Paradigm shift; the emergence of arbitral forum shopping in CPEC investment disputes

Author:Rao Qasim Idrees, Rohimi Shapiee, Haniff Ahamat
Position:Faculty of Law, Universiti Kebangsaan Malaysia, Bangi, Malaysia
Pages:136-151
SUMMARY

Purpose The phenomena of arbitral forum shopping to resolve a commercial investment dispute is still under development and more complicated in many states. However, for Pakistan, it seems in an evolutionary phase, where the country is struggling hard to adopt the best practice of dispute resolution through forum shopping clauses. This struggle is even more inflated with huge Chinese investment through China Pakistan economic corridor (CPEC) projects in Pakistan, which come alongside with commercial investment disputes. For this purpose, the current treaty or contract-based system between China and Pakistan and... (see full summary)

 
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Paradigm shift; the emergence of
arbitral forum shopping in CPEC
investment disputes
Rao Qasim Idrees,Rohimi Shapiee and Haniff Ahamat
Faculty of Law, Universiti Kebangsaan Malaysia, Bangi, Malaysia
Abstract
Purpose The phenomena of arbitral forum shoppingto resolve a commercial investment dispute is still
under developmentand more complicated in many states. However, for Pakistan, it seemsin an evolutionary
phase, where the country is struggling hard to adopt the best practiceof dispute resolution through forum
shopping clauses. This struggleis even more inated with huge Chinese investment through China Pakistan
economic corridor (CPEC) projectsin Pakistan, which come alongside with commercial investment disputes.
For this purpose, the current treaty or contract-based system between China and Pakistan and litigation
based domestic civil court structurelook obsolete, hence, appear to require reinstatement of forum shopping
clauses underconcerned treaties or contracts for CPEC investment-relatedissues.
Design/methodology/approach The authors choosea legal research method. The research design is a
comparative analysis between CPEC contracts and dispute resolution mechanism between China and
Pakistan and also the domestic civil courts litigation system. This analysis selected by the authors due to
inefcient bilateralinvestment arrangements and efcient resolution of future commercialdisputes in CPEC.
While the internationalarbitration system is included in the assessment were particular in the time and space
context. The comparisoncomprises on dispute resolution clausesin free trade agreement (FTA) and bilateral
investmenttreaties (BIT) between China and Pakistan and the system of resolvingdisputes by CPEC clauses.
Findings The authors nds that in the absenceof CPEC forum shoppingclause under dispute resolution
system, Pakistan is highly at risk to lose foreign investors, and therefore, set back the goal of long term
economic sustainability in the region. However, China has already made its investment policies safer with
establishing three internationalcommercial courts (also referred to as Belt and Road courts),one in Xian for
the land-based Silk Road EconomicBelt, one in Shenzhen for the Maritime Silk Road and one in Beijing that
will serve as the headquarters. These courts will be offering litigation, arbitration and mediation services.
According to oneview, China aims to have all belt and road initiative (BRI)disputes resolved by these courts.
This makes Pakistanposition more awkward and needs proactive measures,as CPEC investment is based on
Pakistan foreign direct investment policies and legal structure. Therefore, it will be complicated and less
favourablefor Pakistan to deal with such cases under ChineseCourts.
Originality/value The papers primary contribution is nding that comprehensive analysis of
alternativedispute resolution mechanism between China and Pakistanover CPEC investment is inevitable. A
socio-legalresearch combine with an examination of Singapore InternationalCommercial Court functions and
mechanism and CPEC plans further contributes to ascertain the best model of the settlementof commercial
disputes underinvestments in Pakistan. This research paper anticipatesfuture economic and legal problems,
which Pakistanmay encounter.
Keywords China Pakistan economic corridor, Civil court litigation, Forum shopping,
Investment dispute resolution, Hague convention, Investment dispute arbitration
Paper type Research paper
1. Introduction
Forum shopping is not a novel thought or model but it has been known and functional for
decades. The concept of Arbitral forum shoppinghas different dimensions and
interpretations. In itsadvance interpretation, the idea of forum shopping is distinctfrom the
JITLP
18,3
136
Received3 May 2019
Revised23 July 2019
Accepted9 August 2019
Journalof International Trade
Lawand Policy
Vol.18 No. 3, 2019
pp. 136-151
© Emerald Publishing Limited
1477-0024
DOI 10.1108/JITLP-05-2019-0022
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1477-0024.htm
very concept of civil litigation. However, the basic principles and functions are remaining
the same in both civil litigation and arbitral forum shopping. The arbitral forum shopping
may include, shopping for a proper place or centre and available jurisdiction, which are
available under stipulated conditions or in absence of such conditions, where parties have
chosen one of these or about to decide the most favourable situation for them (Mckenna,
2005). Under such conditions,the arbitral forum shopping is more technical and complicated
in nature, especially whenit is arrangedunder any contract or treaty to resolve international
investment disputes. The idea of arbitral forum shopping currently revolves around the
conicting situation of an applicable clause in the contract against concerned treaty or
investor-state arbitration regime. This further raises the international concerns regarding
consolidation, waiver, lispendens, res judicata and estoppels (Lectric Law Library, 2017).
Such issues are mostly discussed and prevalent under court litigation in the civil courts
system. However, the factor of increased international investment disputes and arbitration
proceedings; such issues are in play and commonly hinder the smooth process.
Consequently, it further demands more comprehensive study and analysis by the parties
while managing the arbitral forum shopping mechanism owing to its suitability for China
Pakistan economiccorridor (CPEC) commercial disputes (Kreindler, 2005).
The object of this paper is to elaborate and explain the need and importance of the
international commercial court as a forum for the resolution of commercial investment
disputes under differentCPEC dispute resolution clauses. It will be further assessedwhether
and in how far this is an addition to current Pakistan China bilateral investmenttreaty (BIT)
and free trade agreement (FTA) dispute resolution clauses, which are available in CPEC
contractual agreements. To achieve above mentioned objectives, Part 1 discusses the
signicance of forum shopping, Part 2 highlights CPEC dispute resolution clauses, Part 3
analyses ICSID arbitration in Pakistan perspective, Part 4 argues the need of international
commercial court for Pakistan, and Part 5 provides the signicance of Singapore
International Commercial Court (SICC) and Hague Choice of Court convention for Pakistan,
and nally, this papersetup recommendations for CPEC commercial investmentdisputes.
2. Structure of the study
This study is divided among analysis of literature and jurisprudence and authors analysis
and own ideas based upon legal statutes, case laws, international agreements and bilateral
instruments. Forthis purpose Parts 5,6,7 and 8 is the analysis of literature and jurisprudence
and Parts 9,10,11,12 and 13 is the authors own ideas and ndings prepared in the light of
international and domestic statutes and treaties and China Pakistan bilateral investment
agreements.
3. Methodology
The authors choose a legal research method. The researchdesign is a comparative analysis
between CPEC contracts and dispute resolution mechanism between China and Pakistan
and also the domestic civil courts litigation system. This analysis selected by the authors
due to inefcient bilateral investment arrangements and efcient resolution of future
commercial disputes in CPEC. While the international arbitration system is included in the
assessment were particular in the time and space context. The comparison comprises on
dispute resolution clauses in FTA and BIT between China and Pakistan and the system of
resolving disputesby CPEC clauses.
The emergence
of arbitral
forum
shopping
137

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