Shift in International Commercial Arbitration Amid Global Restructuring

Core characteristics of the current global economic and political landscape

Over the past few years, the underlying dynamics of global business operations have undergone profound changes. The process of economic integration that once characterised the global economy has gradually slowed, with regionalisation and fragmentation emerging as the new dominant trends, and protectionist tendencies continuing to intensify across multiple major jurisdictions. At the same time, ongoing geopolitical conflicts have further accelerated the reshaping of the global economic landscape, leaving businesses operating across borders to face an external environment that is more complex and uncertain than ever before.

Current landscape of Chinese enterprises’ overseas expansion

Against this backdrop, the overseas expansion of Chinese enterprises has entered a new phase of development. The internal demand for economic transformation and upgrading within China is driving an increasing number of companies to extend their business operations into emerging markets and high-risk jurisdictions such as South-East Asia, Africa and Latin America. As the scale of overseas investment and trade continues to expand, Chinese enterprises are encountering not only a substantial rise in the volume of cross-border commercial disputes but also a significant surge in their complexity, with the legal and compliance issues involved becoming ever-more diverse.

Fundamental transformation of international commercial arbitration

As the preferred method for resolving cross-border commercial disputes, international commercial arbitration is also undergoing a profound transformation. It is no longer merely a post-dispute adjudication mechanism used to resolve disputes over contract performance, but has gradually evolved into a comprehensive governance platform that integrates the application of law, political considerations, anti-corruption compliance, and public policy balancing. This transformation is both a proactive response to the changing landscape of global business risks and an inevitable result of the arbitration system’s own adaptation to the times.

This article focuses on key developments in the field of international commercial arbitration from 2025 to 2026, with a particular emphasis on analysing the core innovations in the International Chamber of Commerce (ICC)’s forthcoming anti-corruption umbrella report (“the Report”) and its newly revised arbitration rules. Additionally, the article will explore the industry’s reflections on and efforts to address the trend towards the judicialisation of arbitration. It will also provide a targeted analysis of the challenges faced by Chinese enterprises amid this wave of change, and propose feasible response strategies.

Anti-Corruption: From Peripheral Issue to Core Pillar of Arbitration Proceedings

Anti-corruption was once merely a marginal issue that occasionally arose in international commercial arbitration; arbitral tribunals typically viewed it as a criminal matter unrelated to contractual disputes and did not examine it in depth. However, in recent years, with the intensification of the global anti-corruption movement and the exposure of a series of major corruption arbitration cases, this issue has risen to become a central pillar of arbitration proceedings. The Report marks a significant step forwards for the international arbitration community in combating corruption, providing unified operational guidance to replace the previously fragmented approaches in practice.

Shift in arbitral tribunal’s role: from passive neutrality to active discharge of duties

Limitations of traditional practice

Traditional arbitration practice strictly adheres to the nemo judex sine actore principle, meaning that an arbitral tribunal will only examine relevant issues when a party explicitly raises allegations of corruption. This passive and neutral stance has allowed a vast amount of corruption hidden behind commercial transactions to evade scrutiny – the case of Nigeria v P&ID serves as a sobering example of this.

In 2010, the Nigerian government signed a natural gas processing contract without a public tender with P&ID, a shell company based in the British Virgin Islands. After P&ID initiated arbitration in 2012, the proceedings were conducted in secret and with unusual haste. The arbitral tribunal ultimately ruled that Nigeria was liable for compensation, and as of 2023, Nigeria’s total debt had risen to approximately USD11 billion.

It was not until 2019 that Nigeria first raised allegations of bribery and sought to have the award set aside. The High Court of England and Wales found that P&ID had committed serious irregularities, including bribing officials, submitting false evidence, and stealing the opposing party’s internal legal documents to manipulate the arbitration. Ultimately, the court set aside the award on the grounds that it was contrary to public policy.

In his ruling, Judge Knowles noted that without oversight, the arbitration process would become less reliable and more susceptible to fraud. This inevitably raises the question – does the arbitral tribunal have sufficient tools at its disposal to ensure the fairness of its awards?

Highlights of the report

This landmark case underscores the necessity of the ICC’s long-standing efforts to standardise and systematise anti-corruption practices in international arbitration. As early as 2019, the ICC Committee on Arbitration and ADR established the “Task Force Addressing Issues of Corruption in International Arbitration”, which spent nearly seven years compiling this Report.

The final guidelines establish a logically coherent three-stage framework for investigating corruption:

• the first stage involves a preliminary review of the issues, focusing on issues such as whether the arbitral tribunal should initiate an investigation sua sponte, and the impact of parallel proceedings;
• the second stage focuses on evidentiary issues, systematically addressing the burden of proof and the assessment of such evidence;
• the third stage clarifies the tribunal-specific aspects of the corruption inquiry, including the legal consequences of a corruption finding and arbitrators’ obligations; and
• the Report provides international arbitration practitioners with a comprehensive operational framework for combating corruption.

Factors to consider before conducting a sua sponte investigation

When deciding whether to initiate a corruption investigation of its own motion, the arbitral tribunal may take into account multiple key factors:

• the severity and credibility of corruption risk indicators present in the case;
• the potential impact of the alleged corrupt conduct on the validity of the arbitration agreement;
• the relevance of the conduct to the core dispute in the case;
• the applicable legal framework and fundamental principles of procedural fairness; and
• the impact of the investigation on the cross-border enforceability of the final award.

This balanced approach addresses the expectations that the arbitration system will combat corruption while preventing unnecessary delays and increased costs resulting from procedural abuse. For enterprises, suspicious conduct in transactions will be subject to more rigorous scrutiny. Therefore, it is essential for companies to maintain higher compliance standards throughout the entire transaction process.

Integrating experience and evidence: red flag methodology

Corrupt conduct is inherently covert, and direct evidence is often difficult to obtain. This has long been the greatest challenge in proving corruption in arbitration. To address this critical issue, the ICC Report develops the “red flag methodology”, integrating scattered practical experience into a systematic set of tools for evidence evaluation.

ICC’s three-step assessment framework: Identify–Validate–Assess

This methodology provides the arbitral tribunal with a clear three-step operational framework, for a more standardised and transparent review of corruption allegations:

• Identification – Comprehensively review all facts and circumstances in the case that may indicate the presence of corruption risks.
• Verification – Verify the authenticity, accuracy and relevance of these risk indicators one by one.
• Assessment – Integrate all verified information and weigh it against counter-evidence to form a comprehensive judgment.

The Report categorises red flags into two main types to help arbitration tribunals conduct more targeted reviews. General red flags are primarily related to environmental factors, including a specific country’s reputation for integrity, inherent corruption risks within an industry, and the current government’s anti-corruption environment. Specific red flags are more direct, primarily involving the counterparty’s background and qualifications, relationships with public officials, and unusual terms and payment arrangements in the transaction itself.

Bidirectional evaluation system of red flags and green flags

The Report also introduces a two-way assessment system based on red flags and green flags. A single serious red flag indicator – such as a large, undisclosed payment made without a legitimate business justification – may carry significant probative value. Conversely, the accumulation of multiple seemingly minor red flag indicators can also be sufficient to raise reasonable suspicion of corruption. Accordingly, the accused party may refute the allegations by providing a legitimate business explanation (ie, a “green flag”).

This is vividly illustrated in the case of Metal-Tech v Uzbekistan, where the arbitral tribunal identified four mutually corroborating red flags: a consultant of questionable credentials; a service fee of USD4 million with little relation to the actual work performed; the close familial relationship between a consultant and the then-prime minister of Uzbekistan; and fund transfers conducted through opaque offshore shell companies. The claimant failed to present any sufficiently compelling green flags to rebut these suspicions, as it could not produce evidence of the actual consulting services rendered or any other reasonable commercial justification for the anomalous arrangements. Ultimately, the arbitral tribunal dismissed Metal-Tech’s claim on the grounds of corruption; however, given that Uzbekistan had also engaged in corrupt practices, it ordered both parties to bear their own costs in accordance with the principle of equity.

Practical challenges in applying the red flag methodology

Although this methodology offers strong practical guidance, it still faces some significant challenges in real-world application:

• the assessment of red flag indicators involves a degree of subjectivity, and there are currently no uniform quantitative standards for determining the weighting of different indicators;
• some parties may abuse this mechanism by intentionally filing a large number of false red flag allegations to delay the arbitration proceedings; and
• arbitral tribunals lack the power to compel discovery, making it difficult to obtain key evidence held by third parties, and differences in business culture across countries may also lead to misjudgments.

Co-ordination of parallel proceedings

In international commercial arbitration cases involving corruption, the emergence of parallel proceedings is a common occurrence. A single act of corruption may trigger various types of legal proceedings – such as, criminal investigations, civil lawsuits and regulatory reviews – simultaneously across multiple jurisdictions.

Stay of proceedings

The primary issue raised by parallel proceedings is whether arbitration proceedings should be stayed pending the outcome of those parallel proceedings. Generally speaking, the threshold for staying arbitration is very high. First and foremost, the tribunal must determine whether there is a mandatory legal obligation to stay the proceedings. In the absence of such mandatory legal obligation, the tribunal will further consider:

• the degree of correlation between the core issues of the parallel proceedings and the arbitration dispute;
• the current stage and estimated duration of the parallel proceedings;
• the potential impact of the parallel proceedings’ outcome on the arbitration;
• the procedural fairness of the parallel proceedings, and whether the accused party has been afforded a full and fair opportunity to participate and present its case;
• whether the parallel proceedings are conducted in the arbitral seat – decisions from parallel proceedings in the seat have a decisive impact on the subsequent validity of the award;
• the accessibility of evidence in the parallel proceedings;
• the potential irreparable harm or unfair tactical advantage that a stay may cause to either party; and
• the overall impact of the stay on procedural efficiency and the finality of arbitral awards.

Criteria for evidence sharing

In addition to the issue of stay of proceedings, parallel proceedings also involve the co-ordination of evidence sharing. Evidence obtained by law enforcement agencies generally carries significant probative value; however, the arbitral tribunal must still safeguard the opposing party’s right to cross-examine such evidence. With regard to evidence transferred from arbitration to parallel proceedings, a balance must be struck between the duty of confidentiality and the statutory duty of disclosure; where necessary, the tribunal should issue detailed confidentiality orders and redact sensitive commercial information.

Effect of decisions or judgments in parallel proceedings

Decisions or judgments rendered in parallel proceedings do not automatically have preclusive effect on an arbitration, and the arbitral tribunal retains its independent authority to determine the facts. When assessing the validity of findings from parallel proceedings, the arbitral tribunal focuses on three core criteria:

• due process – whether the parallel proceedings followed due process of law;
• consistency of evidentiary standards – whether the standard of proof applied in the parallel proceedings aligns with the standard used in the arbitration to address corruption issues; and
• territorial connection – whether the location of the parallel proceedings is the same as the seat of arbitration, as this directly impacts the risk of a subsequent judicial review of the award.

Conflicts of Interest and Disclosure: Changes in the Latest Revised ICC Arbitration Rules

Disclosure of conflicts of interest is the cornerstone of fairness in international commercial arbitration. Particularly in cases involving corruption, undisclosed hidden financial ties can directly serve as channels for the transfer of benefits, undermining the legitimacy of the award. The traditional model, in which the disclosure obligation rests solely with the arbitrator, has resulted in a large number of potential conflicts of interest failing to be identified at an early stage of the proceedings. The newly revised ICC Arbitration Rules (“the ICC Rules”), effective 1 June 2026, have reformed the disclosure regime, establishing a new framework involving multiple parties.

Proactive party participation in disclosure: from unilateral obligation to collective governance

Key innovation of the ICC Rules

The most significant innovation of the ICC Rules is the inclusion of the parties themselves in the conflict-of-interest governance framework. At an early stage following the initiation of arbitration proceedings, each party must submit a list to the secretariat identifying any person or entity that may have a conflict of interest, along with specific supporting reasons. This change helps improve efficiency and reduce the risk of issues arising at a later stage.

Dual reinforcement of disclosure obligations

The ICC Rules do not relieve arbitrators of their core disclosure obligations but instead establish a dual safeguard mechanism. On the one hand, arbitrators are still required to independently fulfil their comprehensive disclosure obligations and disclose all circumstances known to them that may affect their independence; on the other hand, the parties are explicitly required to assist the arbitrators in fulfilling their disclosure obligations, thereby assuming a more proactive role in this regard.

Two critical clarifications

The ICC Rules also provide two key clarifications. First, they explicitly codify the “when in doubt, disclose” principle, requiring arbitrators and parties to prioritise disclosure whenever there is any doubt regarding the existence of a conflict of interest, rather than making their own judgement as to whether it is material. Second, they clarify that disclosure in itself does not constitute evidence of a lack of independence or impartiality, thereby avoiding undue deterrence of good-faith disclosures and encouraging all parties to make candid disclosures.

Institutionalisation of the multi-party disclosure principle

The new rules formally institutionalise a multi-party disclosure mechanism, with the underlying rationale for this reform being that “prevention is better than cure”. By comprehensively screening for potential risks early in the proceedings, the system aims to reduce conflicts of interest at their source and prevent parties from subsequently seeking to set aside arbitral awards on these grounds. This not only enhances the efficiency and certainty of the arbitration process but also effectively prevents corruption from infiltrating the proceedings through improper relationships, thereby further strengthening the international credibility of ICC arbitration.

Structural Reflection: Countering the Judicialisation of Arbitration and Returning to Its Commercial Essence

The core value of international commercial arbitration lies in its flexibility, efficiency, and business-oriented approach. However, in recent years, there has been a clear trend towards judicialisation in arbitration proceedings. At the same time, while strengthened anti-corruption measures and conflict-of-interest regulations are crucial for maintaining the credibility of arbitration, they may also objectively increase the risk of procedural complexity. How to strike a balance between strengthening institutional constraints and returning to the essence of business deserves further exploration.

Signs and drawbacks of arbitration judicialisation

The judicialisation of arbitration is primarily manifested in procedural rules aligning with those of court litigation. An increasing number of arbitral tribunals are adopting court-style practices such as discovery, cross-examination during hearings, and document formatting, resulting in protracted and rigid proceedings. The involvement of a large number of former judges and litigation attorneys also leads to arbitration proceedings that tend to overlook commercial and industry practices, thereby diluting the commercial nature of arbitration.

This undermines arbitration’s core competitiveness, causing commercial parties to increasingly favour other more efficient dispute resolution methods. For small and medium-sized enterprises in particular, the high costs in terms of time and money create a “barrier to entry”. Therefore, arbitral tribunals should prioritise the practical needs of commercial transactions rather than mechanically applying legal rules, which may result in awards that lack commercial logic.

Global consensus on returning to commercial sense

Leading international arbitration institutions, represented by the ICC, collectively advocate that arbitral tribunals should move away from pure proceduralism and apply a business-oriented mindset throughout the entire proceedings. The ICC states that the amendments to the Arbitration Rules aim to enhance efficiency, clarity and usability, ensuring that ICC arbitration continues to meet the needs of global entities and to strengthen parties’ confidence in the fairness and efficiency of dispute resolution.

In the future, the international arbitration community is expected to advance the arbitration regime in a more business-friendly direction by focusing on the following areas:

• encouraging the participation of practitioners with industry experience, expertise in anti-corruption compliance, and cross-cultural competence;
• streamlining procedures, promoting documents-only proceedings, and optimising the emergency arbitrator mechanism; and
• integrating ADR methods, such as mediation and expert determination, with arbitration to form a multi-tiered dispute resolution system.

Risks and Proactive Strategies for Cross-Border Arbitration

The number of international arbitration cases involving corruption allegations continues to rise. Corruption allegations not only influence arbitration proceedings as grounds for claims or defences but also directly challenge the basis of arbitral awards; as a result, anti-corruption has become a highly disruptive risk factor in international arbitration.

Core risks facing enterprises operating in high-risk cross-border environments

Specifically, businesses face the following risks.

• Risks of corruption allegations in high-risk jurisdictions: potential conflicts may exist between local business practices and international anti-corruption standards, which could lead to inadvertent involvement in third-party misconduct.
• Risk of the arbitral tribunal conducting a proactive investigation: even if neither party raises the issue of corruption, the arbitral tribunal may still conduct a proactive review if there are evident red flags.
• Risk of the award being set aside: failure to proactively identify and disclose conflicts of interest may lead to avoidable challenges to the award.

Key measures for prevention and response

To avoid the risks mentioned above, companies are advised to proactively take the following measures.

• Contract refinement: incorporate ICC standard anti-corruption clauses and clarify parties’ compliance obligations, liability for breach of contract, and audit and inspection rights.
• Due diligence: strengthen background checks on counterparties and third-party intermediaries, and establish a warning mechanism for corruption risks.
• Procedural participation: proactively fulfil disclosure obligations under the Rules and emphasise the selection of arbitrators with relevant business backgrounds or experience.

Conclusion: Future Direction of International Commercial Arbitration

International commercial arbitration is transforming from purely post-dispute adjudication to preventative risk governance by promoting the proactive participation of all parties. This trend also reflects a central theme in the development of international arbitration – striking a balance between safeguarding the public interest and upholding the commercial nature of arbitration. It is essential to bear in mind that the vitality of arbitration lies in its commercial nature. While strengthening anti-corruption measures, caution must be exercised against the risk of excessive judicialisation, with the core objective always remaining the pursuit of efficient and practical commercial solutions.

For Chinese enterprises, proactively adapting to new international arbitration rules is crucial. On the one hand, businesses must strengthen internal compliance systems to prevent corruption; on the other hand, continuous improvement of cross-border dispute resolution strategies should be prioritised, with a focus on proactively identifying conflicts of interest rather than passively waiting for them to arise.