CIETAC speaks out on a year of turmoil: interview

In May this year, CIETAC released its updated Rules. How have the new Rules been received by arbitrators and practitioners?

After thorough research and analysis, multi-disciplinary discussions, careful deliberation and nearly two years of repeated revisions, the Arbitration Rules became effective on May 1. The new Rules, upon promulgation and implementation, have been critically acclaimed, extensively publicised and applied as the applicable Rules for the 19th Annual Willem C Vis Moot International Commercial Arbitration Moot.

When applying the new CIETAC rules, the parties should take note of the following modifications in the rules:

1. The 2012 Arbitration Rules further highlight the international characteristics of CIETAC's arbitration services. The new Arbitration Rules provide that where the parties have not agreed on the place of arbitration or their agreement is ambiguous, the place of arbitration shall be the domicile of CIETAC or its sub-commission or centre administering the case. Where the parties have not agreed on the place of arbitration or their agreement is ambiguous, CIETAC may also determine the place of arbitration to be another location, taking into account the specific circumstances of the case. The new Arbitration Rules also provide that where the parties have agreed on the language of arbitration, their agreement shall prevail. In the absence of such an agreement, the language of arbitration to be used in the proceedings shall be Chinese or any other language designated by CIETAC, taking into account the specific circumstances of the case.

Under this article, parties using English or other non-Chinese languages as their working language do not necessarily have to use Chinese as the language of arbitration in the absence of agreement on the language of arbitration. CIETAC can thus determine the language of arbitration to be the working language of the parties based on the specific circumstances of the case and consider what is convenient for the parties and proceedings.

2. The new Arbitration Rules clearly provide that the parties may choose the lex causae governing the validity of the arbitration agreement. They may agree on the laws applicable to substantive disputes and may agree on the ways to exchange arbitration documents.

3. The new Arbitration Rules have added a provision that allows CIETAC to consolidate arbitrations upon satisfaction of certain conditions.

4. Considering the fact that foreign laws or the laws of Hong Kong, Macau or Taiwan (HMT) may govern the cases CIETAC accepts, under agreements between the parties and the arbitration laws and practices of foreign countries and HMT all permit and often adopt interim measures. The provision allows that at the request of a party, an arbitral tribunal may order interim measures if it deems necessary or proper in pursuance of applicable laws and may require the requesting party to provide appropriate security in connection with the interim measures.

Can you clarify the situation between CIETAC and its Shanghai and South-China sub-commissions?

In accordance with the provisions under the relevant establishment documents of CIETAC sub-commissions, CIETAC has clearly specified the positioning of its sub-commissions under CIETAC's Articles of Association of 1993: “The CIETAC and CIETAC sub-commissions are the same arbitration commission and CIETAC sub-commissions are local branches of CIETAC.”

Cities allowed to set up arbitration commissions under the laws may only establish one unitary arbitration commission. In 1995, Shanghai and Shenzhen were among the first group of pilot cities for reorganisation of arbitration institutions under the Arbitration Law and established local arbitration commissions. The fundamental reason that CIETAC Shanghai Sub-commission and Shenzhen Sub-commission could coexist with the local arbitration commission in the same city at that time was that these sub-commissions were branches of CIETAC rather than independent arbitration institutions.

In practice, CIETAC and its sub-commissions have always acted as one arbitration commission when conducting arbitration business. Both CIETAC Shanghai and Shenzhen share the Arbitration Rules and Panel of Arbitrators of CIETAC. They follow the leadership of CIETAC in operations, including reporting to CIETAC for appointment or authorisation by the CIETAC Chairman of the members of the arbitral tribunal for cases administered by the sub-commissions in pursuance of the Arbitration Law. They implement decisions by the CIETAC Chairman on withdrawal of arbitrators from cases administered by sub-commissions in pursuance of the Arbitration Law. They also accept centralised decisions by CIETAC on objections in the jurisdictions of sub-commission cases. Shanghai and Shenzhen also review CIETAC documents, such as the draft awards of cases administered by the sub-commissions or by CIETAC. They centrally stamp the CIETAC seal on decisions to withdraw or not withdraw arbitrators from cases administered by sub-commissions and decisions on jurisdictions and participate in work conferences held by the CIETAC Secretariat. Both CIETAC Shanghai Sub-commission and South China Sub-commission operate under the central leadership of CIETAC Commission and Chairman Meetings. The CIETAC Secretariat has assigned one staff member to serve as the deputy secretary-general of the South China Sub-commission and two other staff members to serve as the secretary-general and deputy secretary-general of the Shanghai Sub-commission.

From both factual and legal perspectives, CIETAC and its sub-commissions form an integrated arbitration commission. CIETAC sub-commissions, with all brands and resources they use that come from CIETAC and all its arbitration-related businesses directly led and administered by CIETAC, are not independent arbitration institutions. There were no disputes or disagreements pertaining to this fact before May 1 this year.

What are some of the most common disputes brought before CIETAC and what practical advice can you offer for parties about to arbitrate in these disputes?

In recent years, the types of dispute cases that CIETAC has accepted have further diversified, covering sales and purchase contracts of goods, joint venture and cooperation contract disputes, construction, project contracting, real estate development and construction, financial transaction disputes, equity transfer, IP licensing and ship leasing. New dispute types, such as asset acquisition, copyright transfer contracts, logistics contracts, franchise contracts, trading-trust contracts, finance lease contracts, and shipbuilding contracts have seen increases in volume.