A comparative study in Saudi Arabia and China Culture Influence in International Commercial Arbitration and the significance of Art. 24 of the UNCITRAL Model law. A comparative study in Saudi Arabia and China

Differences in Legal Culture Part II Common and Civil Law Introduction What is Culture? Differences in Legal Culture Part II Common and Civil Law UNCITRAL Model Law: Oral or Written Proceedings Discovery and Pre-hearing Procedures Treatment of Witnesses Record Keeping Part III Saudi Arabia China Part IV What cultural considerations should be adopted in International Commercial Arbitration? Conclusion

Introduction Rapid expansion of International Commercial Arbitration Conflicts of Culture v Cultural Differences Two main legal systems creating laws, codes and guidelines Intl. Commercial Arbitration – ADR Formation of contracts affected by culturally developed preferences

What is Culture? The communalities that tie different societies into larger groups of similar understandings are called culture “The common theme of the various cultural definitions as the shared knowledge and the meaning systems use a particular group of people that are objective and subjective”, Erez and Earley (1993) Culture influences many aspects of life, attitude, social organisation, thought patterns, body language and time sense Thought patterns have immediate effect on the process of reasoning, particularly the legal one Cultural background strongly influences the legal systems and understandings, hence arbitration expectations.

Differences in Legal Culture The essence of a legal culture may be formally expressed in variety of codes, statutes and judicial decisions which are set out in the principles and rules of law governing arbitration The development of a legal culture may also be seen in the response of social values that are ascribed to law, such as the interpretation of law in a fair, clear and efficient manner Law impact on culture and culture upon law Common features v differences between categories must be drawn, such as commodities, maritime, “classic” commercial arbitration – whether institutional (such as ICC) or ad hoc and arbitrations involving a State.

Common Law and Civil Law Fundamentals of a legal culture lie upon two legal systems or “cultures” that are predominant in the world today – Common Law and Civil Law Cultural background of each participant influences all aspects of international commercial arbitration, such as choice of arbitration rules, arbitrators, “the seat” and expectations in process and outcome Common Law lawyer expects an adversarial approach Civil Law lawyer expects an active judge and an inquisitional system

UNCITRAL Model Law The rules provide for great discretion in determination of the procedure The most common differences that influence the expectations in arbitration: If the proceedings are oral or in writing Discovery and pre-hearing procedure Treatment of other witnesses, specifically parties and cross examination; and Record keeping

Saudi Arabia Arbitration has an important role in the mentality, history and customs of Arab nations In contrast to other regional systems, the approach of International Commercial Arbitration in the Arab world is truly culturally based as religion (the Muslim faith) is the core foundation The only arbitration process available in Saudi Arabia is the procedure regulated by the Act (M/46, 1983) – not based on UNCITRAL Model Law Difficult jurisdiction - the 1992 Constitution requires that the Quran and the Sunna are the sole sources of law Hearings are fundamental and witnesses preferred to written evidence

China Asia - very different cultural approach to International Commercial Arbitration Two important differences illustrate this: first concept is analysed through the influence of Western Common Law and Civil Law, which forms the basis of the Asian legal systems second important difference of culture influencing the arbitral procedure is confidentiality Arbitration Law 1994 establishes the legal system for arbitration / new era of arbitration in China CIETAC – China International Economic and Trade Arbitration Commission

What cultural considerations should be adopted in International Commercial Arbitration? Cultural bias and stereotyping Politics and religion Miscommunication (verbal and non-verbal) Cultural precepts for Negotiation

Conclusion International Arbitration as a process has moved forwards at a very rapid pace in the past decade However, there are problems that rules do not solve UNCITRAL Rules are often deliberately vague to avoid prejudicing the arbitral tribunal’ s discretion Challenges ahead include dealing with issues such as cost, delay, and enhancing Domestic Court support (and reducing Domestic Court interference) There is a recognizable influence of culture even in the experienced lawyer or arbitrator The lack of change risks undermining the perception amongst some users of International Commercial Arbitration as a “fair and just” process

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