The ABA Section Goes To China

Tuesday, December 1, 2009 - 01:00

Editor: In September, you and Peter Antonucci of Greenberg Traurig LLP were co-chairs of a conference at Tsinghua University School of Law sponsored by the ABA's Tort Trial & Insurance Practice Sections and the International Law Committee of Tsinghua University. How did this Conference come about and what were some of its high points?

Aliment: Our firm has been working with the Duan & Duan law firm in China for about 19 years on matters that originated in China but had ramifications in the United States. In late 2007, a couple of things happened which brought about the Conference. Number one was the development of a significant matter in China that involved my working with the Duan firm. As part of that matter, I had occasion to go to several of their college campuses, one of which was Tsinghua University, one of the most prestigious universities in China with a beautiful modern campus. As we passed the law school, my immediate thought was: wouldn't it be great to have a program at Tsinghua? The second factor inspiring the Conference came in Tokyo, where I went directly after visiting Tsinghua. We were presenting a program at Temple University in Tokyo, similar to our recent program, which was extremely successful. There were around 150 or 160 attendees, mostly Japanese business people and lawyers, who showed a tremendous desire to learn more about the civil justice system in America, primarily because they had significant investments in the United States. Our justice system was truly foreign to them and they wanted to learn more about it.

I went back to the American Bar Association where I am an officer in the Tort Trial & Insurance Practice Section. The idea of a conference was an easy sell because the program in Tokyo was so successful, and my impressions of Tsinghua University were truly exceptional. We set out to hold a program on the legal challenges that Chinese companies face when they choose to do business in the United States. What I didn't understand at the time was that it was not an easy task procedurally to get the approvals from the Ministry of Education, the Ministry of Justice, the president of Tsinghua University and the dean of the Law School. While we had originally planned the program somewhat earlier in 2009, we were finally able to arrange the program for this September. In the end, however, it was extremely well received. Tsinghua has a very large auditorium which they called their Moot Court Room, where they can do mock demonstrations of a dispute resolution, a trial, or a court proceeding. We were able to fill the room at capacity, seating 170 to 175 people.

Editor: What is the relationship between Tsinghua and Temple University Law School?Aliment: Temple offers their courses on the premises of the Tsinghua University School of Law. Temple University's program was established in 1999, offering an LLM degree designed for international attorneys, government officials, corporate legal counsel, and recent law graduates who are interested in receiving a degree in American law. ( Editor's note: for more information on Temple's China Program see http://www.metrocorpcounsel. com/current.php?artType=view&EntryNo=3934.)

Editor: Was the Conference geared specifically for Chinese attorneys and business people?

Aliment: It was. There is such a strong desire and apparent need for their business people and their lawyers to understand more of what they are getting involved with when they increasingly invest in businesses or acquire properties in the United States. It was also, and perhaps just as important, to hold this fascinating exchange of ideas related to how the two countries deal with civil justice issues, and what the differences are between the two civil justice systems. We had one segment on the technical challenges to litigating in China that was certainly fascinating to the American lawyers who attended. Mostly the American lawyers that attended were the panelists, but we had approximately ten lawyers who attended from the U.S. who were strictly meeting attendees.

Editor: Was the main purpose of the conference to orient Chinese lawyers and businessmen about what to expect in the U.S. if they commence operations over here?

Aliment: It was, as well as the exchange of ideas on the civil justice system. To some extent there was also a cultural exchange as to what it is like to practice law in the two countries. There are a surprising number of similarities to being an American lawyer and being a Chinese lawyer in their respective law firms, but a lot of differences as well.

Editor: I understand you led a panel on alternative dispute resolution in international business transactions. What advice did you give to Chinese business people in the U.S. regarding keeping commercial disputes out of U.S. courts?

Aliment: Perhaps, the most important practical advice that we gave them was to pay attention to their contracts; be aware that they have a choice as to what type of arbitration they want and what organization they might want to help them resolve their disputes. We talked a bit about the different arbitration associations available to them and what types of clauses they should include when they draft their contracts.

Editor: Did your panel discuss mediation as well as arbitration?

Aliment: Yes, we did. In the papers that were submitted to the audience we had some types of mediation clauses that they could insert into their contracts to take advantage of that method of dispute resolution before they go to the additional expense of arbitration as well as general information on what mediation is about and its benefits and pitfalls.

Editor: What other advice did you provide regarding choosing the arbitrator, choosing the venue, including arbitration clauses in contracts, etc.?

Aliment: That was really the main focus of this part of the Conference. There are just so many choices that you can make to control your dispute and how it can be resolved before the dispute arises. Unfortunately, too few business people pay attention to this aspect of dispute resolution. We wanted to impress upon our attendees that it is best to address such issues as the method of dispute resolution, the language choice and venue before the dispute arises. After the dispute arises, it is going to be very difficult to have a meaningful discussion because everyone at that point is looking for some advantage. When you don't make those choices pre-dispute, the arbitral facility that you end up with and their internal rules will make those choices for you, and what it may decide is not always to your advantage. For instance, on the language issue you may find yourself with an arbitration in Chinese or Japanese, resulting in your having the added expense of translation of not only the documents, but of the testimony itself.

Editor: How was the discussion of American-style discovery received by your Chinese audience?

Aliment: The whole e-discovery process and the blatant intrusiveness of this process was shocking to them. Their system is entirely different from ours in the sense that they don't have the free exchange of documents that we have. The added notion that one could actually get into electronic data such as email and even various versions of documents of an adversary was quite novel and strange to them. What was emphasized time and again was that failure to comply can have a significant adverse impact on the merits of the dispute.

Editor: Have you had experience with CIETAC (China International Economic and Trade Arbitration Commission)? How does it differ from other international arbitration tribunals?

Aliment: CIETAC is an area that I know only by reputation. It operates under the China Council for International Trade and has also been referred to as the Arbitration Court of the China Chamber of Commerce. Its headquarters is in Beijing with two sub-commissions in Shanghai and Shenzhen with 19 liaison offices throughout China. In the October issue of The Metropolitan Corporate Counsel (www.metrocorpcounsel.com/current.php?artType=view&EntryNo=10194), my article discusses the procedures in the various arbitral tribunals . The Chinese parties with whom we enter into contracts tend to favor CIETAC because that is their home court advantage.

Editor: Would a Chinese businessman in New York or Seattle find himself very much at sea in navigating a U.S. arbitral proceeding because of the complexity and extra cost involved in the U.S.?

Aliment: I don't believe that he would find it all that different because the international arbitration tribunals here go out of their way to make the foreign party feel at home and make the foreign party aware of what to expect in the proceedings. I don't believe that there is a significant difference in how things are handled by AAA in the States or in Vancouver Canada or Singapore. There are small differences - you just have to follow the rules.

Editor: Is China a party to the New York Convention?

Aliment: Yes, it is.

Editor: Has CIETAC or other arbitral tribunals in Mainland China risen to the level of tribunals in Singapore or Hong Kong?

Aliment: By reputation, I would say that Hong Kong and Singapore are just slightly ahead of China in terms of what the U.S. businessperson would like to see if he was going to resolve his arbitration dispute in Asia.

Editor: Do Chinese arbitration proceedings take into account common law concepts?

Aliment: The procedural rules of the facility where the dispute is venued will control the proceedings. By contract in the arbitration clause, you can set forth what laws you want to apply. Procedurally, civil law will apply in Asia unless the contract states otherwise.

Editor: Besides ADR, what other legal challenges concerning Chinese companies doing business in the U.S. were discussed at the Conference?

Aliment: We had some discussion about employment law. It was truly fascinating to watch the faces of the audience during the discussion about employee rights in the United States and what employers must do to remain compliant with our labor and employment laws. We also had some discussion of class action litigation in the United States. That was also a big mystery to the audience as well.

Editor: Your colleague Sheryl Willert spoke on legal ethics and privileged communication. What was the reaction of her Chinese audience to this subject?

Aliment: I think it was strange to them that they could be frank and candid in their comments with their lawyer and that the conversations would remain privileged and confidential. There seemed to be extreme distrust of the notion that if I talk to my lawyer candidly about what happened, it won't work to my prejudice down the road.

Editor: Thank you, Randy for the snapshot of this Conference's agenda. I am sure it was enlightening for both the Chinese audience and the American panelists who brought some Western legal concepts to the Middle Kingdom.

Please email the interviewee at raliment@williamskastner.com with questions about this interview.