Thursday, 22 January 2015

Chinese arbitration rules updated to reflect best practices in international arbitration, says CIETAC

January 22, 2015. 

China's oldest arbitration centre has updated its rules for 2015 in order to "adapt to the newest developments in international arbitration practice" while at the same time accounting for agreements that make reference to the breakaway Shanghai and Shenzhen sub-commissions.

The 2015 Chinese International Economic and Trade Arbitration Commission (CIETAC) rules came into effect on 1 January 2015. They introduce an emergency arbitration procedure, in line with that offered by other international arbitration centres; along with new rules on single arbitration for multiple contracts, 'joinder' of third parties to an existing arbitration and consolidation.

     CIETAC was established in 1956 in Beijing. It has other mainland Chinese regional sub-commissions in Chongqing and Tianjin, and opened a branch in Hong Kong in 2012. Its updated rules include a new chapter of special provisions for Hong Kong arbitration, including a different fee scale and express statement that the law applicable to CIETAC Hong Kong proceedings is the arbitration law of Hong Kong unless the parties agree otherwise. CIETAC has also established a new arbitration court in Beijing to take over case administration from its secretariat.
    
      "CIETAC has incorporated existing international arbitration practices into its new rules, for example, a transcript of the arbitration hearing," said arbitration expert Helena Chen of Pinsent Masons, the law firm behind Out-Law.com. "The new rules also echo the recent amendments by major international arbitration institutions to their rules including the consolidation of arbitration proceedings, emergency arbitrators, an arbitration concerning disputes arising out of multiple contracts, and others. These amendments facilitate compatibility of CIETAC's practice with internationally accepted arbitration practice."

    "The new rules also address CIETAC's internal structure by creating an 'arbitration court'. However, such restructure is more an internal adjustment within CIETAC and will not have a big impact on parties to arbitration," she said.

     CIETAC introduced provisions for consolidating multiple arbitrations in its 2012 update to its rules. However, these did not allow additional parties to join existing arbitrations. The 2015 rules now permit 'joinder' of an additional party, even over another party's objection, where it can be established that the agreement governing the arbitration also binds that party. CIETAC has also updated its consolidation rules to allow consolidation in certain circumstances even where a party objects.

     The new rules also permit a party to apply to CIETAC for emergency arbitration, in line with recent international trends. The new rules will most likely apply in Hong Kong, where emergency arbitration is legal, as only courts are entitled to grant interim relief under mainland Chinese arbitration law. If CIETAC grants an emergency application, it will be required to appoint an emergency arbitrator within one day of receipt of the application and requisite fees. The emergency arbitrator will be required to issue an order within 15 days of appointment, unless CIETAC grants an extension of time.

     The former Shanghai and Shenzhen (South China) offices, or sub-commissions, declared their independence from CIETAC after it updated its rules in 2012. Following the split, CIETAC issued a declaration that the sub-commissions were no longer entitled to hear cases containing CIETAC Shanghai or CIETAC Shenzhen arbitration clauses. Both Shanghai, which is now known as the Shanghai International Arbitration Centre (SHIAC), and Shenzhen, now the Shenzhen Court of International Arbitration (SCIA), have said that they will continue to accept these cases.The updated CIETAC rules contain provisions to "restructure" its Shanghai and Shenzhen sub-commissions as branches of the main CIETAC body that operate under CIETAC rules. The new rules state that cases where parties have agreed to refer disputes to CIETAC South China/Shenzhen will be heard by the Shenzhen sub-commission, and that cases where parties have agreed to refer disputes to CIETAC Shanghai will be heard by the Shanghai sub-commission. CIETAC Beijing will administer cases "where the sub-commission/arbitration centre agreed upon by the parties does not exist or its authorisation has been terminated", according to the updated rules.

     However, the Shanghai No. 2 Intermediate People's Court (Shanghai IPC) recently held that SHIAC had jurisdiction to hear cases containing a CIETAC Shanghai arbitration clause "as an independent arbitral institute". The judge found that SHIAC had been "established through a formal procedure and legitimately registered" with the local municipal government. The Guangdong Shenzhen Intermediate People's Court (Shenzhen IPC) issued a similar decision in a case involving SCIA one week later, although its ruling has not yet been made public. In September 2013, the national Supreme People's Court (SPC) ordered that jurisdictional disputes in all cases involving CIETAC Shanghai or South China had to be referred to it first.Arbitration expert Helena Chen said that there would be more court orders in line with the IPC's reasoning in the Shanghai and South China cases, as a number of jurisdictional disputes had been referred to the courts in line with the SPC's September 2013 ruling."CIETAC's announcement on the reorganisation of its South China and Shanghai sub-commissions came right before the release of the IPC's orders," she said. "In terms of timing, there are some doubts whether this was really a coincidence."

Source: http://www.out-law.com

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