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.

The topic is inherently difficult for many entrepreneurs and executives because it requires them to address the possibility of failure at the outset of a relationship they necessarily believe will succeed. As a result, many joint venture associates and business partners simply gloss over the issue, refusing even to address it.

If their clients are willing to listen, many lawyers offer the standard list of dispute resolution mechanisms: arbitration, mediation and buy/sell arrangements, also referred to as Russian roulette or Texas shootout provisions.

Although the terms “arbitration” and “mediation” are typically met with disinterest, “Russian roulette” and “Texas shootout” almost always pique interest. Yet that interest generally fades when the parties delve into the mechanics of the buy/sell arrangement. Business partners need a better alternative. Fortunately, there is one known as the possession arrow.

I observed the following interaction among three children at their school bus stop. As the bus rounded the corner, John, age 8; Annie, 6; and Ben, also 6, scrambled in line. Ben was disappointed that John was first, particularly because John went first the previous day. Ben appealed to his father to intercede, which he declined to do, suggesting instead that the children work it out. John offered to play rock-paper-scissors to decide the order, but that didn’t appeal to Annie. Neither the children nor their parents thought it was a good idea to set the order based on who got to the bus stop first. As the bus pulled up, the children agreed out of desperation to take turns going first, something they have continued to do.

Although taking turns as a method for resolving significant commercial disputes seems at first blush unsophisticated and arbitrary, it can work well if structured thoughtfully. In its most basic form, the possession arrow method authorizes one party to make the final decision on the first deadlock and gives the other party the power to decide the next one.

The approach requires business partners to establish fundamental principles to guide their behavior when confronted with a particularly difficult issue that could lead to a deadlock. The parties must make a covenant agreeing to be bound by those fundamental principles with respect to their joint decision-making and individual conduct when they are empowered to break a particular deadlock. The fundamental principles should include an obligation to deal in good faith and commitment to advance positions that are in the venture’s best interests, not the individual’s. It is sometimes also appropriate to include a requirement that the parties take positions consistent – to the extent that it is commercially feasible – with their most recent past practices.

When using the possession arrow, the parties must also determine who will be empowered to break the first deadlock. In some cases, the parties might be able to agree immediately. In other cases, the parties might decide to give the arrow to the one who did not declare the deadlock.

An effective dispute resolution mechanism should encourage cooperation to avoid deadlocks, foster commercially reasonable conduct and lead to outcomes that allow the parties to move forward. The possession arrow meets each of these criteria. The children and parents at the bus stop recognized that arbitration, mediation and game-playing were inferior to taking turns. It is time for business partners to do the same.

By David Charles, Special to Washington Technology. Lessons from the bus stop in dispute resolution. David Charles is a partner in the Corporate and Securities-Technology practice at Pillsbury Winthrop Shaw Pittman LLP.

“This Act enables Canada to ratify a convention that has already been ratified by 143 countries, and that will provide Canadian investors with another internationally recognized instrument for protecting their assets abroad,” said Minister Bernier.

“This is welcome news for Canadian business,” said the Honourable David Emerson, Minister of International Trade. “Entrenching international standards will both promote and protect two-way investment between Canada and its trading partners around the world. These are key objectives of the Global Commerce Strategy.”

The ICSID Convention is a World Bank-sponsored instrument aimed at facilitating the free flow of international investment. It does this by providing foreign investors and host states with tools that enable dispute resolution through conciliation and arbitration, and it has become an internationally recognized, efficient and reliable mechanism for settling investment disputes. The ICSID arbitration rules were modified in 2006 to facilitate open hearings and the filing of amicus briefs. Canada’s ratification of the Convention not only provides additional protection to Canadian investors but also reinforces Canada’s investment-friendly image among foreign states.

The Convention can also be used by provinces and territories that pass implementing legislation. In recent years, four provinces—British Columbia, Newfoundland and Labrador, Ontario and Saskatchewan—have adopted legislation implementing the Convention in their jurisdictions. Nunavut has also legislated to that effect. The Government of Canada welcomes provincial and territorial support for the Convention and invites all provinces and territories that wish to use ICSID arbitration to pass implementing legislation.

Source:
Foreign Affairs Media Relations Office
Foreign Affairs and International Trade Canada
613-995-1874
www.international.gc.ca/index.aspx

Besides the workshop and forum, Schonewille used her visit in Israel to promote mutual efforts to advance awareness, acceptance and the use of international arbitration and mediation in the MEDA countries (Israel, Algeria, Egypt, Jordan, Lebanon, Morocco, Syria, Tunisia, Turkey and West Bank & Gaza), with special attention to small- and medium-sized enterprises (SMEs). The intention of the European Commission’s initiative is to assist SMEs to resolve international commercial disputes arising from business transactions between Middle Eastern countries and EU-based companies, in order to enhance business transactions between companies based in two or more Middle East countries.

In order for the good intentions to materialize, Schonewille met different people from the business and legal community. Among them, Judge Edna Bekenstein (President of Magistrate Courts of Tel Aviv, Israel and a District Judge); Dr. Peretz Segal (Ministry of Justice, former director of the National Center for Mediation and Dispute Resolution); advocate Yori Geiron (president of the Israel Bar), Advocate Shai Porat (head of the mediation committee of the Israel Bar); Omri Gefen (CEO of Gevim mediation center from Herzliya); and many more, including myself, who had the pleasure of having her over at my home to light Hanukka candles.

These meetings should encourage creating and strengthening a working collaboration between Israeli Arbitration/Mediation Centers and the EU Arbitration/ADR Centers. Moreover, it could make a first encounter with existing MEDA counterpart institutions, bearing in mind that the European Commission’s project is intended to integrate local initiatives, without creating assistance-dependent services.

In 2005, the European Commission sponsored a three-year project dedicated to facilitating foreign investment and international trade, across the northern and southern shores of the Mediterranean, through the promotion of Alternative Dispute Resolution in the 10 MEDA countries. At the concluding event of this project, a conference was held in Rome at the end of September. Representatives from the 27 EU member states participated alongside representatives from the 10 MEDA countries.

The project was designed specifically to assist SMEs, the backbone of most MEDA country economies, to develop greater skill and ease in dealing with counterparts in other countries. Therefore, the project worked primarily with bar associations, jurists, local arbitration and other ADR groups, chambers of commerce, federations of industry, trade promotion agencies and other organizations, which relied upon by SMEs for advice and related services. The trainings on international contracts and dispute resolution were aimed at creating a group of highly specialized mediators and arbitrators who will increase the availability of specialized services. The intensive training workshop Training for International Commercial Mediators and Arbitrators were geared toward local business lawyers of the MEDA countries.

Most intermediary institutions, like chambers of commerce and entrepreneurial associations, perform the function of informally helping local and foreign entrepreneurs to amicably settle disputes. Many firms, especially SMEs, have had positive experiences with regard to receiving assistance from an intermediary institution in settling problems/disputes arising from a given contract. Establishing links among all institutional centers and promoting and managing arbitration and ADR in the EU and MEDA countries through networking is instrumental in promoting the use of such dispute settlement methods among entrepreneurs.

The preliminary step that should be taken now is creating informal networks. If the network is set out well, it could make for a good platform to enhance business and financial transactions between private entities in Israel and the other MEDA countries that may use the EU roof to try to normalize commercial connections with their Israeli counterparts.

The active Israeli dispute resolution centers could use this opportunity to enter into cooperation agreements with institutions in the EU and in Arab countries surrounding Israel. In instances where the potential for formal cooperation agreements is demonstrated following the cultivation of a relationship, the agreement may result in a formal Memorandum of Understanding between local organizations. The cooperation should include exchange of experience and information, and may also include cooperation in provision of services, such as in the case of co-mediation. In this process, rather than choosing a mediator from a third country, international litigants can each pick a mediator from a mediation organization in their own country. The neutrals then undertake to work together to facilitate settlement negotiations.

While recourse to two neutrals may add some cost, this approach generally increases confidence in the process. Also, it can be effective when there is need for a mediator who speaks a certain language or has a specific background. For such reasons, co-mediation can make settlement more likely, so parties often find it worthwhile.

Source: Jerusalem Post, Israel – Dec 11, 2007

OECD countries have agreed a new approach to better protect the rights of consumers and make online shopping safer. They call on national authorities and business to make it easier, cheaper and quicker for people to resolve complaints and get compensation when they are unhappy with goods or services they have bought. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD.

The OECD Recommendation on Consumer Dispute Resolution and Redress offers a roadmap for consumer protection agencies to address the practical and legal obstacles that many consumers face when trying to exchange goods or get their money back from firms, in their own country or abroad.

Most OECD countries already have laws or self-regulated schemes to help consumers, ranging from small claims courts to credit card protection and collective action lawsuits. But most of these were designed before e-commerce took off and are poorly suited to handling cross-border complaints. The Recommendation advises countries on steps they should take to update their laws to take into account these new developments.

It also calls on member countries to develop bi-lateral or multi-lateral arrangements in order to improve international judicial co-operation and use technology more effectively, making it easier to share information across borders.

In addition to a framework that details the basic elements necessary to an effective consumer dispute resolution and redress mechanism, it highlights the need for countries, both at a government level and via consumer protection agencies, to tell consumers who to approach when they have a problem and what they can do to resolve it. Companies should also set out clear, simple policies that explain what steps customers should follow to make a complaint and then have it resolved.

Consumers should also have the right to band together to take legal action against a firm, known as “collective action lawsuits.” This is important because in most European countries even if consumers have the right to take collective action in principle, there are so many restrictions that in practice they cannot. This means that their only option is take a firm to court on their own, which is usually too expensive for most people to even consider.

The Recommendation builds on a substantial body of OECD work carried out over the past decade on consumer policy issues. These include the 1999 OECD Guidelines for Consumer Protection in the Context of Electronic Commerce (www.oecd.org/dataoecd/18/13/34023235.pdf), the 2003 OECD Guidelines for Protecting Consumers from Fraudulent and Deceptive Commercial Practices Across Borders ( www.oecd.org/dataoecd/24/33/2956464.pdf) and a 2005 Report on Consumer Dispute Resolution and Redress in the Global Marketplace (www.oecd.org/dataoecd/26/61/36456184.pdf).

See the full text of the Recommendation. For further information, journalists are invited to contact Peter Avery, OECD’s Science, Technology and Industry Directorate (+ 33. 1. 45. 24. 93. 63).

For furher information, see www.oecd.org/sti/consumer-policy

A detailed outline of the course can be found at the ODR – Center for Information Technology and Dispute Resolution

The course will be taught by Daniel Rainey, Director of Alternative Dispute Resolution Services at the National Mediation Board.

Dispute Resolution

A comprehensive overview of the modern practice of online dispute resolution (ODR) around the world. Participants will learn about the history and development of ODR, the current state of the field, and advantages and disadvantages of using online techniques to resolve disputes. The syllabus will systematically explore several types of ODR platforms in use around the world. Including automated negotiation, solution databases, and virtual meeting rooms. Participants will also get a chance to try out the tools used to practice ODR, giving them a chance to confront common practice challenges and overcome frequently-encountered difficulties. The course will involve several role-plays, and each participant will have a chance to participate in these simulations as both a third-party neutral and a disputant. At the conclusion of the course all of the participants will receive a certificate indicating their completion of the training and summarizing the work completed. Instructor: Daniel Rainey Email: danielrainey@comcast.net

Contact Alan Gaitenby (gaitenby@disputes.net) at the Center if you have questions.

The Uniform Dispute Resolution Policy (UDRP) established a process as well as a policy, a set of procedures for resolving domain name disputes as well as a set of standards to be employed in making decisions. The principal standard is ?bad faith? but in order to determine whether a domain name holder?s behavior violates this standard, a fairly detailed process was put in place for selecting panelists, obtaining and exchanging information, reaching a decision within a specified time period, and, depending upon the decision of the panelist, changing, canceling or preserving the registration.

The UDRP process, like all legal processes, consists of a string of coordinated communication and information processing activities. Parties, panelists and providers must acquire, retrieve, understand, communicate and evaluate information in order to reach the end point of the process. If any of these informational activities are burdensome, the process may not operate efficiently, and, if more burdensome for one party than the other, the process may be unfair. For example, obstacles placed in the way of searching for information can affect whether certain arguments are made and how they are framed, whether costs are higher than they need to be, whether professional expertise is needed, and even whether a respondent decides to participate in the process.

Uniform Domain Name Dispute Resolution Policy Database (UDRP-DB) Homepage

The UDRP-DB helps those who need information about UDRP decisions to actually obtain it, and it is more efficient information retrieval system to be put in place so that parties, lawyers, panelists, and others can obtain the information that they need in a systematic way.

Section 4J. of the UDRP states that. All decisions under this Policy will be published in full over the Internet. By the time as few as ten or twenty decisions appeared in early 2000, users of the UDRP recognized that there was a problem. While providers could post decisions at little cost and any user with a Web browser could read a decision, every additional case posted made it harder to find out which case one might want to read. One could read decisions which one could find but the growing universe of decisions made finding information in decisions increasingly difficult.

Posting decisions online made access possible, but, as the number of decisions grew, finding decisions dealing with a particular issue or set of facts became increasingly difficult. It has been an open question whether decisions of panelists should be considered as precedent but, regardless of the weight that should be given prior decisions, all panelists have been interested in consulting decisions involving the different parts of the policy. Even if prior decisions are not controlling, panelists will try to look to prior decisions for guidance, to see the reasoning of other panelists, and to see if there have been similar factual situations.

The only reason the system did not break completely is that some individuals and groups provided assistance. At a very early date, for example, Scott Donahey, a member of the UDRP Review Task Force, reviewed the decisions every few weeks and prepared a report summarizing what had occurred. This was enormously helpful but it was a volunteer effort and not something that could be expected to continue forever. Other efforts, mostly voluntary and non-commercial, followed. Each of these efforts is a significant contribution and the result of considerable effort. The individuals who have contributed to the informational infrastructure underlying the UDRP deserve a great deal of credit since, if they had not come forward, the functioning of the UDRP process might, over time, very well have come to a halt. Yet, it is also fair to say that what has happened is that several bandaids have been placed on a problem. The bandaids allow the process to continue to operate but the bandaids are not permanent and if some fall off, the UDRP process would deteriorate.

For users who do not have access to LEXIS or Westlaw, do not participate in the INTA listserv, and do not receive special updates from providers, as the number of decisions grows, the difficulty in making sense of the system also grows. Even for those who find and use one of the current search engines, a key problem with the search results is that false positives will grow as the number of decisions grows. At best, one will find growing inefficiencies, at worst, one will find growing unfairness as what had been intended to be a relatively easy to use system becomes increasingly complex.

With support from the Markle Foundation, the Center for Information Technology and Dispute Resolution at UMass-Amherst and the Cornell Law School Legal Information Institute have created the UDRP-DB to allow access to data that is currently not available at all or only available at considerable expense or effort. The Legal Information Institute, ten years ago, was the first legal research site on the Web and is still considered by many to be the most professional and authoritative source of legal information on the Web.

The UDRP-DB is available freely to ICANN and the providers. What is necessary for version 2.0 of the UDRP information infrastructure to emerge is for the providers to agree on an approach that will benefit users. The providers are competitors and, unfortunately, there are no incentives for them, on their own, to provide data to a common database. On the other hand, the user community does not benefit from having access to incomplete information.

UDRP-DB Statistics

Current Number of Decisions in the UDRP-DB: 6957
Number of Domain Names in the UDRP-DB: 11536
Criteria involving bad faith

13.9% No bad faith: the domain name either not registered, or not used in bad faith

30% The domain name was registered with the purpose of transferring it to complainant or a competitor for a profit

14.1% The purpose of registration was to prevent the owner of the trademark from using the domain name, and the respondent has a pattern of such conduct.

9.1% The purpose of registration was to disrupt the business of a competitor

39.3% The respondent has registered the domain, attracted users by creating confusion with the complainant’s mark

15.1% Some other evidence of bad-faith registration exists