China Pushes for Increase in Online Dispute Resolution as It Reboots Economy

Vincent Chow on Law.com March 19th:

‘China was promoting online dispute resolution even before the coronavirus outbreak. Now, the government wants to see more of it, as business in the country resumes. But questions remain as to whether it will catch on for international disputes.

“As China slowly sends people back to work in an effort to reboot its economy, the government is advising dispute resolution organizations across the country to bolster their online dispute resolution efforts as it anticipates an increase in domestic disputes emerging from the coronavirus pandemic.

The Ministry of Justice issued a guideline on March 3 calling for the accelerated development of China’s “internet arbitration systems.” The guideline emphasizes the importance of online dispute resolution, or ODR, for achieving its goal of getting the economy back on track while still maintaining control over the spread of COVID-19…

The move is part of China’s broader promotion of alternative dispute resolution. The Ministry of Justice has issued several directives in recent weeks encouraging the use of arbitration and mediation to resolve disputes caused by COVID-19 and the stringent government restrictions on the movement of people that resulted…

In the past, online dispute resolution in China was primarily used for resolving internet-related disputes such as e-commerce and domain name disputes. However, the guidelines instruct arbitration institutions to expand its use to include disputes expected from work resumption after an extended break, including debt issues, labor disputes and work injury compensation. Institutions should even defer payment for their services if the businesses are facing financial difficulty as a result of the pandemic, the government has said.

“The Chinese government certainly wants to see more ODR now,” said Ronald Sum, a Hong Kong-based dispute resolution partner at Addleshaw Goddard. “But its support for ODR precedes the current crisis.”

In early December, China’s Supreme Court issued a white paper outlining the government’s strategy to develop the “internet judiciary.” It included measures to improve the court’s online mediation platform, which has resolved over one million disputes since launching in 2016. In the last three years, China has set up “internet courts” with the capability to handle entire proceedings online in the major cities of Hangzhou, Beijing and Guangzhou.

…Hong Kong is also developing its online dispute resolution capabilities. Later this year, the city will launch its first online dispute resolution platform, eBRAM. The platform will employ blockchain and artificial intelligence technology and is designed to address concerns among practitioners about the feasibility of replicating entire dispute resolution proceedings online…

“Parties, tribunals and the courts are more willing than ever to rely on technology to resolve disputes in Hong Kong,” she said.

Sum, former chairman of the International Chamber of Commerce Hong Kong Arbitration and Alternative Dispute Resolution subcommittee, believes that the outbreak has improved both practitioners’ and businesses’ attitudes towards online dispute resolution. He expects Chinese parties’ demand for online dispute resolution services to increase moving forward.

“The pandemic has changed people’s thinking generally on what work can be done remotely—dispute resolution is no exception,” he said…

“Domestic acceptance [in China] of ODR is higher than it is internationally,” Sum said. “You see this reflected in Chinese society broadly, where people are very receptive to technological changes—for example in e-payments and e-commerce. Therefore, although ODR is developing fast in China, the systems are being designed to fit domestic disputes rather than cross-border disputes.”

Vincent Mu, a Shanghai-based partner at Llinks Law Offices and an arbitrator at the Shanghai International Arbitration Centre and the HKIAC, also expects to see more online dispute resolution developments in China. However, he is unsure whether it is wise to move entire proceedings online.

“Hearings are about communicating with the judges, the arbitrators and other participants of the proceedings,” he said. “Where an important case is concerned, I would always prefer to plea the case in a face-to-face manner.”’