6 September 2024

Development of international commercial arbitration in Asia-Pacific countries

Trade and economic ties with the countries of the Asia-Pacific region are rapidly growing. As a result, arbitration institutions are gaining strategic significance across the globe. Despite sanctions, legal disputes involving companies from unfriendly countries are continuing to be heard, which makes it all the more important to be able to review cases impartially. The development of commercial arbitration necessitates strengthening international cooperation, establishing new alliances, and developing unified principles for interaction in the legal sphere. Those were the conclusions reached at a session entitled Development of International Commercial Arbitration in Asia-Pacific Countries, which took place as part of the Eastern Economic Forum (EEF).

 

KEY CONCLUSIONS

 

The International Commercial Arbitration Court (ICAC) fulfils a vital role amid growing economic ties with Asia-Pacific nations

“We are currently witnessing a rapid increase in economic and related interactions within the Asia-Pacific region. International commercial arbitration is designed to ensure effective, prompt, and independent dispute resolution, which makes it a key tool in this region. The ICAC and the MAC [Maritime Arbitration Commission – ed.] at the Chamber of Commerce and Industry of the Russian Federation are endeavouring to contribute to this process,” Alexey Kostin, Chairman, The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation.

“In July, we signed a cooperation agreement with the International Commercial Arbitration Court of Russia. This is a well-known organization in Russia, which has been operating for a long time. We therefore hope that this agreement paves the way for a lasting partnership with this prestigious organization. Alongside the agreement with Russia, we also signed similar agreements with Vietnam and Malaysia. These agreements aim to foster collaboration in arbitration cases involving businesses in the Asia-Pacific region,” Hemant Gupta, Chairman, Indian International Arbitration Center.

“We are handling more disputes than leading European arbitration institutions such as the London or Stockholm arbitration centres. Each year, we handle both international and domestic corporate disputes. And over recent years, despite the challenging situation, the number of international cases has been growing,” Dmitriy Podshibyakin, Director, Arbitration and Mediation Center of the Chamber of Commerce and Industry of the Russian Federation.

“A number of studies have been conducted on international dispute resolution, and the volume of such disputes is rising. It is essential to make international courts more efficient,” Prashant Kumar, President, The Bar Association of India.

 

Despite the sanctions, Russian jurisdiction plays a key role

 

“The ICAC handles both small cases [where amount being claimed is – ed.] under USD 10,000, and large cases in excess of USD 10 million. Of course, most of the disputes we see involve Russian companies, which generally specify in their contracts that Russian jurisdiction and law shall be applied. However, we also have cases where contracts directly reference the laws of other countries, such as the UK and Belarus recently, as well as Kazakhstan, Germany, Estonia, Mongolia, and Georgia,” Dmitriy Podshibyakin, Director, Arbitration and Mediation Center of the Chamber of Commerce and Industry of the Russian Federation.

“We have 10 members in the ICAC presidium, two of whom are foreign arbitrators – one from Germany, and one from the United States. We also have two foreign arbitrators in the committee that appoints arbitrators – one from Germany, and one from the Czech Republic. Despite the ongoing upheavals surrounding our country, they continue to work – none have resigned,” Sergey Katyrin, President, Chamber of Commerce and Industry of the Russian Federation.

“We are observing increased interest in maritime law in Russia. There are a few obvious reasons for this, but those aside, I think this trend is down to the fact that maritime law is predominantly private, and private law has significantly evolved in Russia in recent decades. This is due to there being a strong interest in and study of foreign experience, as well as an understanding of the nuances of Russian private law and the Russian legal system as a whole. It appears as though these trends are now extending to maritime law, and we expect things to develop and improve apace in Russia, with experience being incorporated not only from Western countries, but Eastern ones as well,” Anna Arkhipova, Deputy Chairman, Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation.

“We are here to foster friendly relations, establish connections, and work together with our esteemed Russian colleagues and friends from other countries. As for international cooperation, there is a Russian arbitration agency that has been to Singapore. We have even incorporated such events into our official calendar. It marked the first time a foreign arbitration organization was included in the Singapore Centre’s official calendar of activities,” Cunyuan Zhang, Head (China), Singapore International Arbitration Centre.

“At our branch, the geographical aspect of arbitration provisos [a contractual or separate agreement made by the parties when concluding an international commercial contract – ed.] is quite extensive. I know that companies from these countries are using our provisos in their contracts with Russian companies. Whereas in the early years our work primarily focused on popularizing arbitration and raising awareness among businesses, by 2023 we began receiving cases. To date, we have concluded four cases, three of which were international commercial disputes,” Natalia Prisekina, Executive Secretary, Branch of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in Vladivostok.

 

PROBLEMS

The resolution of disputes involving Russian companies in unfriendly jurisdictions

“We are paying a high price today. That is because issues concerning large Russian companies and their assets are very often being resolved not by Russian courts or arbitration bodies, but in the courts and arbitration bodies of unfriendly countries. This gives rise to significant challenges in terms of access to justice. <…> We are also facing difficulties in finding suitable experts who can put forward a position and offer their insight. The same is true of legal professionals and lawyers who can represent our interests. That is because although there is no formal prohibition on handling disputes with companies under sanctions, with SWIFT being disconnected, it has become very difficult to make payments. Many legal professionals refuse to take cases – they fear for their reputation, because they are subject to external pressure and cancel culture. <…> I believe that for several years to come, we will continue to see key disputes over assets taking place in unfriendly jurisdictions. It is for this reason that we greatly welcome the development of ties with alternative forms and arbitration bodies,” Igor Krasnov, Chief Lawyer, Head of Legal Unit, VEB.RF.

“The failure to fulfil obligations is the result of sanctions. This is mainly about the financial sector. Payments cannot be made because banks refuse to process the transactions or are under sanctions themselves. Alternatively, an organization may refrain from fulfilling their obligations due to the threat of secondary sanctions. Sanctions are often cited as force majeure, though this claim is not always upheld when cases are considered,” Dmitriy Podshibyakin, Director, Arbitration and Mediation Center of the Chamber of Commerce and Industry of the Russian Federation.

 

A shortage of neutral arbitrators

“When organizations lodge a case in neutral jurisdictions, costs can escalate, and difficulties can occur. If a case is heard in a foreign jurisdiction, the cost may be 80% higher than in a home jurisdiction. Neutral arbitrators exist, but they can come at a premium. There is a monopoly on handling international disputes, and international courts can be overloaded. If we endeavour to increase the number of international arbitration organizations, we need local expertise and must engage local companies and experts. This practice will continue to expand,” Prashant Kumar, President, The Bar Association of India.

 

SOLUTIONS

Fostering cooperation between arbitration institutions and the expansion of maritime law

“The new era requires us to set new objectives. Proactive international cooperation in the business sphere means getting arbitration institutions to work together actively, and not just bilaterally, as has traditionally been the case. The time has come to think about how to establish multilateral cooperation in this area,” Alexey Kostin, Chairman, The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation.

“We propose establishing a centre for resolving maritime disputes. <…> I would like to suggest that the international community consider India as the location for an arbitration court specializing in maritime, arbitration, and commercial disputes. We are looking to establish such a centre in Mumbai,” Hemant Gupta, Chairman, Indian International Arbitration Center.

“Some time ago, a branch of the International Commercial Arbitration Court opened in Vladivostok, and, I should say, it has been remarkably successful. The branch is already operating successfully and boasts partnerships on the international stage. Today, I should announce another important event. The upcoming meeting of the maritime arbitration commission presidium is set to discuss and decide on the opening of a branch of the maritime arbitration commission in Vladivostok. This would make it the second branch of its kind, with the first located in St. Petersburg,” Alexey Kostin, Chairman, The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation.

“We would like to invite various organizations from the BRICS countries to join us in the creation of a network of affiliated arbitration organizations, which will carry out their duties in line with their workload. This will expand the pool of arbitration experts, create a unified set of rules, and help determine arbitration costs. In doing so, we will bridge the gap between different arbitration markets and raise the availability of local expertise. We will work to develop this further,” Prashant Kumar, President, The Bar Association of India.

* This is a translation of material that was originally generated in Russian using artificial intelligence.

For more information, visit the Roscongress Foundation’s Information and Analytical System at roscongress.org/en

 

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