Arbitrating the world

    The experts' opinions are then passed down to the arbitrators through the sub-commissions.

    “If the arbitrators accept the opinions, they can redraft their award,” says Yu.

    And if the arbitrators do not agree?

    “Then that's up to the decision of the arbitral tribunal.”

    Yu is enthusiastic about the Commission's work, and confident that the quality of its arbitrators can be maintained, despite their large and growing number.

    “The arbitrators are carefully chosen – we have a very good process of selecting the arbitrators,” he says. “When a person qualifies to be an arbitrator, they must have a very good reputation, a strong sense of responsibility, and would like to make contributions to arbitration.”

    This careful selection process along with the review of awards safeguards quality and consistency, says Yu. And there is also cross-supervision of cases, under which the arbitrators supervise the performance of the Cietac secretary and the secretary in turn ensures that the arbitrator does not show any bias.

The other side of the coin
Many lawyers agree that Cietac is now among the world's leading institutions in terms of quality; but criticism is common, too. Some have said that arbitrators can be paranoid about making the wrong decision, and therefore slow the process down. Yu says this is not because the arbitrator is “afraid of running into trouble”.

    “This is probably because the arbitrator is not sure what to do – is not sure about what kind of conclusion he could reach. In this sense I think if the arbitrator is hesitant to make the arbitral awards, he would often ask the commission to convene an expert committee meeting to give some opinions,” he explains, adding that Cietac is known for its efficiency.

    “Generally speaking, the Cietac arbitration cases are handled very fast – unlike some other arbitral institutions in the world where a case might drag for many, many years.”

    As well as speed, reliability is a prime concern for parties involved in disputes, or those who worry that they may encounter a dispute sooner or later. Many foreign companies who are new to doing business in China still fear that they will not get a fair trial at Cietac, and Yu is keen to reassure them.

    “I think their worries come mainly from the negative image depicted by foreign media of China. Once they have an experience of Cietac arbitration, they'll change their original image of China,” he says.

    “Cietac is quite famous for its impartiality. The fact that we handle more than 1,000 cases every year signifies impartiality; otherwise the parties would not choose Cietac arbitration.

    “Compared with other arbitral institutions in the world, we are one of the most impartial bodies. In Cietac, whether it's a Chinese party or a foreign party, we never try to protect the rights and interests of the Chinese company – we treat the parties equally – because we know, deep in the heart of Cietac, that we should provide a very satisfying investment environment to foreign investors, otherwise they'll not come over to China to do business.”

    Yu says that some Chinese companies that have experience in dealing with arbitration at foreign arbitral bodies have reported being treated unequally or even “very badly” in some cases.

    “But we never do that – we try to treat every party equally,” he insists.

Civil, not common
Another difficulty faced by foreign companies and their counsel is that mainland China has a civil, rather than common law, legal system. This means that physical evidence may be given much more weight that witness testimony compared with what parties are used to in their home jurisdiction. But Yu points out that arbitration allows more flexibility than litigation, and that this hurdle can be easily overcome.

    “When we revised the arbitration rules of Cietac in 2005,” he says, “we introduced the common law system as well. Nowadays the arbitral tribunal is free to make a decision on what approach to take – whether the inquisitorial or adversarial approach.”

    While admitting that, in mainland China, more importance is attached to written witness statements than to oral statements, Yu says that Cietac does not prohibit witnesses from being present at hearings. He says the Commission is making efforts to change its system in order to assist parties from common law countries and to “pay more attention to witnesses”.

    The system of enforcement of awards between mainland China and its closest common law neighbour – Hong Kong – was strengthened in 2008, with the introduction of a reciprocal agreement. Yu says the new arrangement is successful.

    “I think the two sides are co-operating very well,” he says “Hong Kong arbitral awards can be smoothly enforced in mainland China, and mainland China arbitral awards, including Cietac arbitral awards, have been well enforced in Hong Kong.”

    The issue of enforcement of foreign arbitral awards in mainland Chinese courts, has caused some debate. In 2008, Asialaw reported Yu as saying at a conference that only about 10 awards had been denied over a few years leading up to 2007. At the time, some lawyers responded by saying they would prefer to see no denials at all. Yu defends the record of the mainland courts, citing a vice-president of the Supreme People's Court.

    “[Wan Exiang] gave a figure saying that 10 foreign awards were denied between 2000 and 2007. About four of these were cases with parties that did not have an arbitral clause in the contract; there is one case where there was not any asset to enforce upon; the other five were turned down because of some procedural matters,” he says.

    “The enforcement record in China is improving and we're doing a lot of work in this regard,” says Yu. “I think the court system in China is very pro the enforcement of foreign arbitral awards.”

China Law & Practice would like to thank Cietac and the Hong Kong International Arbitration Centre for their help in arranging this interview.

Online pioneers

Cietac was only the second arbitral institution in the world to introduce specific online arbitration rules (the other being the American Arbitration Association). CLP asked Yu Jianlong about the Commission's motivation.

    “The major motivation behind it is to provide parties with convenient, fast and effective arbitration services, because when people have business relationships they come from different parts of the world and the distance is so far,” he said. “Once a dispute arises, they need to have it resolved quickly and economically to lower their costs. So in traditional arbitration, when we have a hearing in Beijing, parties from the US or Europe had to travel all the way to Beijing for the hearings which will cost a lot of money and manpower. When we have online arbitration, a lot of costs could be saved.”

    The PRC Arbitration Law was promulgated in 1994 and does not make any explicit mention of online arbitration. Does Yu think it needs revision?

    “Yes, the Arbitration Law should be revised to recognise the role of online arbitration, because in the current law there's not any provision about it,” Yu said. “It doesn't prohibit it, but it doesn't say yes.”

    One concern often raised about online arbitration is the legal weight of electronic evidence or documents submitted purely online with electronic signatures. Yu agreed that this is a factor hindering the development of online arbitration, and said this would need more legal support.

    “And it also calls for revision of relevant laws and regulations in other countries as well so we have uniform, consistent practice where everybody accepts the standard,” he said.

    “When we have the arbitration proceedings, it's not possible for us to do everything online – at least at this point. While we primarily use the online method to conduct proceedings, we should also adopt the traditional method as a secondary means of communication. Probably some of the evidence would be submitted for cross-examination via mail, because people wouldn't accept that online.”

    Yu said that Cietac has been actively lobbying the government about the revision of the Arbitration Law for several years, and some departments are thinking about revising the law.

    “I think within a few years the Arbitration Law will be revised,” he said.

Cietac timeline

1956 Established as the Foreign Trade Arbitration Commission under the China Council for the Promotion of International Trade (CCPIT)

1980 Renamed as the Foreign Economic and Trade Arbitration Commission

1987 China accedes to the 1956 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention)

1984 South China sub-commission established; allows foreign arbitrators for the first time

1988 Commission renamed as the China International Economic and Trade Arbitration Commission (Cietac)

1994 China issues PRC Arbitration Law (中华人民共和国仲裁法)

2005 Issues latest Arbitration Rules and rules for Financial Disputes

2009 Becomes the second institution worldwide to issue specific online arbitration rules