BRICS Nations Look at Establishing A Common Arbitration Centre

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Unification of BRICS Arbitration Standards Required – But Who Will Host?

The BRICS nations are developing an interaction model for a single arbitration center for its members and other developing economies, the executive secretary of the arbitration commission of the Association of Russian Lawyers Roman Gerakov stated yesterday.

The BRICS grouping includes Brazil, Russia, India, China and South Africa. It is anticipated their collective clout will account for over 50% of global GDP by 2030.

“It is planned to create a BRICS+ single arbitration center, comprising representatives of all countries. This initiative will be discussed by an international working group. Experts will present proposals from all the countries to develop a single arbitration standard. This is a rather complex procedure, requiring consideration of interests and observation of public order of all countries, development of a single website, a common system and common rules or reservations referring to common rules, single recommended list of arbitrators, elements of collective governance and establishment of such centers.” Gerakov said.

The BRICS grouping have been holding bi-annual legal forms for the past five years, with each member taking turns to host. Each of the BRICS countries already has a legal framework based on international standards in place. When it comes to resolving domestic disputes, an increasing number of businessmen favour arbitration over the overburdened domestic litigation systems in their countries. Establishing a single arbitration centre in just one country though gives rise to accusations of impartiality. For this reason disputes among the Belt & Road tend to be held in the Singapore International Arbitration Centre (SAIC) even though China has set up its own BRI courts to deal with disputes. Last year, India was the top foreign user of SIAC, followed by China.

Despite the growing popularity of arbitration within each country, international cooperation among BRICS countries has been limited. To start with a particularly obvious example of limited cooperation, some countries in the bloc do not recognize each other’s arbitral awards. In India’s case, local courts will only enforce a foreign arbitral decision if the country the decision comes from meets certain requirements. The country where the award was issued has to have ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards for Indian courts to consider it valid. Additionally, the central government has to declare that particular country a territory that falls under the purview of the convention. Thus far, only 48 countries have been listed by the government. Although all BRICS countries have ratified the convention, India has not officially notified Brazil or South Africa yet. Consequently, arbitral awards issued in these two countries are not enforceable under India’s Arbitration Act.

In addition to this, many countries take a long time with enforcement proceedings, leading to judicial delays. For instance, the process can take up to four years in China. The execution of foreign awards is a major issue for business operators and so making arbitration a speedier mechanism will ensure that they consider it a more attractive option than domestic litigation.

A copy of the existing BRICS “Rules For Procedure” concerning arbitration can be viewed here

 

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Silk Road Development Weekly is compiled each week by Chris Devonshire-Ellis, Chairman of Dezan Shira & Associates. The firm has 28 offices throughout Eurasia and assists foreign investors into the region. For strategic advisory and business intelligence issues please contact the firm at silkroad@dezshira.com or visit www.dezshira.com

 

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