested reading time around several hours or even half/one day.

2. Disclosure

In the international arbitration cases, disclosure is widely used, under which parties shall not only disclose their own evidence but all the materials associated with the case. However, in Chinese mainland arbitrations, parties only voluntarily submit materials that are favorable to their own case.

3. Cross-examination

In Chinese arbitration, the factual background of cases is narrated by the counsels in their legal writings supporting by the related documentary evidence and the technical problems are demonstrated by way of submitting written expert reports. However, in the international arbitration process, factual witnesses and expert witnesses to give testimony in person during the hearings and cross-examination is primarily used.

4. Hearing Duration

There are two modes of hearing in the international arbitration cases: document-only or oral hearing. However, in Chinese arbitrations cases, oral-hearing mode is primarily preferred by the tribunal.

5. In international arbitration, the parties and arbitrators belong to different jurisdictions and have different social, cultural, and legal backgrounds. Therefore, there are many cases where an arbitrator from different jurisdictions is not academically and professionally trained under the governing law jurisdiction but is just familiar with the relevant law. In such cases, the way counsels direct the arbitral tribunals may affect the final result of the case. However, in the Chinese arbitration process, both the parties and arbitrators belong to the same kind of laws, society, culture and legal background. So, the cases are not affected by the counsel's appeals and arguments.