Flexible institutionalization: a critical examination of the Chinese perspectives on dispute settlement for the Belt and Road

ABSTRACT

This paper critically introduces a few Chinese perspectives on dispute settlement for the Belt and Road Initiative (BRI) as presented in the articles included in this special issue. It starts with proposing the theory of ‘flexible institutionalisation’ as an analytical framework to capture the nature and intention behind China’s effort in developing BRI dispute resolution mechanism, followed by an examination of the legal characteristics of – and the legal changes facing – dispute settlement in the BRI, which has not been thoroughly addressed and analysed in the existing literature. It then offers an overview of the Chinese effort to establish a China-led dispute settlement system for the BRI. With this background, the paper presents the main argument and perspective in each article in this special issue. It concludes with reflections on the shortcomings of the special issue to the literature on BRI dispute settlement, as well as, the concerns China has to take into consideration in its ambition to construct China-led mechanisms for dispute settlement for the Belt and Road.

Acknowledgements

The author would like to thank all the authors in this special issue. Some of the same papers were originally presented at the International Conference on Dispute Settlement in the Belt and Road Initiative held in Singapore on 14-15 November 2019, which was co-organized by Associate Professor Wee Meng Seng and me with the generous financial and logistical support of the EW Barker Centre for Law and Business (EWCLB) of the Faculty of Law of National University of Singapore led by Professor Hans Tjio. The author should also thank Julien Chaisse and Kelvin Low for their extremely helpful editorial comments and Madeleine Fitzpatrick for her meticulous editorial management work. The usual disclaimer applies.

Notes

1 For a brief introduction about the background and framework of the BRI, see Jiangyu Wang, ‘Dispute Settlement in the Belt and Road Initiative: Progress, Issues and Future Research Agenda’ (2020) 8:1 The Chinese Journal of Comparative Law 5–7.

2 Ministry of Commerce Press Conference on the Work and Operation of Commerce in China [商务部召开2020年商务工作及运行情况新闻发布会], PRC Ministry of Commerce, 29 January 2021, at http://www.gov.cn/xinwen/2021-01/29/content_5583641.htm (visited 2 Feb 2021) (MOFCOM press conference).

3 See Office of the Leading Group for Promoting the Belt and Road Initiative, The Belt and Road Initiative: Progress, Contributions and Prospects (Foreign Languages Press, 2019), 31 (hereinafter BRI Progress, Contributions and Prospects).

4 MOFCOM press conference (n 2). See also, ‘China Is Making Substantial Investment in Ports and Pipelines Worldwide’, The Economist, Feb 6th 2020 edition, available at https://www.economist.com/special-report/2020/02/06/china-is-making-substantial-investment-in-ports-and-pipelines-worldwide (visited 20 Jan 2021).

5 MOFCOM press conference (n 2).

6 See ‘Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road’, issued by the PRC National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce (28 March 2015), at https://www.beltandroad.gov.hk/visionandactions.html (visited 1 Jan 2021) (hereinafter ‘BRI Vision and Actions’). See also Wang (n 1) 11 (noting ‘there was no mention of ‘disputes’, let alone formalized dispute settlement mechanisms, in the early BRI policy papers issued by the Chinese government’).

7 See Wang Qi, ‘Understanding and Constructing Dispute Settlement Mechanisms for the Belt and Road [王琦:《‘一带一路’争端解决机制的阐释与构建》]’ (2008) Issue 8 Law Science Magazine [《法学杂志》] 13–23 (surveying the statements of Chinese politicians and leading judges on BRI dispute settlement); Wang Guiguo, ‘A Study of Dispute Settlement System for the Belt and Road [王贵国:《‘一带一路’争端解决制度研究》]’ (2017) Issue 6 China Legal Science [《中国法学》] 56–71. On international literature, see Julien Chaisse and Jedrzej Gorski (eds), The Belt and Road Initiative: Law, Economics, and Politics (Brill Nijhoff, 2018); Yun Zhao (ed), International Governance and the Rule of Law in China under the Belt and Road Initiative (Cambridge University Press, 2018); Jiangyu Wang (ed), ‘Special Issue: Dispute Settlement in the Belt and Road Initiative’ (2020) 8:1 The Chinese Journal of Comparative Law; Heng Wang, ‘China’s Approach to the Belt and Road Initiative: Scope, Character and Sustainability’ (2019) Journal of International Economic Law 29–55; Weixia Gu, ‘Hybrid Dispute Resolution Beyond the Belt and Road: Toward a New Design of Chinese Arb-Med(-Arb) and Its Global Implications’ (2019) 29:1 Washington International Law Journal 117–172; Alyssa VM Wall, ‘Designing a New Normal: Dispute Resolution Developments along the Belt and Road’ (2019) 52 NYU J Int’l L & Pol 280–313; Zachary Mollengarden, ‘“One-Stop” Dispute Resolution on the Belt and Road: Toward an International Commercial Court with Chinese Characteristics’ (2019) 36:1 Pacific Basin Law Journal 65–111; Matthew S Erie, ‘The New Legal Hubs: The Emergent Landscape of International Commercial Dispute Resolution’ (2020) 60 Virginia Journal of International Law.

8 China Heilongjiang International Economic & Technical Cooperative Corp., et al, v. Mongolia, PCA Case Number 2010–2020 https://pca-cpa.org/en/cases/48/. Proceeding of this case was commenced in 2010 and the final award issued on 30 June 2017.

9 See (n 30) and the accompanying texts. See also Wang (n 1) 11–12.

10 See generally, Xiangzhuang Sun, ‘A Chinese Approach to International Commercial Dispute Resolution: The China International Commercial Court’ (2020) 8:1 The Chinese Journal of Comparative Law 45–54; Long Fei, ‘Innovation and Development of the China International Commercial Court’ (2020) 8:1 The Chinese Journal of Comparative Law 40–44; Julien Chaisse and Xu Qian, ‘Conservative Innovation: The Ambiguities of the China International Commercial Court’ (2021) 115 AJIL Unbound 17–21; Guiguo Wang and Rajesh Sharma, ‘The International Commercial Dispute Prevention and Settlement Organization: A Global Laboratory of Dispute Resolution with an Asian Flavor’ (2021) 115 AJIL Unbound 22–27; Lance Ang, ‘International Commercial Courts and the Interplay between Realism and Institutionalism: A Look at China and Singapore’ (2020) HILJ Online Scholarship https://harvardilj.org/2020/03/international-commercial-courts-and-the-interplay-between-realism-and-institutionalism-a-look-at-china-and-singapore/.

11 Chaisse and Xu (n 10) 17. See also Erie, ‘New Legal Hubs’ (n 10) 278.

12 Hans Keman, ‘Institutionalization’ in Mark Bevir (ed), Encyclopedia of Governance (Sage Publications, 2007) 453.

13 Ibid.

14 See ‘Court Rules’ http://cicc.court.gov.cn/html/1/218/19/278/index.html.

15 Wang ‘China’s Approach to the BRI’ (n 7) 31 and 43.

16 See (n 44) and the accompanying texts.

17 See generally, Chaisse and Xu, ‘Conservative Innovation’ and Ang, ‘Interplay between Realism and Institutionalism’ (n 10).

18 See Wang, ‘Dispute Settlement in the BRI’ (n 1) 6.

19 Ibid, 7–8.

20 Ibid, 8–9.

21 Ibid, 9–10.

22 See Andrew Small, ‘First Movement: Pakistan and the Belt and Road Initiative’ (2017) 24 Asian Policy 80. See also Council on Foreign Relations (CFR), ‘China’s Belt and Road: Implications for the United States’ (2021) Independent Task Force Report No. 79 36–29.

23 Small (n 27) 82.

24 FM Shakil, ‘China Slowly Retreating from Pakistan’s Belt and Road’ Asia Times (https://asiatimes.com/2020/12/china-slowly-retreating-from-pakistans-belt-and-road/, 26 December 2020).

25 Adnan Aamir, ‘China and Pakistan fall out over Belt and Road frameworks’ Nikkei Asia (https://asia.nikkei.com/Spotlight/Belt-and-Road/China-and-Pakistan-fall-out-over-Belt-and-Road-frameworks, 19 January 2021).

26 Ibid.

27 See Wang (n 1) 7–8.

28 See Mercy A Kuo, ‘Malaysia in China’s Belt and Road’ The Diplomat (23 November 2020).

29 CFR, ‘China’s Belt and Road’ (n 30) 42–43.

30 Similar problems have occurred between China and Central Asia countries. See Roza Nurgozhayeva, ‘Rule-Making, Rule-Taking or Rule-rejecting under the Belt and Road Initiative: A Central Asian Perspective’ (2020) 8:1 The Chinese Journal of Comparative Law 250–78.

31 Martin David et al, ‘BRI Risk Mitigation and Dispute Resolution Options in the Coming Decade’ (December 2019) 28 Asian Legal Business.

32 ‘IBA OBOR Subcommittee Semi-Annual Report’ December 2019 https://www.ibanet.org/Regional_Fora/Regional_Fora/Asia_Pacific_Forum/OBOR/Default.aspx.

33 James Rogers et al, ‘Belt and Road Initiative disputes: bumps in the road?’ (2018) Issue 11 Norton Rose Fulbright International Arbitration Report 24.

34 Wang (n 1) 9.

35 See Cao Yin, ‘Courts Handling ‘a boom’ of Belt and Road Cases’ China Daily (http://www.chinadaily.com.cn/china/2017twosession/2017-03/15/content_28559326.htm, 15 March 2017).

36 Qiao Liu, ‘The Use of Case Law in China’s Belt and Road Initiative’ in this special issue offer a thorough study of the two types of BRI model cases issued by the SPC.

37 A collection of the 18 typical cases, issued by the SPC in 2015 and 2017 respectively, can be found at the B&R Cases database of Stanford Law School’s ‘China Guiding Cases Project’ https://cgc.law.stanford.edu/zh-hans/belt-and-road/b-and-r-cases/?page=1.

38 ‘Supreme People’s Court Promulgates Guiding Cases relating to the Belt and Road [最高人民法院发布涉‘一带一路’建设专题指导案例]’, 25 February 2019 http://cicc.court.gov.cn/html/1/218/149/192/1190.html.

39 Ibid.

40 Ibid.

41 On current information about WTO disputes involving China, see ‘China and the WTO’, the World Trade Organization https://www.wto.org/english/thewto_e/countries_e/china_e.htm.

42 Lai Huaxia and Gabriel M Lentner, ‘Paving the Silk Road BIT by BIT: An Analysis of Investment Protection for Chinese Infrastructure Projects under the Belt and Road Initiative’ in Julien Chaisse and Jedrzej Gorski (eds), The Belt and Road Initiative: Law, Economics, and Politics (Brill, 2018), 220-.

43 Lai and Lentner ‘Paving the Silk Road BIT by BIT’ 259.

44 Ibid, 260.

45 See Yuwen Li and Cheng Bian, ‘China’s Stance on Investor-State Dispute Settlement: Evolution, Challenges, and Reform Options’ (2020) 67 Netherlands International Law Review 503, 504.

46 Afghanistan, Bhutan, Timor-Leste, Maldives, Nepal, Iraq, Palestine and Montenegro are such countries. See Jingzhou Tao and Mariana Zhong, ‘The Changing Rules of International Dispute Resolution in China’s Belt and Road Initiative’ in Wenxian Zhang et al (eds), China’s Belt and Road Initiative: Changing the Rules of Globalization (Palgrave Macmillan, 2018) 305, 317.

47 Ibid.

48 See Dilini Pathirana, ‘Making an Arbitration Claim Chinese BITs: Some Inferences from Recent ISDS Cases’, (2017) 5:2 The Chinese Journal of Comparative Law 420, 431.

49 See ‘One Belt One Road and Investment Treaty Disputes’, Bird & Bird (December 2018) https://www.twobirds.com/en/news/articles/2018/china/one-belt-one-road-and-investment-treaty-disputes.

50 See eg, Gao Tiantian, ‘On the Feasibility of Using the WTO Dispute Settlement Mechanism as the Trade Dispute Settlement Mechanism for the “Belt and Road” Initiative’, (2018) 8:1 Journal of WTO and China 70–86.

51 ‘BRI Vision and Actions’, Part V: ‘Cooperation Mechanisms’ (n 6).

52 See ‘IBA OBOR Subcommittee Semi-Annual Report’ (n 37) 10 (noting that ‘with an initiative as abroad and ambitious as the Belt and Road … the need for an efficient and universally enforceable dispute resolution mechanism is particularly relevant’. See also Guiguo Wang, ‘The Belt and Road initiative in Quest for a Dispute Resolution Mechanism’ (2017) 25:1 Asia Pacific Law Review 1–16; Weixia Gu, ‘Belt and Road Dispute Resolution: New Development Trends’ (2018) 36 Chinese (Taiwan) Yearbook of International Law & Affairs 150, 151.

53 See BRI Progress, Contributions and Prospects (n 3).

54 Wang, ‘China’s Approach to the BRI’ (n 7) 36.

55 Lee Jeong-ho, ‘Japanese official Tadashi Maeda dismisses China’s Belt and Road Initiative as just a “political show”’ South China Morning Post, 18 October 2019, at https://www.scmp.com/news/china/diplomacy/article/3033470/top-japanese-bank-official-tadashi-maeda-dismisses-chinas-belt (visited 5 January 2021).

56 Henrik Anderson, ‘Rule of Law Gaps and the Chinese Belt and Road Initiative: Legal Certainty for International Business?’ in Giuseppe Martinico and Xueyan Wu (eds), A Legal Analysis of the Belt and Road Initiative: Towards a New Silk Road? 103, 117–26 (Palgrave Macmillan, 2020).

57 Alyssa VM Wall, ‘Designing a New Normal: Dispute Resolution Developments along the Belt and Road’ (2019) 52 NYU J Int’l L & Pol 279, 289.

58 See ‘BRI Vision and Actions’ (n 11). See also Wang, ‘Dispute Settlement in the BRI’ (n 1) 11.

59 Jiangyu Wang, ‘China’s Governance Approach to the Belt and Road Initiative (BRI): Relations, Partnership, and Law’ (2019) 14:5 Global Trade and Customs Journal 222, 223.

60 Ibid, 224–25.

61 The General Office of the Communist Party Central Committee and the General Office of the State Council Issued the ‘Opinions Concerning the Establishment of International Dispute Settlement Mechanism and Institutions for the Belt and Road’ [中共中央办公厅,国务院办公厅印发‘关于建立‘一带一路’国际商事争端解决机制和机构的意见’] (Chinese Communist Party and the State Council, 27 June 2018) http://cicc.court.gov.cn/html/1/218/149/192/602.html accessed 20 March 2020 (hereinafter the ‘Decision on BRI Dispute Settlement System’). Note that the original text of the opinions has not been published and hence remains an ‘internal document’. See also Wang (n 1) 15.

62 Wang (n 1) 15.

63 ‘Decision on BRI Dispute Settlement System’ (n 21).

64 Wang (n 1) 15.

65 Gregory Shaffer and Henry Gao, ‘A New Chinese Economic Order’ (2020) Journal of International Economic Law 619.

66 See generally, Xiangzhuang Sun, ‘A Chinese Approach to International Commercial Dispute Resolution: The China International Commercial Court’, (2020) 8:1 The Chinese Journal of Comparative Law 45–54; Justice Steven Chong, ‘Dispute Settlement in the Belt and Road Initiative: Lessons from the Singapore Experience’ (2020) 8:1 The Chinese Journal of Comparative Law 30–39; Zhengxin Huo and Man Yip, ‘Comparing The International Commercial Courts of China with the Singapore International Commercial Court’ (2019) 68 ICLQ 903–42; Wei Cai and Andrew Godwin, ‘Challenges and Opportunities for the China International Commercial Court’ (2019) 68 ICLQ 869–902; Sheng Zhang, ‘China’s International Commercial Court: Background, Obstacles and the Road Ahead’ (2020) 11:1 Journal of International Dispute Settlemen 150–74.

67 Sun (n 26) 48.

68 Ibid, 49.

69 See Provisions of the Supreme People’s Court on Several Issues Concerning the Establishment of the International Commercial Court (《最高人民法院关于设立国际商事法庭若干问题的规定》), Fa Shi (2018) 11 Hao, adopted by the SPC on 25 June 2018 and effective as of 1 July 2018, Article 12, at http://www.court.gov.cn/zixun-xiangqing-104602.html (visited 2 January 2021) (hereinafter ‘Provisions establishing the CICC’).

70 Ibid, Article 13.

71 Ibid, Article 14. See also Sun (n 26) 49.

72 See (n 19) and (n 29), and the accompanying text.

73 See (n 11–17) and the accompanying texts.

74 Wang (n 1) 26–28.

75 On China’s BRI investment arbitration, see Julien Chaisse and Jamieson Kirkwood, ‘Chinese Puzzle: Anatomy of the (Invisible) Belt and Road Investment Treaty’ (2020) Journal of International Economic Law 1–25.

76 On a Central Asia perspective, see Nurgozhayeva, ‘An Central Asia Perspectie’ (n 35).

77 Wang (n 1) 24.

78 Ang (n 10).

79 Ang (n 10). See also Justice Steven Chong, ‘Dispute Settlement in the Belt and Road Initiative: Lessons from the Singapore Experience’ (2020) 8:1 The Chinese Journal of Comparative Law 30, 34.

80 Ang (n 10).

81 ‘Xi’s statements on the Belt and Road Initiative’ China Daily (http://www.chinadaily.com.cn/china/2017-04/15/content_28940829_15.htm, 15 April 2017).

82 Jacob Mardell, ‘Dispute Settlement on China’s Terms: Beijing’s New Belt and Road Courts' MERICS (https://merics.org/en/analysis/dispute-settlement-chinas-terms-beijings-new-belt-and-road-courts, 14 February 2018).