Publish time: Mon Jul 04 10:30:36 CST 2016
First show in Frankfurt, In-depth Exchange on Law
2016 Frankfurt Summit on Commercial Dispute Resolution in China Successfully hosted
On June 22 2016, the 2016 Frankfurt Summit on Commercial Dispute Resolution in China was successfully hosted by the Beijing Arbitration Commission / the Beijing International Arbitration Center (the “BAC”), jointly with the Deutsche Institution für Schiedsgerichtsbarkeit (the “DIS”) at the Steigenberger Frankurter Hof. This Summit was an annual international exchange event held on the basis of the Commercial Dispute Resolution in China: An Annual Review and Preview (2016) (the “Annual Report 2016”). This Summit was sponsored by CMS and AnJie Law Firm, and was supported by LexPR, with joint media support from the Global Arbitration Review, Wolters Kluwer, LexisNexis, and the “ChinaGoAbroad.com”.
The Frankfurt Summit was the second stop of the Annual Report overseas launch event, and also was for the second time the BAC hosts such annual summit in Germany since the success of the 2015 Cologne Summit. The BAC delegation, consisted of 16 members including 8 authors of those sub-reports on arbitration, energy, construction project, international trade, finance, real estate, investment and intellectual property, attended this event. Under a background that the China-Germany bilateral trade value reached 156.28 billion USD in 2015, the Chinese speakers’ well prepared speeches on both update and dispute resolution within their respective areas of expertise were brought into sharp focus and attracted about 100 German legal professionals and industry experts. Meanwhile, the BAC invited 19 industry experts from Germany and its neighbor countries to act as moderators or commentators and thus to conduct in-depth exchanges and discussions on relevant topics.
The Summit
The opening ceremony of the Summit was hosted by Dr. Fuyong Chen, Deputy Secretary General of the BAC. Madame Hongsong Wang, Vice Chairperson of the BAC, Dr. Francesca Mazza, Secretary General of the DIS, and Mr. Christopher Lau, Chartered Arbitrator of the Maxwell Chambers, provided their respective interpretation of the hosting and significance of this Summit.
Dr. Fuyong Chen
Madame Hongsong Wang and Dr. Francesca Mazza extended thanks to the organizing team from both sides for the mutual support and assistance during the preparation of the Summit. They emphasized that it was the hard work of both institutions’ teams that laid the foundation for the smooth opening of this event, and the sincere cooperation between the BAC and the DIS provided another possibility for in-depth exchange between the two countries’ arbitration and legal service industries.
Madame Hongsong Wang
Dr. Francesca Mazza
Thereafter, Mr. Christopher Lau, by referring to his own story of asking the hand of his wife, said that “Germans are hardworking, Chinese are hardworking. It is a good match!” He thought that the hosting of his Summit was in line with the development trend and cooperation demand of both countries’ arbitration and legal service industries. All the three speakers believed that the two countries share a number of similarities in arbitration practice and legal tradition that are inherited from the source and idea of law of the Civil Law system, and this Summit not only helps promote the exchange between professionals from both countries, but also helps Chinese and German dispute resolution service suppliers to provide their customers with better legal services.
Mr. Christopher Lau
Session on Arbitration and Mediation
After the opening speeches, the Session on Arbitration and Mediation convened under the hosting of Dr. Dorothee Ruckteschler, a partner of CMS-HS, with Dr. Helena Chen, a partner of Pinsent Masons LLP, as the keynote speaker and Dr. Axel Reeg, the founding partner of REEG Rechtsanwälte, as the commentator, all of whom jointly conducted an extensive discussion on the development and typical cases within the Chinese arbitration and mediation industries in 2015. Starting from the Annual Review on Commercial Arbitration in China (2016) authored by Dr. Helena Chen, Dr. Dorothee Ruckteschler directly focused on the reason of the Chinese arbitration industry’s growth of a blowout type. With statistics about arbitration, Dr. Chen firstly presented the “amazing speed” of the Chinese arbitration development. Next, she referred to some hot cases relating to the recognition standard of “foreign related” factors, along with statistics of judicial supervision of arbitral awards by Chinese courts, and thereby unveiled the openness of Chinese courts to arbitration in recent years. Dr. Chen stressed that Chinese arbitration institutions and arbitration system deserve more confidence from the international arbitration community if only based on the data of the BAC in 2015. In this regard, Dr. Axel Reeg pointed out that the procedural and substantive difference between the Civil Law system and the Common Law system should not be a barrier for their mutual trust. He said that “although English is a carrier for English Law, many countries in the world still share the heritage of Civil Law tradition”. During the progress of international arbitration’s future development, arbitration practitioners from different legal systems need to learn and adopt each other’s strong points in their arbitration practice such as the allocation of the burden of proof and the disclosure of evidence. The three speakers shared the opinion that any state’s progress of its arbitration system and development of its arbitration industry rely on trust worthy arbitration institutions and arbitration practitioners, and their contributions should not be limited to the professionalism and justice in their dealing with specific disputes. This won the heated applause of all the audience.
Session on Arbitration and Mediation Dr. Dorothee Ruckteschler
Dr. Helena Chen Mr. Axel Reeg
Session on Energy
The third section was moderated by the Hon. Prof. Dr. Andreas Reiner from the Wirtschaftsuniversität Wien. Dr. Libin Zhang, a partner of Broad & Bright, acted as the keynote speaker and Dr. Stefan Tüngler, Counsel of Freshfields Bruckhaus Deringer, the commentator. They had an in-depth discussion based on the Annual Review on Energy Dispute Resolution (2016). Dr. Zhang firstly made an analysis of China’s energy usage structure, explaining that the Chinese decision makers have determined to change the traditional energy structure centered on coal. In view of the expanding environment protection pressure and the impediment to its Gross Domestic Product growth due to the inefficient use of energy, as well as other factors such as China’s acceding to the Paris Climate Agreement in 2015, it is foreseeable that China as a responsible consumption power of energy, will have a transform in its energy industry and energy consumption from coal to cleaner energy. With such an industry transformation, the caseload of energy disputes has been increasing with huge amount in dispute. In China, issues such as the relationship between administrative approvals by Ministry/Bureau of Land and Resources and the validity of contracts, as well as the respective responsibilities of parties in different bidding segment in case of segment bidding, are often involved in such disputes, that raise higher requirements for complexity and professionalism to legal professionals who are ambitious to participate in Chinese arbitration practice or to better understand the interest of Chinese parties in international arbitration practice. Dr. Stefan Tüngler agreed on this, and introduced that the German energy reform started ever since the Fukushima Nuclear Power Plant accident in 2011 has enormously promoted the investment into the renewable energy industry. At the same time, with a sharp decline of nuclear power in the energy proportion, 2/3 of the current German energy supply depends on imports. To the dispute resolution industry, this undoubtedly means that arbitration services within the energy industry would become an important business for international legal professionals. The Hon. Prof. Dr. Andreas Reiner referred to statistics that more clearly confirm such expectation: around 20% ICC arbitrations in 2015 were energy related disputes. At last, the three speakers expressed their respective views on the Energy Charter Treaty’s functions and effects. Such brainstorming ignited the passions of the audience, and the Summit came into a more delightful stage.
Session on Energy The Hon. Prof. Dr. Andreas Reiner
Dr. Libin Zhang Dr. Stefan Tüngler
Session on International Trade
Following the discussion on energy, Dr. Wolfgang Kühn, a senior partner of Heuking Kühn Lüer Wojtek, Dr. Xuehua Wang, a partner of Huanzhong & Partners, and Dr. Christine Heeg-Weimann, Secretary General of the China European Arbitration Center and a partner of KPMG composed the panel on International Trade. From the aspect of the close relationship of China-German cooperation, Dr. Wolfgang Kühn spoke high of the Annual Review on International Trade Dispute Resolution (2016). He pointed out that this sub-report provides rich content and accurate data, and the expertise knowledge in line with German professionals as reflected in relevant cases particularly deserves affirmation. Dr. Xuehua Wang then pointed out by reference to different data that despite the governmental authorities thought the decline of several imports and exports indexes indicated an extremely complexity of the past year’s international trade, the growth of online cross-border trade and technical service trade reflected therefrom has shown the real change and demand of the structural adjustment of the Chinese economy. Dr. Wang also presented a detailed introduction of China’s conclusion of free trade agreements with other countries and the progress of the Belt and Road Initiative’s landing in Asian, African and European countries. He was of the opinion that despite the slowdown of the speed of the Chinese economy growth, a series of measures such as the Shanghai Free Trade Zone and the acceptance of the WTO Trade Facilitation Agreement reflect the trend of the Chinese economy’s de-centralization and de-administration, and the economic exchange between China and the world will lead to more win-win outcomes. Dr. Christine Heeg-Weimann pointed out in her comments that to Germany, China is a trading partner next only to the EU and America, which is not only embodied in those bilateral import and export statistics, but also in the specific arbitration and legal practice of both countries. Dr. Wolfgang Kühn then referred to Article 32 of the BAC Arbitration Rules and said that “take a look at Article 32 of BAC’s rules, the production of evidence reflects what we the practitioners from Civil Law countries are really familiar with”. Dr. Christine Heeg-Weimann at last suggested from the perspective of dispute resolution that a good many German invested enterprises registered in China may need to further improve their legal departments’ recognition of arbitration industry and arbitration services of the two countries, and only legal services in a higher level could match the very important and converging trading partner relationship between the two countries.
Session on International Trade Dr. Wolfgang Kühn
Dr. Xuehua Wang Dr. Christine Heeg-Weimann
At the close of the sessions in the morning, the audiences were still in high spirit and had further exchange and discussion with Chinese colleagues during the lunch break.
Session on Finance
After a short break, the first session in the afternoon convened on dispute resolution in the Chinese financial industry in 2015. This session was moderated by Dr. Rupert Bellinghausen, the head of Linklaters LLP’s German Dispute Resolution Practice. Dr. Xiuming Tao, a partner of JunZeJun Law Offices, acted as the keynote speaker and Dr. Peter Heckel, a partner of Hengeler Mueller, the commentator. Dr. Rupert Bellinghausen delightedly said that “probably you can say the whole German or EU bank industry is centered in Frankfurt, and it is good to have this discussion on finance related issues in Frankfurt.” Next, Dr. Xiuming Tao frankly pointed out based on the Annual Review on Financial Dispute Resolution (2016) that the slowdown of the Chinese economy’s growth brought extreme complexity to the financial industry in 2015, namely, the contradiction between the economic signals reflected in the financial industry and the real economy. On one hand, financial innovation impetuses including the “internet plus” have appeared in the financial industry that is accompanied with the market prosperity. On the other hand, the shadow banking risk and the stagflation pressure have been emerging, from which the financial market has remained gloomy. Dr. Tao also referred to several cases in 2015 and analyzed that the refinancing risk accumulated from a large number of irregular financing channels have already been reflected in real arbitration and litigation cases. To legal professionals, this means the need to further learn about the relevant financial structures, as well as the request for competence of qualitative and quantitative analysis of risks and accurate decision on loss amount. Dr. Peter Heckel commented that after the financial tsunami in 2007, the German financial industry has also experienced a growth peak of financial disputes, which, from the perspective of the world economic cycle, seems unavoidable. Nevertheless, based on the German experience, he said that the “Ombudsman” mechanism might better resolve such financial cases that are repetitive, single and standard contractual disputes. Furthermore, Dr. Peter Heckel highlighted that with regard to the decision made under the “Ombudsman” mechanism, the proportion of self-performance of such decisions “is surprisingly high”. At last, Dr. Tao summarized that the dispute resolution within the financial industry and the development of the financial industry are subject to the policy makers’ choice and balance between the regulation and the restraint of financing, and thus the strong growth of China’s overseas investment statistics must be backed by strong financial legal services. On this point, Chinese legal professionals should be further equipped with international perspectives and skills.
Session on Finance Dr. Rupert Bellinghausen
Dr. Xiuming Tao Dr. Peter Heckel
Session on Investment
Following the previous session, the panel consisted of Mr. Robert Hunter, the founding partner of Chambers of Robert Hunter, Mr. Zhi Bao, a partner of Fen Xun Partners, and Dr. Sabine Stricker-Kellerer, Senior China Counsel of Freshfields Bruckhaus Deringer LLP conducted a hot discussion on the basis of the Annual Review on Investment Dispute Resolution (2016). Mr. Bao summarized that many changes were seen within the Chinese investment industry, and the most obvious one was the transform of traditional investment channels into newly emerging investment channels. Due to the shortage of investment channels, the low efficiency of financial resources allocation, the preference change of regulatory measures, the different maturity of counter parties and other factors, more and more domestic and overseas capitals have gradually stepped away from traditional financial channels, but were actively invested through P2P, Masked-PE-Fund, protocol control and the like in mainland China. On one hand, investment of many “unqualified” investors have promoted the concentration of systematic risk. On the other hand, however, it pushed the reform of regulatory policies, and raised the risk awareness of a good many legal professionals and related practitioners within the investment industry. Mr. Bao said that the transition from approval system to registration system in the stock market, the implementation of the negative list for market access and the release of the draft Foreign Investment Law for comments are all hot topics in China’s investment industry in 2015. The signs suggest that the Chinese investment industry will need to find a key opportunity of transition. He further pointed out that the tension between the free market economy and the government’s strong hand directing the economy resulted in the periodic fluctuation of the investment market. To those professionals ambitious to participate in arbitration practice and the investment legal service in China, it is a must to have an in-depth understanding of difficult problems such as the “look though principle”, the “value adjustment rules” and the “share repurchase arrangement” in 2015 and many years to come. Dr. Sabine Stricker-Kellerer showed strong interest in Mr. Bao’s speech. From various aspects, she pointed out that it might be incomplete to decide whether to invest merely based on the statistics of foreign direct investment. Today, with an increasingly quickened pace of globalization, it is the complexity of investment and the maturity of dispute resolution service that really reflect and measure the attractiveness of the investment destinations. She further said that “we have to think about the predictability of the foreign investment in China. When we took it for grant that the word ‘foreign related’ is a reason of differentiating it from the domestic regime, we have to ask why”. She thought that to a state, either for domestic arbitration or for international arbitration, the attractiveness of arbitration service itself and even the whole system where arbitration service is located in ultimately lies in the certainty it can provide. Mr. Robert Hunter agreed with her, and believed that it will be a significant progress if the Foreign Investment Law comes into force in China.
Session on Investment Mr. Robert Hunter
Mr. Zhi Bao Dr. Sabine Stricker-Kellerer
Session on Real Estate
Next, Ms. Jutta Wittler, a partner of Luther acting as the moderator, Mr. Dennis Deng, a partner of Dacheng Law Offices the keynote speaker, and Mr. Peter Bert, a partner of Taylor Wessing the commentator conducted a discussion on the content of the Annual Review on Real Estate Dispute Resolution (2016). Mr. Deng introduced the overall development of the Chinese real estate market in 2015, and by referring to detailed data and cases, he helped the audience to understand the major changes in the Chinese real estate market under the economic stimulus policies that were widely seen in China in recently years. To some sense, the development of Chinese real estate market is directly related with the economic reform, and although the risks within this industry are still controllable with the support of various policies and capitals, the reduction of such risks will act as an important pressure valve. To the dispute resolution industry, arbitration is a proper way to resolve many disputes arising from the real estate industry. In addition, Mr. Deng said that mediation is also an important way of dispute resolution, and there are plenty of opportunities in the Chinese real estate industry for mediation. Compared with litigation and arbitration, dispute resolution through mediation will considerably minimize those unreasonable costs of the parties. Mr. Peter Bert fully agreed on this point. He further said that mediation, especially the court mediation mechanism, often works for certain kinds of disputes. When it comes to international cases, however, the cross-border enforceability is still a great advantage of the arbitration industry and its development. If merely from the dispute resolution perspective, the German real estate industry has many system designs that help to avoid disputes. Taking examples of the conclusion of real estate acquisition agreements and the payment and delivery that frequently cause disputes, German practitioners and investors often adopt the approach of witness notarization as an alternate measure in case the pre-transaction due diligence investigation is unfinished or unworkable. Ms. Jutta Wittler agreed with them, and chaired a discussion among the speakers on the specific practice of the closing and the due diligence investigation of real estate project.
Session on Real Estate Ms. Jutta Wittler
Mr. Dennis Deng Mr. Peter Bert
Session on Intellectual Property
The subsequent session was moderated by Mr. Felix Rödiger, a partner of Bird & Bird. Dr. Guanbin Xie, the founding partner of Lifang & Partners, delivered the keynote speech on the Annual Review on IP Dispute Resolution (2016), and Dr. Bing Cheng, a partner of AnJie Law Firm thereafter made comments. Mr. Felix Rödiger stressed that the IP legal system of a state is to serve the demand of internationalized users and enterprises, and the discussion on IP dispute resolution is therefore of particular significance. Dr. Guanbin Xie agreed on this, and followed the moderator’s words by saying that a series of Civil Law hearing measures adopted in the Chinese IP areas such as the burden of proof inversion will for sure lead to a well exchange between the IP legal professionals of both countries. He introduced that the openness of Chinese courts in awarding compensation for IP infringement damages in recent years has shown China’s stress laid on IP protection. It has been reflected in more and more practice and cases that the “punitive damage” will be unavoidable in arbitration or litigation cases caused by IP infringement. On the other hand, Dr. Xie presented an introduction of the draft amendment to the Chinese Patent Law released for comments in 2015. The measure of “preliminary injunction” has been adopted in the draft. He said that if such an adoption could be realized, parties requesting the infringing parties to cease the acts of infringement will have a better interim measure in the near future. And accordingly, when dealing with relevant IP disputes, arbitration institutions will be able to provide more convenience to the parties. Dr. Cheng then introduced the establishment of IP courts in China in 2015 from the aspect of legal system reform. From different perspectives, she commented on the decision standard for trademark belonging in the Petual case mentioned in Dr. Xie’s speech. The three panelists also discussed the potential IP disputes in the OEM business. Dr. Xie at the end concluded that in arbitration or other dispute resolution practice, the decision standard for infringement and the proving method thereof require for excellent professional skills and extensive knowledge of the industry, and only starting from the two points could one provide more qualified IP legal services to the parties.
Session on Intellectual Property Mr. Felix Rödiger
Dr. Guanbin Xie Dr. Cheng Bing
Session on Construction Project
The last session was moderated by Mr. Claus H. Lenz, the founding partner of Lungerich Lenz Schuhmacher. Ms. Jinghui Tan, Director of the City Development (Beijing) Law Firm, gave her keynote speech on construction project based on the Annual Review on Construction Dispute Resolution (2016). Mr. Andrew Burr, a barrister and arbitrator of ArbDB, and Dr. Ragnar Harbst, a partner of Baker & Mckenzie, jointly acted as commentators. Ms. Tan firstly summarized the most frequently seen categories of dispute within the Chinese construction project industry with informative statistics, where the top three categories are disputes arising from illegal subcontracting, construction quality and construction duration delay. Combined with her own arbitration experience, Ms. Tan mentioned that when dealing with construction project disputes it is necessary to pay sufficient attention to construction documents, which requires that the arbitrators and counsels of the parties should not only have enough understanding of laws and regulations relating to construction project, more importantly, they should have full stress on and understanding of construction documents. For this reason, construction project arbitrations are often highly complicated, leading to a heavy workload of preparation. Apart from that, Ms. Tan also introduced the application of Building Information Modeling, and analyzed issues such as the validity of bidding documents and the audit of public projects which are usually involved in China related dispute resolution procedures. Meanwhile, she was of the view that with the boom of PPP projects, as well as the implementation of the Belt and Road Initiative, the economic downturn can be deemed as an opportunity of “structural adjustment” for the construction project industry. To legal professionals within the construction project industry, how to properly handle existing construction disputes and how to avoid or manage risks during the stages of contract conclusion and construction are topics worthy of in-depth exploration. Thereafter, Mr. Andrew Burr provided a detailed introduction of the significance of construction dispute review mechanism to the construction project industry by reference to the process of the draft and revision of the BAC Construction Dispute Board Rules. By quoting an interesting story, he said that even though the provisions of construction contracts are numerous and complex, attention should be paid to each sentence, each word, and even each punctuation. Otherwise, even the ambiguity caused by a careless punctuation mistake may lead to a complete loss in case of dispute. Mr. Claus H. Lenz and Dr. Ragnar Harbst agreed, and further pointed out that if contemplating construction project disputes under the background of international arbitration, the key point will be whether they can be cost-efficiently resolved. Arbitral proceedings of mainstream international arbitration institutions often last for several years in such disputes, but is that really in line with the parties’ business interests? Dr. Ragnar Harbst said that “rough proceedings could bring a quicker outcome while a sophisticated proceeding may result a prolonged outcome”. That is what should be considered by legal professionals.
Mr. Claus H. Lenz Ms. Jinghui Tan
Mr. Andrew Burr Dr. Ragnar Harbst
At the end of the comments in each session, the audience had heated discussions and exchanges with speakers on hot topics of the respective sessions.
Q&A Section
Q&A Section
The full day Summit was a rich and rewarding event, where speakers of both countries provided insights into various hot topics and presented in-depth, clear and complete interpretation on content of the Annual Report 2016. Few audiences ever left till the end of the last session. In the closing speech, Dr. Dorothee Ruckteschler had a strong feeling in this regard. She said that “two way communications are necessary for us understanding each other. BAC’s summit offers a good opportunity of rethinking the dispute resolution.” Dr. Dorothee Ruckteschler stressed that the exchange between the legal service industries of both countries should pay more attention to the source and idea of law that they share. She was of the opinion that if arbitration practitioners of both countries often have constructive and in-depth professional exchange like this, it will be hard to imagine that the validity of arbitration clause could remain to be a frequently seen problem of arbitration as shown in judicial statistics. In her summary of this Summit, Dr. Dorothee Ruckteschler thought that this full day exchange between top German and Chinese experts was truly enlightening, and perhaps all the legal professionals should be more user-oriented. Based on mutual exchanges, legal professionals of both countries should consider more about how to better help the parties to resolve their disputes, and how to provide dispute resolution services that are more consistent with the parties’ interest. At the end of the Summit, Dr. Chen Fuyong extended thanks on behalf of the BAC delegation to all the speakers for their attention and contribution. He addressed that the consideration about the legal service industry and the prospect of the dispute resolution system as Dr. Dorothee Ruckteschler presented in her closing remark is exactly the original reason for the BAC’s organization of the Annual Report and the Summit.
Dr. Dorothee Ruckteschler
Here the full day’s event came to its end. After the Summit, the hosts held a cocktail reception. Most speakers and audience attended the reception had a further exchange and communication.
Cocktail reception
Looking back on the Summit, it can be said that the in-depth exchange between Chinese and German professionals to a certain extent is a pioneer event. On one hand, Chinese speakers of the BAC delegation provided candid and in-depth analyses on various areas, from which both German speakers and foreign audience attending the event had a deeper understanding about Chinese dispute resolution, and quite a few misunderstanding of and prejudice against the business environment and commercial dispute resolution in China were decreased. On the other hand, German speakers’ fully and carefully prepared speeches let the BAC delegation learned more about German practice and German perspectives, which will be helpful to establish mutual trust in their future practice in providing legal service to German parties. In addition, the BAC’s cooperation with the DIS in this Summit is proved to be a well form of cooperation, and the two institutions’ mutual support and mutual trust to each other during the preparation of this event makes it possible for the BAC to further expand the influence of the Annual Report series and the Summit series in a larger scope in the future. The success of this Summit has not only promoted the BAC’s image value and brand value, but has helped to make the Chinese business environment and dispute resolution industry more transparent and trust worthy. The BAC in the future will continue to organize the Annual Report series and to host international colloquia or other events, so as to proactively promote the international development of the Chinese arbitration, and to contribute its share to the growth of the Chinese arbitration industry and even the whole legal service industry’s competence of competition and cooperation on the international stage.
Group photo of speakers and BAC staffs