AIIB focuses on dispute resolution process

The Asian Infrastructure Investment Bank, a multilateral financial institution headquartered in Beijing, held an international legal conference in the capital this week to examine and promote effective dispute resolution.

Its efforts seek to develop robust dispute resolution mechanisms and to create a diverse intellectual environment from which the AIIB can take away useful lessons.

"We want to know what others have experienced, what lessons they have to teach us, and the areas where we could innovate, rather than just following past practices," said Peter Quayle, head of corporate law at the AIIB.

About 80 participants representing more than 20 different international organizations and financial institutions attended the 2018 AIIB Legal Conference that ended on Thursday. Representatives from the world's leading international arbitration centers, courts, tribunals and law firms also attended.

Paul Sandosham, a partner of global law firm Clifford Chance LLP, traveled to Beijing to attend the legal conference, the second the AIIB has organized.

"What's particularly interesting is that the AIIB has chosen the topic of dispute resolution as the centerpiece for discussion this year. I think it just illustrates the importance they place on the dispute resolution process and their recognition of the significant part it plays in any project development ... This demonstrates a good level of proactiveness: organizations are looking ahead and putting mechanisms in place to deal with potential future disputes," Sandosham said.

As the sheer volume of business going through the organizations that deal with disputes has increased phenomenally, it is natural to see an equivalent increase in disputes, said Gerard J. Sanders, general counsel of the AIIB.

"If there is a dispute, we want to make sure that we thought about that in advance and we have a sensible way of resolving these disputes, so that the projects can be completed and the parties can all be treated fairly and in accordance with their legal rights," said Sanders.

"At the AIIB, we are keen to make sure that we do everything in a very honest, transparent and open way so that it reduces the likelihood of any kind of disputes arising. But if disputes do arise, to have them properly resolved, we need to have good relationships with arbitral institutions in advance, so they can assist us and the parties to find solutions," he said.

The AIIB is reaching out to the legal academic community and arbitral institutions to reinforce the point, to an external audience, that it is a rule of law-based institution, he said.

According to the 2017 annual report of the Singapore International Arbitration Centre, parties from India and China have remained strong contributors of cases to the center over the past six years. A total of 77 Chinese parties filed new cases with the center last year, ranking as its second-largest foreign user, following 176 Indian parties.

A lack of understanding of their respective contractual obligations is a common cause for disagreements among parties, said Clifford Chance partner Sandosham.

"Parties have a certain perception of what they are obliged to do, but often in reality the terms of the contract do not reflect that understanding. Parties need to take the time to make sure the precise terms agreed between themselves are accurately set out in the contract," he said.