Impact of COVID-19 on International Arbitration: Chinese arbitral institutions work to keep proceedings running
Despite uncertainties on arbitration regulations in China, the countrie´s arbitral institutions push to offer the best alternatives to adapt to the “new normal”.
China, the first country attacked by the COVID-19 imposed the most strict quarantine measures, which affected the social and economic activities significantly. Chinese courts and arbitration institutions had to shut down their facilities and put the proceedings on hold. However, after the total shutdown during the extended Chinese new year holidays and the following first few weeks, Chinese arbitration institutions began to offer online dispute resolution (ODR) in order to keep the proceedings running.
As discussed in our previous issues of the International Arbitration Newsletter (see here and here), moving the arbitration proceedings online has become a solution for the institutions and the parties who have been restricted by social distancing/quarantine orders and international travelling bans. So far, many Chinese arbitration institutions have published their rules or guidance to allow the case filings, evidence exchanges and hearings to be moved online to mitigate the impact of the restrictive measures, which may otherwise paralyze the arbitration proceedings. Among others, many Chinese arbitration institutions have offered the users with the following:
Online case filing. Some institutions have established their own online platforms for case filing. Most of the institutions also accept cases via mails or other methods without physical contacts.
Online exchanges for case files. Some institutions recommend the parties to send documents (petitions, defenses, evidences, etc.) via emails. Shenzhen Court of International Arbitration has set up an online evidence exchange and storage platform.
Virtual hearings. The tribunals are suggested to hold hearings via telephone conference or video conference with participants joining from different locations.
Award. The institutions recommended the tribunals to render their awards as soon as possible. The tribunals are also suggested to consider rendering partial award in certain cases.
Reduced fees. In most cases, the arbitration fees for online arbitration would be more favorable than the traditional proceedings.
ODR is not new to Chinese arbitration institutions, in fact the first online arbitration rules was published by China International Economic and Trade Arbitration Commission in 2009. However, before COVID-19 outbreak, such a new way of getting the job done is not popular at all among the users with only 10% of the institutions providing online arbitration services. One of the main obstacle is that some of the characteristics of online arbitration have raised concerns under the Chinese arbitration laws and the traditional practices. For example, some have argued that, it is explicitly stipulated in the Chinese arbitration laws that the arbitration shall contain hearings and the proceedings shall be confidential unless otherwise agreed. However, the confidentiality of the process is challenged since the tribunals sometimes find it difficult to verify the identification of participants and make sure that no unauthorized person is hiding behind the screen. Besides, it becomes impossible for the tribunals to verify the evidences with their originals, which is a common practice in Chinese arbitration.
Despite those concerns from the Chinese arbitration legal regime, the Chinese arbitration institutions and tribunals have been proactive in exploring the best practices to adapt to the “new normal”. For example, most of the institutions require the parties’ consent on conducting online hearings, which shall particularly cover the matters regarding place of hearing, platform choice, identity confirmation, and evidence verification. Beijing Arbitration Commission went even further to engage a notary public to notarize the witness giving his testimony independently.
In summary, comparing to the Chinese court system, the Chinese arbitration institutions have been more proactive in keeping the proceedings operating despite the harsh measures for the fight against COVID-19, even it means extra works to keep in compliance with the laws and less traditional practices inherited from the court system. For the parties participating in online arbitration proceedings, the key is to be vigilant about the differences in procedures of the institutions and always follow the best practice.
Manuel Torres and Dun Zhang, partner and senior associate at the Garrigues Shanghai office.