TECH MATTERS

AN OASIS OF NEUTRALITY ON THE DIGITAL SILK ROAD – ARBITRATING TECHNOLOGY DISPUTES (Part one of two)

In the Tech Matters Series, Shaun Leong, Partner based in the Singapore office of global law practice Eversheds Sutherland, Eversheds Harry Elias, considers, in collaboration with leading corporate personalities from the global tech ecosystem, the latest in technology law and disputes, trending challenges faced by technology companies, and other technology related issues.

For PART 1 of this piece, we consider the resolution of technology disputes along the Digital Silk Road and how the Beihai Asia International Arbitration Centre (“BAIAC”) features as an arbitration institution of choice when it comes to disputes of this nature.

In PART 2 of this piece, we are honoured to interview BAIAC’s Founding President, Professor Steve Ngo, where he discusses his views regarding the topic.

The Digital Silk Road

The Silk Road connected the East, the Middle East and the West in the times of our ancestors for the purposes of trade and commerce. Since 2013, the Chinese government has sought to revive the spirit of the Silk Road through its Belt and Road Initiative, which is a development strategy targeted at expanding China’s global connections. It is also a plan to address China’s industrial overcapacity. As part of the Belt and Road Initiative, the Chinese government coined the term Digital Silk Road in early 2015 and revealed their intention of connecting China to the rest of the world by building a new generation of technological systems that will provide the technical support necessary for this connection.

Since then, China has pushed for the pursuit of both domestic and foreign innovation-driven development and cooperation, such as through artificial intelligence, cloud computing and big data, to create a Digital Silk Road of the 21^st century. The Belt and Road Initiative is a timely form of inclusive globalisation as it connects landlocked and developing countries to the global economy through internet technologies such as big data and smart cities. 

China’s pursuit can be divided into domestic and foreign fronts. On the domestic front, China is focussed on developing advanced technologies such as satellite-navigation systems, artificial intelligence and quantum computing. On the foreign front, China has three obvious points of focus. First, it is supporting the building of digital infrastructure such as cellular networks, fibre optic cables and data centres abroad. Second, it is promoting e-commerce by allowing for digital free trade zones. Third, it seeks to develop an international digital environment by using multilateral institutions to establish technological standards related to telecommunications infrastructure and to promote the principle of cyber-sovereignty.

As at mid-2019, more than USD 17 billion has been invested into Digital Silk Road projects. Such projects include the “Belt and Road Digital Economy International Cooperation Initiative” between China and Egypt, Laos, Saudi Arabia, Serbia, Thailand, Turkey and the United Arab Emirates. One representative project is the China-Pakistan Economic Corridor that connects Kashgar in West China with the Port of Gwadar in Pakistan, with the aim of securing an alternative route for China’s energy supply.

Singapore was an early supporter of the Belt and Road Initiative and continues to take an active role in the process, by being a part of the Chongqing Connectivity Initiative and other developing joint projects with China and other countries. Singapore is also offering financial and dispute resolution services to companies and institutions that are part of the Belt and Road projects.  

Technology Disputes Resolved Through Arbitration

The increase in cross-border transactions and collaborations inevitably also brings about a growth in the number of technology-related disputes. These range from disputes between major technology companies to disputes between small and medium enterprises in charge of aspects of the production chain. Technology disputes often involve complex issues relating to the intricate workings of digital mechanisms. Examples of issues can include infringements of patents and copyrights, breaches of joint venture agreements and outsourcing arrangements, or even violations of media rights.

Arbitration has become the preferred mode of dispute resolution for many technology disputes which are often international in nature and tend to involve many different industry sectors. While litigation used to be the conventional choice for the resolution of technology disputes, the shift in reliance to arbitration is inevitable. Arbitration offers parties the option of having the dispute heard by arbitrators who have the technological expertise and can understand the crux of the dispute.

Arbitration is also able to address a growing concern of parties involved in technology-related disputes - confidentiality. This is a prominent concern in any dispute involving a public-facing corporation. Be it trade secrets or public reputation; it is best for disputes to be resolved behind closed curtains to prevent any unnecessary complications.

In this respect, arbitral proceedings are typically confidential, depending on the rules that parties decide to apply. This will allow parties to protect their reputation and more importantly, any intellectual property rights that may be compromised during the proceedings.

Parties also have the autonomy to choose their arbitrator and to a certain extent, customise elements regarding how the dispute is to be heard. This means greater control over time and costs.

Given the high stakes typically involved in such disputes, parties tend to find themselves in need of efficient dispute resolution. Technology evolves rapidly and disputes should not take too long to resolve, as the result may end up becoming obsolete.

Evidently, arbitration has grown to become one of the more attractive dispute resolution mechanisms for resolving technology disputes.

Advantages of Singapore as a Seat of Arbitration and Singapore Institutions as Administrators of Technology Disputes

In this regard, Singapore is still one of the favoured choices for dispute resolution on the international plane, particularly within the Asia-Pacific region. According to the 2019 International Arbitration Survey by Queen Mary University of London in collaboration with White & Case, Singapore was one of the top five choices as a seat of arbitration, alongside London, Paris, Hong Kong and Geneva. Such a finding is hardly surprising, given Singapore’s steadfast rule of law, state-of-the-art infrastructure and international approach to matters. It is also widely recognised as a neutral venue.

Singapore also has a pro-arbitration judiciary, a robust and efficient legal system and is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). These factors have long convinced commercial parties to have their seat of arbitration in Singapore and have instilled confidence in parties to have their cases administered with the arbitration institutions located in Singapore.

In the context of the Digital Silk Road, Singapore is in an especially advantageous position in terms of the administration and resolution of such disputes. The geographic spread of the entire Digital Silk Road raises the prospect of an increase in complex cross-border commercial disputes which will often involve multi-national parties and multiple jurisdictions. These jurisdictions will likely not possess the same attributes as that of the Singapore dispute resolution system and will continue to allow Singapore to stand out amongst the crowd.

Beihai Asia International Arbitration Centre (“BAIAC”) - The Oasis of Neutrality

One of the arbitration institutions well-equipped to administer such technology disputes is the BAIAC.

The BAIAC was set up by the Beihai Arbitration Commission (“BHAC”) headquartered in Beihai, China. It aims to provide more efficient and cost-effective international arbitration services for small to medium value disputes in cross-border transactions, with a particular focus on China and the Association of Southeast Asian Nations (“ASEAN”).

BAIAC’s Functions

The establishment of the BAIAC was motivated by two core factors:

1. First was the need to provide efficient and low-cost international arbitration for small to medium value disputes, which are prevalent in cross-border commercial transactions.
2. Second was Singapore’s position as a trusted international dispute resolution hub for the resolution of disputes arising from the Belt and Road Initiative, Asia trade cooperation and investments between Chinese and ASEAN parties.

BAIAC actively promotes lower costs of arbitration as well as simplified rules and procedures, to meet the needs of their target users.

In this regard, BAIAC’s institutional arbitration rules are based on the 2013 United Nations Commission on International Trade Law rules albeit with some modifications. It offers a small claims procedure for a speedier and more economical way to address disputes of a small value.

The BAIAC not only administers arbitrations, but also mediations. This sits well with the Memorandum of Understanding between Singapore and China where the countries have agreed to set up a panel of international mediators that will help resolve disputes arising from projects under China’s Belt and Road Initiative.  

The BHAC has set up hearing centres in 29 cities within China, including Beijing, Shanghai and Guangzhou, to provide arbitration services. The use of the BHAC has also seen an increase since its inception, with over 58,000 cases heard in 2018 and over 47,000 cases heard in the first half of 2019 alone.

BAIAC – the Preferred Arbitration Institution for Digital Silk Road Disputes

In conjunction with the Digital Silk Road initiatives, BAIAC stands as a preferred institution for the arbitration of Digital Silk Road disputes.

As mentioned, under the Digital Silk Road initiatives, there are foreign elements that deal not only with countries in ASEAN but also with the rest of the world. In this respect, the BAIAC will be establishing a China-ASEAN panel of arbitrators to promote people-to-people exchanges. This is where the BAIAC differentiates itself from the other arbitration institutions as it can make use of its unique expertise to administer such disputes.

For further information, contact:

Professor Steve Ngo

BAIAC, Founding President

Steve.Ngo@baiac.org

Shaun Leong, FCIArb

Partner, Eversheds Harry Elias

Arbitrator, BAIAC

ShaunLeong@eversheds-harryelias.com

Selina Yap

Legal Associate, Eversheds Harry Elias

SelinaYap@eversheds-harryelias.com