Commercial mediation practice of the “Belt and Road Initiative” in Shanghai: a summary

belt and road

 

In 2013, Chinese President Xi Jinping announced the beginning of the “Silk Road Economic Belt with Central Asian Countries”, also known as the “Belt and Road Initiative”. This intercontinental economic and trade plan consists of a gigantic network of both railway and maritime infrastructure projects. Serving as a new trade route aiming to link China to the entire Eurasian continent and Africa, current projects are looking to directly connect the Asian giant with such far away and key locations as the European ports of Rotterdam and Venice.

As mentioned above, this enormous undertaking has attracted investment commitments from over 68 countries and international organizations, and is expected to have a total combined cost of $1 trillion in infrastructure projects, with China directly investing over $210 billion and Chinese companies securing more than $340 billion in construction contracts all over Europe, Asia and Africa.

But this gigantic project does not consist only of infrastructure, but also of trade agreements and, most importantly, a legal structure to support it. China plans to establish a series of international courts and legal institutions in order to provide legal coverage for the entire enterprise, especially ones that serve as alternative dispute resolution (or “ADR”) centers.

In light of creating a good legal environment so as to continue enhancing its global position, among the many actions taken by China, we must emphasize on the recently established Shanghai Commercial Mediation Center (or “SCMC”). The creation of such an institution in 2011 was of paramount importance for the developing giant for several reasons.

Firstly, we must view this from a geopolitical perspective. The Belt and Road Initiative is not only considered as the largest global commercial partnership in an era of growing trade conflicts, but it is also China´s most important foreign policy project, aimed at projecting its power and influence across the globe. In this sense, we must remember that over the past 20 years, the main centers for international ADR have been located in western cities such as London, Paris, Stockholm or New York, or in other developed nations such as Singapore and the special administrative region of Hong Kong.

Furthermore, the variety of countries, and therefore legal cultures, involved in the Belt and Road Initiative requires the establishment of a solid system that can provide legal security to the many different projects that compose it. This is achieved by creating a commercial mediation organization that can deliver “win-win” solutions for business, as the SCMC aims to do.

Moreover, the SCMC seeks to adhere to the implementation of market-oriented practices, follow the inherent laws of commercial disputes, and ensure the sustainable development of commercial mediation. For this reason, the SCMC has actively explored a new way of interfacing with the court system, notably in China, and has completed the litigation and mediation process by coordinating a strong relation with, for example, the intermediate people´s courts of Shanghai as well as with the intellectual property, maritime and railway courts.

In this sense, this litigation and mediation coordinating relation also helps promote the service capabilities and service levels of both parties through this platform. For instance, the Shanghai No. 1 Intermediate People´s Court sought the advice of the SCMC before introducing various measures to promote the diversified dispute resolution mechanism, and also asked the SCMC to lecture on mediation for judges.

For another example, the Shanghai No. 2 Intermediate People´s Court entrusted more than 100 invited mediators to the SCMC for unified and standardized management in order to help the invited mediators improve their professional mediation ability.

Thirdly, the SCMC looks to establish a commercial mediation training institution to train domestic and foreign mediation professionals. In order to cultivate more commercial mediation professionals, since 2013 the Kaisheng Commercial Professional Mediation Qualification Training Center has supervised the training of future mediators, some of them coming from such important institutions as the Shanghai Bar Association, the National Securities Industry Association, the Shanghai Municipal  Commission of Commerce and even the Hong Kong Bar Association.

The training of professionals familiar with commercial mediation lays a good foundation for strengthening the legal services in the implementation of the Belt and Road Initiative.

Finally, the SCMC also promotes cooperation with the world´s top commercial mediation organizations, continuously improving the professionalization level of the mediation team, and aims to integrate into the international ADR family. The numerous international implications of the Belt and Road Initiative require for the SCMC to adopt an international perspective. It is for this reason that it seeks to enhance its service capabilities and promote cooperation with other international commercial mediation organizations, such as the Association of International Arbitration, the Singapore Mediation Center, and the Hong Kong Joint Mediation Helpline Office. Most importantly, the SCMC works closely with the Judicial Arbitration and Mediation Services, Inc. (JAMS) in the United States, the world´s largest ADR services provider.

After more than 8 years of practice and with an increasing number of cross-border and cross-disciplinary commercial disputes, the SCMC successfully settled 554 of the 973 cases it formally accepted, marking a mediation success rate of 59.12%, and totaling CNY 14.4 billion worth of transactions.

Authors: Matias Gatto de Aracil and Paloma Laura García Carabantes

Trainees, Lupicinio International Law Firm

For more information: Julia Collado Lainez