This paper addresses a question which is based on the unproved assumption that there is still resistance to arbitration in Asia. Nevertheless, I have been witness to sufficient personal and anecdotal evidence to assert that assumption as a proposition of fact. I therefore consider it a worthwhile exercise to attempt an analysis of the kinds of resistance that arbitrators in Asia are likely to encounter, disclaiming any intention to declare this anything more than a subjective, unscientific and generalized overview.

My central thesis is that there are three classes of resisters, who are for the most part respondents:

(a) Terrorists or arbitration guerillas

(b) Conscientious objectors or arbitration atheists

(c) Sceptics or arbitration agnostics

Terrorists or arbitration guerillas

These are respondents who are not interested in playing the game by the rules, usually because they have a bad case. They will try to exploit the procedural rules for their own advantage, seeking to delay the hearing and (if they get any opportunity) ultimately to derail the arbitration so that it becomes abortive or ineffective.

Their first strategy will be to try to find a technical objection to the arbitral tribunal's jurisdiction in the hope that the tribunal will selfdestruct by declaring that it has no jurisdiction over the dispute.

If the jurisdictional objection does not work, then they will take their case to a court (usually their own local court rather than the court of the seat of the arbitration) with a view to establishing the jurisdiction of that court rather than the arbitral tribunal. Such applications to court often include a prayer for an injunction preventing the claimant from further prosecuting the arbitration. If the claimant happens to be incorporated or carrying on business in the same country as the respondent and therefore subject to the jurisdiction of that local court, the claimant will be bound, under pain of contempt of court, to obey any[Page401:]

order that local court may make even if it is not the court of the seat of the arbitration. 1 If the claimant is not subject to the jurisdiction of the local court, it will nonetheless be mindful of its need ultimately to go back to that court for enforcement of the tribunal's award and will therefore usually feel the need to appear in that local court to prevent any order being made which would preempt a subsequent enforcement application.

Assuming that jurisdictional objections and applications for antiarbitration injunctions fail, these respondents will then launch a campaign of guerilla warfare, trying to delay the arbitration hearing indefinitely and, if unsuccessful, adopting provocative measures designed to cause the tribunal to overreact and commit errors that could give grounds for the subsequent award to be challenged in setting aside or enforcement proceedings.

These arbitration guerillas will rely on the rules that underlie most international arbitrations:

- that each party must be treated fairly;

- that each party must be given a full or reasonable opportunity to present its case; and

- that each party is entitled to a hearing if it so requests.

Exploiting these rules, they will (among other things):

- fail to comply with the tribunal's procedural orders in a timely fashion or at all;

- fail to pay deposits, leaving the other party to make advances on their behalf; 2

- discharge their lawyers and then apply for a postponement of the hearing because they need time to brief new lawyers; 3[Page402:]

- ask for adjournments of hearing dates at the last minute on a variety of grounds (missing witnesses, local festivals, political events) when they know that the tribunal's and the counsel's commitments will make it impossible to reschedule the hearing within a short time;

- make a series of unmeritorious applications to the tribunal, which are dismissed, and then mount a challenge against the tribunal on grounds of bias (in extreme cases they will even dismantle the tribunal by revoking the appointment of their own partyappointed arbitrator).

The reasons they will give for their actions or inaction will include (just as a sampling, since there is no limit to the ingenuity of such respondents):

- they cannot file their witness statements on time because their witnesses (who are expatriates) have gone back to their home countries owing to the danger of working in Muslim countries after 9/11, and their Muslim lawyers cannot travel to see the witnesses because of immigration restrictions imposed on Muslim visitors to Western countries (in shipping cases, the story is usually that a key witness is on a voyage somewhere and not expected to return anytime soon);

- they cannot comply with their discovery/disclosure obligations because their documents are kept at the plant which is very far from the head office, and there are logistical difficulties in transporting so many documents from the plant to the head office (and in any event they are short of human and financial resources to comply with extensive discovery/disclosure orders);

- they have no counsel on record (when it is clear that correspondence in their name has been drafted by external counsel); alternatively, they have just engaged new counsel, who needs more time to get up to speed (and he is a sole practitioner with little experience in international arbitration and with little backup assistance);

- they need more time for compliance with procedural orders because of long religious holidays over the period specified for compliance (one month each for Ramadan and Aidilfitri for their Muslim staff, two weeks for Chinese New Year for their Chinese staff, two weeks for Christmas for their Christian staff, plus, for good measure, a week for Thanksgiving for their American counsel).

Arbitration guerillas know that tribunals will be anxious to be seen to be fair and properly appreciative of cultural differences, and they will therefore try and test this accommodating attitude to the utmost by asking for all kinds of[Page403:] indulgences, particularly in requests for more time. In local litigation, counsel for the other party can often comment on the validity or otherwise of the reasons given in support of the applications for various procedural indulgences, and the local court itself can also judge the validity of these reasons from their own knowledge. It is much more difficult for nonAsian counsel and arbitrators to decide on the truth or otherwise of the reasons advanced by Asian parties for their applications. Even if they have suspicions about the validity of these reasons, if they cannot substantiate those suspicions in a manner that can speak for itself in their award, there would be a risk of a challenge or defence based on a breach of Article 18 of the UNCITRAL Model Law on International Commercial Arbitration or Article V(1)(b) of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).

Arbitration guerillas also know that tribunals do not usually have the power to make 'unless' orders, i.e. orders denying respondents who do not comply with procedural orders the right to defend their claims, even if they have failed to file documents on time or to pay their deposits. A respondent can usually be prevented from proceeding with its counterclaim, but that would not stop it from relying on its counterclaim for setoff and hence as a defence.

Finally, as mentioned above, the true guerilla will stalk the tribunal, looking for ways of giving the respondent an opportunity to challenge the propriety of the arbitration in setting aside or enforcement proceedings on grounds of lack of fairness or lack of opportunity to present its defence, and actively provoking the tribunal into making orders that will give the respondent an excuse to walk out of the proceedings on one or other of these grounds. 4

How does a tribunal deal with arbitration guerillas?

There is no easy answer to this. The tribunal has to be aware from an early date that the respondent is a guerilla, i.e. a party who is not really interested in the ultimate verdict of the tribunal on a dispassionate basis, but one who needs to deny the claimant an award by any means.

The tribunal will need to be on constant guard. The goodwill of the counsel and the parties cannot be presumed. The tribunal will need to be aware that every decision it takes will need to be justified on the face of the record. If the[Page404:]

tribunal intends to deny an application (or overrule an objection) by an arbitration guerilla, it should take care to record its reasons for so doing somewhere in the record, either by reading it into the transcript or by a separate letter to the parties.

The tribunal will have to mind its language, taking care that nothing in the transcript can be used by the respondent to make a case that the tribunal demonstrated bias against it. Arbitrators who are used to making jokes at the expense of counsel will have to rein in their levity and arbitrators who practise the art of Socratic dialogue when questioning counsel or witnesses will have to take care that such intervention does not appear to demonstrate any prejudice against the case of the respondent. 5

Conscientious objectors or arbitration atheists

These are commonly local lawyers who do not wish to fight foreign lawyers before a foreign tribunal. They are not out to sabotage the arbitration because their clients have no defence, but they sincerely believe that their clients will get a better deal before a local court for the following reasons:

- they are inexperienced in international arbitration and do not know how the game is played;

- they feel that their clients may be at greater risk of liability because they are less capable of predicting the outcome; and

- they believe that their clients' witnesses are more likely to convince a local court than a tribunal composed of at least a majority of foreigners.

So they will try to fight the arbitration before, during and after the tribunal has commenced its work:

- they will apply to their local courts for an antiarbitration injunction regardless of the seat of the arbitration;

- they will challenge the tribunal halfway through the hearing if they think there are grounds for its removal; and

- ultimately, if there is an award against the respondent, they will resist enforcement in the court of the respondent's home country. [Page405:]

How does a tribunal deal with arbitration agnostics?

Tribunals should realize that they are not dealing with arbitration saboteurs, but conscientious objectors to arbitration, who are sincere in their opposition, but nonetheless dangerous for that.

This is a longterm problem. When a State accedes to the New York Convention, it sometimes does not follow this up with appropriate legislation to implement the enforcement procedure6 or by educating its judges as to how they should approach enforcement cases. The record of Asian courts (other than in Singapore and Hong Kong) in relation to international arbitration cases is spotty, to say the least7.This may not always be the local judges' fault if they have not received special training in principles of international arbitration. Tribunals cannot control what happens in the local courts, but they can try to do their best to ensure that the record of their arbitration indicates clearly the reasons for every significant step taken by them in the proceedings, so that, hopefully, their exemplary conduct of the arbitration will persuade a local court in a respondent's home country that the foreign tribunal has given the respondent a fair and unbiased hearing.

Hong Kong has got it right by appointing a dedicated arbitration judge who hears all cases dealing with arbitration. Singapore has recently followed suit. The body of arbitration decisions from these two jurisdictions will undoubtedly contribute to the growth of understanding and acceptance of arbitration in Asia. Ultimately, judges (and hopefully lawyers) in Asia will understand that they should not intervene in any arbitration unless they are the court at the seat of the arbitration; otherwise they should simply refrain from intervention, even if their own nationals are a party to the arbitration, unless and until the case comes before them as the enforcing court. Judges must further be trained to have regard to Article II(3) of the New York Convention8 and grant stays of court proceedings as a matter of course where there is an operative arbitration agreement between the parties. Finally, judges should be taught not to deny enforcement of an award under the New York Convention save in truly exceptional circumstances. [Page406:]

The task of educating judges is a slow one. The International Council of Commercial Arbitration ('ICCA') has taken the task upon itself through its biennial conferences and congresses. In 2000 a judicial colloquium was organized in India for Indian judges in conjunction with the ICCA conference in New Delhi, and a similar event was organized in China in 2004 for Chinese judges at the same time as the ICCA conference in Beijing. But much more needs to be done on a continuing basis in other Asian countries if more dramatic progress in judicial attitudes is to be made.

Sceptics or arbitration agnostics

These are persons who are not instinctively antiarbitration, but whose experience of international arbitration has not left a good taste in their mouths. They will not automatically derail or attack an arbitration, but they will give the process an evaluation of 3 out of 10, and will dissuade clients and other respondents from agreeing to arbitration as the preferred method of dispute resolution in their contracts.

Why do these people not support arbitration? Their objections can be broadly divided into:

- matters of style

- matters of substance

Matters of style

They are put off by what they perceive as the aggressive or arrogant behaviour of Western parties' counsel, particularly in crossexamination. If such behaviour is tolerated by the tribunal, then they will regard the tribunal as being sympathetic to such aggression and arrogance and biased against their Asian clients. This feeling may be accentuated by the tribunal's conduct outside hearings, e.g. if its Western member only chats with the Western counsel during coffee breaks.

Asian counsel not from a common law jurisdiction may also be unfamiliar with the Socratic dialogue so beloved by common law judges, which may be perceived as being so interrogative in nature and manner as to indicate a prejudiced mind

Some Asian counsel and witnesses may not be as fluent in English as their Western counterparts and may feel disadvantaged as a result. [Page407:]

How should tribunals address this problem?

Tribunals dealing with disputes between Western and Asian parties should take extra care to make parties and witnesses feel at ease andaccept that there is a level playing field regardless of differences of language and culture.

For those counsel and witnesses unused to 'robust' crossexamination, the tribunal should make it clear that the silence of the tribunal during such crossexamination does not necessarily mean that the tribunal is supporting the crossexamining counsel and that the tribunal will be keeping an open mind and neutral position throughout the proceedings.

Allowance must be made for witnesses and counsel who are not native English speakers. Extra care should be taken to make sure that witnesses and counsel are given full opportunity to express themselves in a manner that can be understood by the tribunal, and the tribunal itself must ensure that it correctly understands what such witnesses and counsel are trying to say, however imperfect their English. 910

Matters of substance

Ultimately, arbitration agnostics and skeptics will say that their client was unhappy with the result, not just because they lost the arbitration, but because of the way in which they lost. Here the problem goes beyond process into substance. [Page408:]

Asian contractual relationships depend on factors other than the letter of the law. Law and contracts as written are insufficient to maintain a commercial relationship. So when disputes arise, an Asian may not be satisfied with any solution that confines itself to the literal words of the contract.

In Asia, a contract is not the conclusion of the deal, but rather the beginning of a commercial relationship. As such, matters such as personal goodwill and the need to look at changed circumstances matter more than the words of a contract. Asians expect law and contracts to be subordinated to evolving circumstances and relational values.

Most Chinese and Japanese contracts have a clause requiring parties to sit down and negotiate in good faith if any dispute arises. This would clearly be unenforceable under common law11 and probably under civil law as well, but such clauses are taken seriously in the civil law countries of the Far East. Asian parties, particularly those not schooled in Western business traditions, view contracts as dynamic and evolving documents rather than fixing obligations in an immutable and static manner. The contract is therefore a source of guidance rather than determinative, and subordinate to other values, such as the preservation of the relationship and the accommodation of the other parties' legitimate business concerns.

Nevertheless, there is a gap between Asian expectations and Asian laws. For example, to my knowledge, the Asian financial crises between 1997 and 1998 have not been found to be a legal excuse for nonperformance of any contractual promise in any Asian country. This is because all major Asian systems are derived from Western models. So, where any national law is the governing law, it is likely that strict standards of frustration and force majeure will be applied, whatever their composition. 12

Although civil law systems pay attention to the concept of good faith-more so than common law systems-it is generally limited in its application to assisting with the interpretation or implication of contract terms. It is not used as a means of modifying the contract or as a means of subordinating the contract[Page409:]

to other values affecting the commercial relationship. So this concept falls short as a vehicle for adjusting contractual obligations in the context of an EastWest commercial relationship. 13

An argument could of course be made that the Asian approach to contractual provisions may be outmoded thinking, and Asian businessmen need to be brought into line with contemporary Western business practices. But if it is thought that they have a point, what then is supposed to be done?

To start with, parties should avoid using a national law as the governing law because few national laws can accommodate the expectations of Asians described above. Parties should then consider using an international convention, such as the Vienna Convention on the International Sale of Goods. However, this is Westerninspired, and may be interpreted in accordance with the strict standards of any Western law. As an alternative, parties might consider using a system of law that allows for adjustments of strict legal rights according to concepts of fairness and equity. The UNIDROIT Principles of International Commercial Contracts (Article 3.10) provide as follows:

(1) A party may avoid the contract or an individual term of it if, at the time of the conclusion of the contract, the contract or term unjustifiably gave the other party an excessive advantage. Regard is to be had, among other factors, to

(a)the fact that the other party has taken unfair advantage of the first party's dependence, economic distress or urgent needs, or of its improvidence, ignorance, inexperience or lack of bargaining skill, and

(b) the nature and purpose of the contract.

(2) Upon the request of the party entitled to avoidance, a court may adapt the contract or term in order to make it accord with reasonable commercial standards of fair dealing.

(3) A court may also adapt the contract or term upon the request of the party receiving notice of avoidance, provided that that party informs the other party of its request promptly after receiving such notice and before the other party has acted in reliance on it. The provisions of Article 3.13(2)apply accordingly. 14[Page410:]

Despite its being a relatively untested provision, this would seem to have the best chance of being widely accepted as a means of establishing a contract adjustment mechanism. 15

Parties might also consider using:

- general principles of equity

- aequo et bono

- amiable composition

- lex mercatoria

What practical problems would arise from their doing so?

First, much more importance would attach to the decision-maker than to the criteria for the decision. Second, some institutional rules do not allow this (while the ICC Rules of Arbitration and the UNCITRAL Model Law on International Commercial Arbitration do, the LCIA Rules, 13.1(a) and (b) of which require decisions in accordance with 'rules of law', do not). Third, parties should consider using a national law blended with one of the equitable systems of law quoted above, thereby ensuring a degree of predictability while allowing for modifications of the national law by the application of general principles of fairness and due faith.

Another measure would be to abandon the parol evidence rule for arbitrations so as to allow evidence of the Asian party's expectations of the contractual relationship to be received in evidence and given due weight.

In addition, consideration should be given to allowing arbitrators to act also as mediators. Although this is permitted by legislation in Singapore and Hong Kong16and positively encouraged in China and Japan, there is a danger that it might go against some legal traditions in countries used to different ideas of arbitrator neutrality.

Ultimately, parties and their counsel will have to decide whether some or all of these measures would solve their problems. But parties who complain that the Western model of arbitration does not adequately address Asian concerns should realize that the solution (whatever it may be) lies in their own hands. All arbitration is a product of contract, and ultimately the parties to the contract are responsible for determining what terms govern their relationship. [Page411:]

1
A new variation I recently came across combined an attack on the jurisdiction of the tribunal with an implied attack on the members of the tribunal personally. A respondent not only challenged the jurisdiction of the tribunal in its local court, but also filed an action against the claimant for the tort of 'wrongful arbitration', claiming huge damages and a conservatory order seizing the claimant's assets. I was a member of this tribunal and had some difficulty persuading the other members (who were both from the jurisdiction of the local court) to issue orders while these court proceedings were pending, as they were fearful that any action taken by the tribunal to advance the hearing would result in similar court proceedings being taken against the members of the tribunal.

2
Under the Rules of the Indonesian Board of Arbitration (BANI), the party that appoints an arbitrator is solely responsible for that arbitrator's expenses. I was once a member of a BANI tribunal where the party appointing me refused to pay for my expenses. As BANI had no power to order the other party to advance my travel expenses, no physical hearing between the arbitrators could be held in Jakarta, the seat of the arbitration.

3
I was once counsel for a party that discharged me a month before the hearing as it did not want an award against it at that point in time. Needing a reason for requesting an adjournment, it saw the engagement of new counsel as the best course in the circumstances. Interestingly, the tribunal (composed of three experienced Singaporean lawyers) refused the adjournment.

4
I was chair of a tribunal where the respondent walked out on the grounds of alleged bias (dismissed by ICC when a challenge was subsequently made). The twist in this case was that the respondent not only left, but took its party appointedarbitrator with it, leaving me with a truncated tribunal.

5
In such cases it will be the responsibility of the chair of the tribunal to exercise control over the other arbitrators who might be inclined to overexuberance in their exchanges with counsel or the witnesses.

6
Countries where there has been a lengthy interval between accession to the Convention and the enactment of implementing legislation include Indonesia, the Philippines and Bangladesh.

7
See N. Kaplan, 'The Good, the Bad and the Ugly' (2004) 70 Arbitration 183 at 188-90 for some examples of questionable decisions by Asian courts in the field of arbitration.

8
'The Court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this Article [i.e. an arbitration agreement in writing], shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.'

9
I was coarbitrator in an arbitration where the English chair allowed American counsel to crossexamine a European witness 'robustly' for more than a day without comment. While the witness's English was perfectly competent for normal conversation, he was obviously at a disadvantage in trying to cope with a skilled crossexaminer who was a native English speaker constantly on the attack, and was unable to do justice to himself by his answers. When I interjected during one exchange to seek clarification of one answer from the witness, he was so relieved to hear a question from a friendly (or at least neutral) voice that he openly expressed his gratitude at finally hearing someone who did not question the good faith of his every answer. If a bilingual European found it linguistically difficult to cope with crossexamination, one can imagine how an Asian would feel.

10
On another occasion, I was sole arbitrator in a case involving Singaporean counsel for the claimant and Portuguese counsel for the respondent. I instinctively attuned myself to the Singaporean counsel's arguments, simply because I had no problem in understanding his common law approach and his linguistic presentation. I had much more difficulty in understanding the Portuguese counsel's civil law approach and linguistic presentation. Yet I persevered and bent over backwards to try to understand what the Portuguese counsel was trying to say. While I started off the case almost ready to give the Singaporean counsel everything he asked for, after I had finally understood what the Portuguese counsel's case really was, I allowed the Portuguese defence and counterclaim to a substantial extent so as to reduce the claimant's claim.

11
See Walford v. Miles, [1992] AC 128.

12
This paper does not address the situation of arbitrations relating to bilateral investment treaties (BITs) in which the respondents are States. In this connection, there is an interesting ongoing debate among international scholars as to whether certain defences available in public international law (e.g. necessity and rebus sic stantibus / Article 62 of the Vienna Convention on the Law of Treaties) could be invoked in BIT arbitrations by States unable to fulfil their financial obligations.

13
A possible exception is the 1992 Dutch Civil Code, where Article 6.248(a) provides that a 'rule binding upon the parties as a result of the contract does not apply to the extent that, in the given circumstances, this would be unacceptable according to criteria of reasonableness and equity'. See P.J. McConnaughay, 'Rethinking the Role of Law and Contracts in EastWest Commercial Relationships' in P.J. McConnaughay & T.B. Ginsburg, eds., International Commercial Arbitration in Asia (Juris, 2002) c. 12, §§ 1242-1243.

14
Article 3.13(2) provides: 'After such a declaration [of willingness to perform the contract] or performance the right to avoidance is lost and any earlier notice of avoidance is ineffective.'

15
These ideas are developed further by P. McConnaughay, supranote 13

16
Section 17 of the International Arbitration Act of Singapore; section 2B of the Arbitration Ordinance of Hong Kong.