1. Resolution of Conflicts, Options under Mexican and Chinese Laws
Associate Professor Alan Kirtley
University of Washington School of Law
Seattle, Washington U.S.A.
4/25/2017

2. Doing Business in China
Panel 1 – Trade and Investment Patterns between Mexico and China
Panel 2 – Mexico and China in the WTO
Panel 3 – Negotiating Successfully with the Chinese
Panel 4 – Chinese Structures and Government Procedures
Panel 5 – Resolution of Conflicts

3. Program Outline
Discuss the problem of domestic litigation to resolve international business disputes
Review of available alternative dispute resolution mechanisms
Consensual vs. Adjudicative Processes
Considerations when selecting a provider and for drafting ADR clauses
Panel discussion, with audience participation, best practices for resolving international disputes

4. Anticipating Future Conflicts
Conflicts arising out of business transactions are inevitable
Lawyers must anticipate those conflicts
Include mechanisms for resolving for resolving future conflicts in the contract itself

5. Pitfalls of Litigation in International Business
Key questions for litigation –
What choice of governing law?
Where should a dispute be handled?
What venue?
Can assets be reached?
Are court judgments enforceable?
Is the dispute resolution clause in a contract unambiguous?
Have parties taken the necessary formalities to have an enforceable contract?

6. Dispute Resolution Processes
Continuum of ADR Processes:
Negotiation
Mediation or Conciliation
Mini-Trial
Mediation > Arbitration
Arbitration > Mediation
Arbitration

7. Dispute Resolution Processes
University of Washington Mediation Skills Training, Day 1
Dispute Resolution Processes
Court
Arbitration
Rights-based or
Interest-based
Adjudication
Mediation
Negotiation
Hybrid Processes
Mini-Trial, Med-Arb, Arb-Med,
Julia Ann Gold, January 2008

8. International Dispute Resolution
Arbitration is the dominant process for resolving international commercial disputes
There are good reasons to consider other forms of alternative dispute resolution
Parties may craft dispute resolution clauses that fit their particular transaction and needs
Parties may use a series of processes

9. International Dispute Resolution
Benefits of consensual processes
Disputes can be resolved:
Faster
Less expense
Less adversarial setting
Privately and confidentially
While maintaining a good business relationship

10. International Dispute Resolution
Benefits of consensual processes:
Disputes can be resolved based on the parties business interest rather than legal rights
Parties can design the process(es) that fit their particular needs
Parties can chose a third-party neutral with
Substantive law expertise
Technical expertise
Process expertise

11. International Dispute Resolution
Benefits of consensual processes:
Parties are more likely to comply with an agreed upon resolution than one imposed by an arbitrator
Parties maintain control of the outcome
Culturally the Chinese prefer to resolve disputes consensually rather that reverting to formal processes

12. International Dispute Resolution
Shortcomings of consensual processes:
Resolution may not be rights based
Information may be revealed in consensual that could harm arbitration
Lack of finality
Extra expense and time of unsuccessful consensual process

13. International Dispute Resolution
Benefits of arbitration:
International arbitration is well developed
Organizational providers of arbitration services have rule and procedures in place
Process will end with an enforceable decision – arbitral award

14. International Dispute Resolution
Short comings of arbitration:
Arbitration process is:
Very complex
Very time consuming
Very expensive
Adversarial setting damages business relationships
Parties lose control of the outcome
Concerns about recognition and enforcement of the award by a domestic court

15. International Dispute Resolution
A series of dispute resolution process steps may be desirable:
First Step – Negotiation
After notice of dispute
Executives meet within 30 days to negotiate
Second Step – Mediate or conciliation
If negotiation is unsuccessful
Parties agree to mediate or conciliate within 45 days
Third Step – Arbitration
If mediation or conciliation is unsuccessful
Parties agree to arbitrate

16. International Dispute Resolution
Benefits of a step process:
Dispute can be resolved quickly
Resolution can be based on business considerations
Business relationship can be maintained
Short comings of a step process:
Multiple processes can be
Time consuming
Expensive

17. Arbitration Between Chinese and Mexican Entities
Global Arbitration Review
China (1987) and Mexico (1958) are signatories to the Convention on Recognition and Enforcement of Foreign Arbitral Awards (New York Convention)

18. Arbitration Between Chinese and Mexican Entities
Mexican arbitration law incorporates the UNCITRAL Model Law on Arbitration
China has its own arbitration law that varies significantly from the UNCITRAL Model Law on Arbitration

19. Arbitration Between Chinese and Mexican Entities
Chinese arbitration law requires that the parties choose arbitrators from lists provided by one of the Chinese designated arbitration commissions (180 commissions in China)
Mexican arbitration law allows for more flexibility

20. Arbitration Between Chinese and Mexican Entities
Chinese arbitration bodies (180 commissions) e.g.:
China International Economic and Trade Arbitration Commission (CIETAC)
Shanghai International Arbitration Center (SIAC).
Beijing Arbitration Commission (BAC).

21. Arbitration Between Chinese and Mexican Entities
Mexican arbitration bodies e.g.:
Mexican Chapter of the International Chamber of Commerce
Arbitration and Mediation Commission of the Mexico City Chamber of Commerce (CANACO)
Mexican Arbitration Center (CAM)

22. Agreement Formalities
Chinese law requires that the arbitration agreement include:
Expression of parties’ desire to submit dispute to arbitration
Scope of the matter(s) to be arbitrated
Selection of the arbitration commission to administer the arbitration
An arbitration agreement that fails to name the institutional arbitration provider is likely to be invalid under Chinese law.

23. Arbitration Between Chinese and Mexican Entities
Mexican law requires that the arbitration agreement include:
In writing signed by the parties
Underlying contract has a legal purpose
Parties consent was not due to error, fraud or duress
Parties had legal capacity to sign

24. Considerations in Selecting the Arbitration Provider
Rules and procedures
Cost
Arbitration Panel
Place of arbitration
Language of proceeding
Representation by foreign lawyers
Law to be applied
Enforceability of the award
Appeal rights

25. Choice of Substantive Law
Both Chinese and Mexican law:
Allow the parties to a foreign-related contract to choose the governing substantive law for any controversy arising under their contract

26. Recognition and Enforcement of Awards
China and Mexico are increasingly integrating their economies with the rest of the world
As a result, both Chinese and Mexican courts are trending toward greater enforcement of foreign arbitral awards

27. Where to Arbitrate Nonetheless, avoid arbitrating in Mainland China
Chinese courts have greater authority to review and overturn arbitration awards rendered inside Mainland China
Compromise would be to arbitrate in Singapore or Hong Kong
Arbitral awards are treated as rendered by a signatory of the New York Convention

28. Model Dispute Resolution Clause
Hong Kong International Arbitration Rules
Following UNCITRAL rules
Mexican International Chamber of Commerce

29. Model Dispute Resolution Clause
International Chamber of Commerce:

30. Model Dispute Resolution Clause
Center for Public Resources (CPR)
American Arbitration Association:

31. Questions for the Panel
From the Mexican prospective:
What are the greatest concerns regarding dispute resolution?
What process have been most successfully used to resolve international commercial disputes?
Which dispute resolution providers have been most helpful?

32. Resolution of Conflicts, Options under Mexican and Chinese Laws
Associate Professor Alan Kirtley University of Washington School of Law Seattle, Washington U.S.A.