What can a foreign party expect in relation to dispute resolution when doing business in China? If a dispute arises, negotiation is the best initial method of resolution. Most business contracts in China will include a clause requiring negotiation before other dispute settlement mechanisms are pursued. Negotiation might require attempts to enlist the help of local government officials by emphasising the importance of the foreign company’s investment.

If negotiation fails, it is arbitration that has for many years been the preferred method of resolution for foreign-related commercial disputes in China. Arbitrators have, at least until recently, been more experienced and better qualified in the subject matter than judges, and procedures have been more flexible and predictable. Arbitration also has the advantage of finality, in that awards are not subject to appeal whereas court rulings may result in a lengthy appeal process.

Arbitration in China is governed principally by the Arbitration Law 1995 and the Civil Procedure Law 1991. The most striking characteristic is that only institutional arbitration is recognised in China and it is unlikely that there will be any change in the near future to allow ad hoc arbitration. Parties are therefore bound to choose an institution and are restricted by some aspects of Chinese institutional practice. There is still considerable reluctance to allow foreign arbitral institutions to set up within China.

The China International Economic and Trade Arbitration Commission (CIETAC) is the best known institution for foreign-related disputes, but there are over 170 other arbitration commissions. CIETAC re-issued its panel of arbitrators in May this year and this included over 200 foreign arbitrators.

The procedure is normally inquisitorial although CIETAC now authorises adversarial procedures such as cross-examination. Documentary disclosure orders are rare. Hearings tend to be short, often only a day.

“The scale of the court system is staggering: 8.1 million cases were decided by China’s 220,000 judges in 2006”

One of the most frequently cited difficulties is enforcement of foreign-related awards made in China and international arbitration awards sought to be enforced in China under the New York Convention – to which China acceded in 1987. In response to international concern, the Supreme Court introduced a reporting procedure for courts intending to refuse enforcement. This and other measures have greatly improved matters although there are still residual difficulties in transparency and delay in the enforcement process.

How do foreign parties fare in court proceedings? The scale of the court system is staggering: 8.1 million cases were decided by China’s 220,000 judges in 2006 in the 3,234 courts. The four levels of courts comprise in ascending order: basic courts, intermediate courts, provincial high courts and the Supreme People’s Court in Beijing. Cases involving foreign interests will be heard by either a basic court or an intermediate court depending on subject matter and size.

The procedure involves a first instance trial and the possibility of one level of appeal. The process is subject to review by higher courts, with widened criteria introduced by a new Civil Procedure Law. This may increase safeguards in the process but at the expense of delay in achieving finality.

Part of the article writted by Adrian Hughes is a foreign panel member of China International Economic and Trade Arbitration Commission (CIETAC) in Building.

So what exactly is expert determination and how does it differ from other methods?

This is one of a number of private dispute resolution methods collectively referred to as alternative dispute resolution (ADR). Other ADR methods include arbitration and mediation.

In expert determination an independent expert is asked by the disputing parties to decide one or more issues between them. The experts are required to use their knowledge and experience to reach a decision based on their own investigation of the issues. The experts must act fairly and the parties must agree to be bound by the decision.

In England and Wales arbitration is supported and controlled by the Arbitration Act 1996, which supports the enforceability of arbitration awards locally and internationally. There is no similar statutory involvement in expert determination.

In arbitration, fairness is formalised by the Arbitration Act. The arbitrator can only undertake an investigation if permitted by the parties and must share the results with the parties. Unlike the arbitrator, the expert is not immune from actions for negligence. In mediation, the mediator helps the parties arrive at their own settlement.

Are there particular types of dispute that suit expert determination?

Expert determinations tend to be applied to technical disputes. The expert is usually chosen for their expertise. The types of dispute for an accountant acting as expert include: share/business valuation disputes; disputes in relation to completion accounts; deferred consideration disputes following a sale of a business; profit share disputes in partnerships and joint venture agreements; and disputes about the loss of profits from breach of contract.

There can be numerous subsidiary disputes in connection with facts and the interpretation of words, which may be outside the expertise of the expert.

Together with other procedural considerations, the expert may need to agree arrangements to enable these matters to be dealt with in a way that does not lead to the validity of his award in respect of the substantive issue(s) being undermined.

How are appointments as expert made and what happens if no agreement can be reached?

A dispute resolution clause may be included in a contract, for example in a sale and purchase agreement for a company, which requires that an expert is appointed to resolve the dispute by expert determination.

If the parties to the agreement have not named the expert, or they are unable to agree on an expert, the contract may provide that the appointment is made by the president of a particular professional body from among its members.

Alternatively, there may be no pre-existing contractual provision for the appointment of an expert to determine the dispute. The parties may decide to use expert determination to solve the dispute.

How does the whole process work and what can the parties expect in terms of fees?

The initial stage of an expert determination assignment involves completion of the engagement formalities and agreement of the expert’s powers. The expert will check whether these are sufficient and, if not, seek to agree those necessary to fulfil their mandate.

The expert will usually issue directions in relation to disclosure of documentation and exchange of submissions including content, sequence and timing.

It is not unusual for further procedural issues to emerge as the matter proceeds.

These may include: defining the issue(s) for determination; dealing with delay on the part of a party; and dealing with abuse of the established process generally.

The written decision of the expert may be by letter to the parties, or in some other form of notice. In arbitration, accompanying reasons for the decision are a requirement, subject to the parties choosing otherwise. In contrast, in expert determination, unless it is agreed that they are required, the expert need not give reasons.

In arbitration, unless the parties agree otherwise, the arbitrator is required to deal with their costs and is empowered to award interest. In contrast, in expert determination these matters may not be within the agreed brief. In any event, it may only be the allocation of the expert’s fees which are in issue as far as the expert is concerned. Alternatively, the parties may have agreed to share these costs.

How much does the whole process cost and how does it compare with other methods?

In expert determination there may be no hearing, reduced disclosure (being disclosure necessary to meet the expert’s requirements), relatively little legal representation required if any, and no reasons given with the award. As a consequence expert determination is likely to be significantly cheaper than litigation. Due to the less formal structure of expert determination, subject to the agreed arbitration process, it can similarly be cheaper than arbitration.

Source: ITweek, UK. Daniel Djanogly is a partner at Kingston Smith LLP.

The swift growth of e-commerce and web site contracts has increased the potential for conflicts over contracts which have been entered into online. This has necessitated a solution that is compatible with online matters and is netizens centric. This challenging task can be achieved by the use of ODRM in India. The use of ODRM to resolve such e-commerce and web site contracts disputes are crucial for building consumer confidence and permitting access to justice in an online business environment. These ODRM are not part and parcel of the traditional dispute resolution machinery popularly known as judiciary but is an alternative and efficacious institution known as ADRM. Thus, ADR techniques are extra-judicial in character. They can be used in almost all contentious matters, which are capable of being resolved, under law, by agreement between the parties. They have been employed with very encouraging results in several categories of disputes, especially civil, commercial, industrial and family disputes. These techniques have been shown to work across the full range of business disputes like banking, contract performance, construction contracts, intellectual property rights, insurance, joint ventures, partnership differences etc. ADR offers the best solution in respect of commercial disputes. However, ADR is not intended to supplant altogether the traditional means of resolving disputes by means of litigation. It only offers alternatives to litigation. There are a large number of areas like constitutional law and criminal law where ADR cannot substitute courts. In those situations one has to take recourse of the existing traditional modes of dispute resolution.

II. THE PREMIER MODE OF ADR

Arbitration is the supreme method for resolving and adjudicating commercial disputes . It is a procedure in which the dispute is submitted to one or more arbitrators, for adjudication, who resolve the dispute. The decision is given in the form of an award. The main objects of arbitration are speed, economy, convenience and simplicity of procedures. It encourages healthy relationship between the parties. The Arbitration and Conciliation Act, 1996 governs the ?arbitration procedures? in India. Section 5 of the Act provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part I (Sections 2 to 43), no judicial authority shall intervene except where so provided in the said part. This clearly indicates the legislative intent to minimise supervisory role of courts to ensure that the intervention of the court is minimal. Section 4 is a deeming provision, which lays down that where a party proceeds with the arbitration without stating his objection to non-compliance of any provision of Part I from which the parties may derogate or any requirement under arbitration agreement, it shall be deemed that he has waived his right to so object. Section 7 provides that the arbitration agreement shall be in writing and such an agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Sub-section (4) of Section 7 provides the conditions under which a document or exchange of letter or exchange of statement of claim and defence may amount to an arbitration agreement. Section 11 of the Act provides for appointment of arbitrators and sub-section (6) thereof empowers the Chief Justice of the High Court or any person or institution designated by him to make such an appointment on the happening of certain conditions enumerated in clauses (a), (b) or (c). Section 16 of the Act is important and it provides that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or authority of the arbitration agreement . Thus, the base provided by the Act is sufficient to accommodate the mandates of ODRM. It must be noted that a court of law cannot render justice unless the ultimate decision is based on the contemporary law as prevailing in the society. A decision based on an old law, which does not satisfy the requirements of the present situation, and environment should be avoided. In such a situation the efforts of the courts should be to give the law a “purposive, updating and an ongoing interpretation”. This position makes the interface of justice delivery system with the information technology inevitable and unavoidable. We cannot allow the dead hand of the past to stifle the growth of the living present. Law cannot stand still; it must change with the changing social concepts and values. If the bark that protects the tree fails to grow and expand along with the tree, it will either choke the tree or if it is a living tree, it will shed that bark and grow a new living bark for itself. Similarly, if the law fails to respond to the needs of changing society, then either it will stifle the growth of the society and choke its progress or if the society is vigorous enough, it will cast away the law, which stands in the way of its growth. Law must therefore constantly keep on adapting itself to the fast changing society and not lag behind . Justice is supreme and justice ought to be beneficial for the society so that the society is placed in a better-off situation. Law courts exist for the society and ought to rise up to the occasion to do the needful in the matter, and as such ought to act in a manner so as to sub serve the basic requirement of the society. It is a requirement of the society and the law must respond to its need. The greatest virtue of the law is its flexibility and its adaptability; it must change from time to time so that it answers the cry of the people, the need of the hour and the order of the day. Thus, the justice delivery system cannot afford to take the information technology revolution lightly . The judiciary in India has not only recognised this need but has also utilised the information technology to do complete justice. The Supreme Court has on various occasions encouraged the use of information technology for meeting the ends of justice and to do complete justice. There is nothing that shows that the courts in India will not encourage the concept of ODRM in India. The Supreme Court has encouraged the use of ADR techniques in India and very soon the same will be extended to ODRM as well.

III. E-JUSTICE SYSTEM IN INDIA

The judicial response vis-?-vis information technology is positive and technology friendly.

In M/S SIL Import, USA v M/S Exim Aides Silk Exporters the words “notice in writing”, in Section 138 of the Negotiable Instruments Act, were construed to include a notice by fax. The Supreme Court observed: “A notice envisaged u/s 138 can be sent by fax. Nowhere is it said that such notice must be sent by registered post or that it should be dispatched through a messenger. Chapter XVII of the Act, containing sections 138 to 142 was inserted in the Act as per Banking Public Financial Institution and Negotiable Instruments Laws (Amendment) Act, 1988.Technologiacl advancements like Fax, Internet, E-mail, etc were on swift progress even before the Bill for the Amendment Act was discussed by the Parliament. When the legislature contemplated that notice in writing should be given to the drawer of the cheque, the legislature must be presumed to have been aware of the modern devices and equipments already in vogue and also in store for future. If the court were to interpret the words “giving notice in writing” in the section as restricted to the customary mode of sending notice through postal service or even by personal delivery, the interpretative process will fail to cope up with the change of time. So if the notice envisaged in clause (b) of the proviso to section 138 was transmitted by Fax, it would be compliance with the legal requirement”.

Thus the requirement of a written notice will be satisfied if the same is given in the form of a fax, e-mail etc, using the information technology. It must be noted that a notice by e-mail can be send instantaneously and its delivery is assured and acknowledged by a report showing the due delivery of the same to the recipient. This method is more safe, accurate, economical and lesser time consuming as compared to its traditional counterpart, popularly known as “Registered A.D”.

In Basavaraj R. Patil v State of Karnataka the question was whether an accused need to be physically present in court to answer the questions put to him by the court whilst recording his statement under section 313. The majority held that the section had to be considered in the light of the revolutionary changes in technology of communication and transmission and the marked improvement in the facilities of legal aid in the country. It was held that it was not necessary that in all cases the accused must answer by personally remaining present in the court. Once again, the importance of information technology is apparent. If a person residing in a remote area of South India is required to appear in the court for giving evidence, then he should not be called from that place, instead the medium of “video conferencing” should be used. In that case the requirements of justice are practically harmonised with the ease and comfort of the witnesses, which can drastically improve the justice delivery system.

In State of Maharashtra v Dr.Praful.B.Desai the Supreme Court observed: “The evidence can be both oral and documentary and electronic records can be produced as evidence. This means that evidence, even in criminal matters, can also be by way of electronic records. This would include video conferencing. Video conferencing is an advancement in science and technology which permits one to see, hear and talk with someone far away, with the same facility and ease as if he is present before you i.e. in your presence. Thus, it is clear that so long as the accused and/or his pleader are present when evidence is recorded by video conferencing that evidence is recorded in the “presence” of the accused and would thus fully meet the requirements of section 273, Criminal Procedure Code. Recording of such evidence would be as per “procedure established by law”. The advancement of science and technology is such that now it is possible to set up video conferencing equipments in the court itself. In that case evidence would be recorded by the magistrate or under his dictation in the open court. To this method there is however a drawback. As the witness is not in the court there may be difficulties if commits contempt of court or perjures himself. Therefore as a matter of prudence evidence by video conferencing in open court should be only if the witness is in a country which has an extradition treaty with India and under whose laws contempt of court and perjury are also punishable”.

This judgment of the Supreme Court is a landmark judgment as it has the potential to seek help of those witnesses who are crucial for rendering the complete justice but who cannot come due to “territorial distances” or even due to fear, expenses, old age, etc. The Courts in India have the power to maintain anonymity of the witnesses to protect them from threats and harm and the use of information technology is the safest bet for the same. The testimony of a witness can be recorded electronically the access to which can be legitimately and lawfully denied by the Courts to meet the ends of justice.

The above discussion shows that the judiciary in India is not only aware of the advantages of information technology but is actively and positively using it in the administration of justice, particularly the criminal justice. Thus, it can be safely concluded that the “E-justice system” has found its existence in India. It is not at all absurd to suggest that ODRM will also fine its place in the Indian legal system very soon.

IV. ONLINE DISPUTE RESOLUTION

The ADR mechanism can be effectively used to settle online disputes by modifying it as per the need. It is time effective and cost efficient. It can also overcome the geographical hurdles. However, there are certain issues revolving around ADR mechanism like need for personnel with knowledge of IT, ADR and law; technical concerns; legal sanctity of proceedings; industry support etc. But these hurdles are just a passing phase. The use of ADR mechanisms for resolving online disputes is increasing day by day. A number of web-sites provide for some type of online dispute resolution method like arbitration, negotiation, mediation etc. and also certain conflict management services. These services fall into the general categories of complaint handling, negotiation, mediation and arbitration. These services will be in great demand in the future since the 1996 Act has given paramount importance to ?party autonomy? by accepting the intention of parties as a platform for dispute resolution. Thus, what law will be applicable will depend on the intention of parties. If the parties have adopted the mechanism of ODRM then it will definitely apply with necessary minor modifications. The language used in various sections of the Arbitration Act give options to the parties to opt for the procedure as per their agreement during the arbitral proceedings before the arbitrator. So if there is an agreement between the parties with regard to the procedure to be followed by the arbitrator, the arbitrator is required to follow the said procedure. However, this would not mean that in appeal parties can contend that the appellate procedure should be as per their agreement. The appellate procedure would be governed as per the statutory provisions and parties have no right to change the same . It must be noted that party autonomy presupposes the existence of an arbitration agreement. There may be a situation where the parties had not entered into an arbitration agreement. To meet such situations Sec.89 of CPC can be invoked. The reason for inserting Sec.89 has been to try and see that all the cases which are filed in the court need not necessarily be decided by the court itself. Keeping in mind the law delays and the limited number of judges, which are available, it has now become imperative to resort to ADR Mechanism as contemplated by Sec.89. There is a requirement that the parties to the suit must indicate the form of ADR, which they would like to resort to during the pendency of the trial of the suit. If the parties agree to arbitration, then the provisions of the Arbitration and Conciliation Act 1996 will apply and that will go outside the stream of the court .

V CONCLUSION

The need and necessity of ODRM is going to be felt very soon and we must be prepared for the same. A sound techno-legal base must be established in advance. There is a possibility that we may get BPO services in arbitration matters in the distant future. In any case it is also a mandate of Article 21 of the Constitution of India. Art.21 confers a Fundamental Right on every person not to be deprived of his life or liberty, except according to procedure established by law. Such procedure is not some semblance of a procedure but the procedure should be ?reasonable, fair and just?, and therefrom flows the right to speedy trial . It cannot be doubted that if the State is encouraging ODRM it is thereby assisting in the attainment of a speedier, economical and convenient justice system. Thus, the sooner ODRM is adopted the better it will be for the nation in general and the justice seeker in particular.

Praveen Dalal
Arbitrator, consultant and attorney
Delhi High Court, India.

E-mail:pd37(at)rediffmail.com
Contact at: +91 9899169611

As a follow-up to the eEurope 2005 Action Plan and the conclusions of the European Council of 20/21 March 2003 stressing the need for exchanging experience in the field of e-business, the European Commission, Directorate General Enterprise, would be interested in your experience as an enterprise doing e-business. The objective is to collect feedback and practical experiences from the market and to identify still existing practical barriers or new legal problems encountered while conducting business electronically.

The consultation will remain open for responses until 7 November 2003. And..

Members of E-Arbitration-T Portal and related stakeholders are invited to consult the – following questionnaire -
The services of the Commission will analyse the results of the open consultation and discuss them with all relevant stakeholders at a High-level Conference, to be organised in March/April 2004. The conclusions will help to reach the EU’s ambitious Lisbon target of becoming the world’s most competitive and dynamic knowledge-based economy.

We appreciate your contributions and thank you in advance!

Definition of e-business:
For the purpose of the present questionnaire, “e-business” is defined in a broad sense as the use of electronic telecommunications for business purposes, including:

Online buying
Online selling
Provision of other online services (including marketing and advertising)
Online collaboration with business partners
Online internal business activities: accounting, management

Year 2003

Many organisations expressed they interest in this Green Paper. Most of they have directly participated in the debate launched by the Green Paper, by submitting comments on it. The European Commission would like to thank them for they contribution.

In the context of the consultation exercise launched by the Green Paper, a public hearing will be held on this subject in Brussels on Friday 21 February 2003.

Further detailed information on this event will be posted on this webpage in the next few days, together with a summary of the comments to the Green Paper received by the Commission:
http://europa.eu.int/comm/justice_home/news/consulting_public/news_consulting_public_en.htm”

Year 2003

This paper aims to be a basic overview of the issues that Online Arbitration raises when dealing with B2B transactions.

Summary of Questions Submitted for Discussion:

Question 1: What is your opinion on the general approach that the EU institutions should follow on ODR and Online Arbitration of B2B transactions? Should the initia-tives be limited to B2B transactions?

Question 2: Do you think that a directive is the most appropriate regulatory instrument to deal with e-commerce issues? And to deal with ODR methods? Do you think that the European Primary Law provides the EU with a legal basis to adopt a directive on ODR methods?

Question 3. Could or should the principles set out in the two recommendations apply indiscriminately to fields other than consumer protection? Of the principles enshrined in the Recommendations, which in your view could be incorporated in the legislation of Member States?

Question 4: Do you think that the EU should follow the Uncitral Model Laws, or should it leave the regulation of Online Arbitration disputes to national laws?

Question 5: What is your opinion on the controversial issues highlighted in section 7? Are they controversial at all? Is this a fictitious debate? What option would you adopt, if any, to solve the inconsistencies? What other alternatives would you propose?

Question 6: Do you think that this is an appropriate time to pass a directive on ODR methods? Would you be in favour of a directive on ODR methods? What are, in your opinion, the legal bases, if any, for a directive on ODR methods?

Question 7: Do you think that the adoption of European standards for Online Arbitration technologies is necessary? Do you think that the EU has the human and technical resources to dictate European Standards without public discussion? Would it be wise to create an interdisciplinary group capable of negotiating standards with other geo-graphic regions?

Question 8: Should there be a register of ODR providers or any other administrative control that ensures the respect of due process rights? Would the intervention of ad-ministrative entities impair the development of ODR bodies?

Question 9: What is your experience in negotiation and enforcement of private mecha-nisms? Should electronic awards be dealt with in an EU directive?

Question 10: Would you eliminate the formal requirements of deposit and notarisation at all? Would you empower notaries and other public authorities to deposit, authenticate and notify the award to the parties?

In your opinion, what are the inconveniences of harmonising the formal requirements of deposit and notarisation and attributing more essential faculties to public authorities?.

Year 2002

CASTELL Consulting has been involved internationally as Expert, Mediator and Arbitrator in a wide variety of disputes and substantial legal actions over contracts which are terminated, with the software rejected amidst a considerable range and variety of allegations expressed by both supplier and customer. These include allegations of incomplete or inadequate delivery, software or database errors, faulty design, operational or performance deficiencies, shifting user or business requirement specifications, poor project management, delays and cost over-runs.

One of the most important issues on which an expert is asked to give an opinion in such software development or implementation cases is: what was the quality of the delivered software and was it fit for purpose ? To answer this, and other equally crucial technical questions posed in such disputes, CASTELL Consulting has developed a range of rigorous analytical techniques, Forensic Systems Analysis, for assessing failed, stalled, delayed or generally troublesome software projects. These objectively justifiable and properly unbiased techniques, founded on sound software engineering principles, are impartial, favouring neither customer nor supplier, software user nor software developer. They are becoming widely internationally accepted and an account of the Forensic Systems Analysis methodology was for example published in the October 2001 issue of ‘The Barrister’ magazine. They should be of interest/use to all Arbitrators and others acting in software development and implementation projects/disputes. An updated presentation will shortly be presented on the (as yet unopened) website Dr Stephen Castell

CASTELL Consulting, 2002
Year 2002