CIETAC goes international with HK sub-commission
November 30, 2012 | BY
clpstaffCIETAC's new sub-commission in Hong Kong shows a determination of the organisation to become a leading player in global dispute resolution
On September 24, the China International Economic and Trade Arbitration Commission (CIETAC) launched its sub-commission in Hong Kong. The decision to set up the first CIETAC branch outside mainland China shows the desire to persuade more multinational companies to use the institution.
“By opening in Hong Kong, CIETAC may hope to attract more international parties, as opposed to primarily domestic parties. This may serve to enhance CIETAC's reputation as an institution for international disputes,” said Edmund Wan, a partner of King & Wood Mallesons in Hong Kong.
|Enforcement
Enforcement of a CIETAC award issued in Hong Kong is expected to be treated the same as awards issued by the HKIAC or ICC in Hong Kong.
Wan explains: “There should also be no difference in terms of enforceability under the New York Convention and under the Arrangement Concerning Mutual Recognition of Arbitration Awards between the Mainland and the Hong Kong Special Administrative Region”.
Care should be taken when drafting arbitration agreements as parties need to specify which governing law will apply and may later have implications for enforcement. For example, the PRC Arbitration Law (中华人民共和国仲裁法) allows six months for a party to apply for an award to be set aside, while the Hong Kong Arbitration Ordinance allows for 30 days.
|CIETAC goes global
To become a truly international arbitration centre, CIETAC needs to build its reputation so that international parties choose it for disputes even when there is no Chinese element.
“CIETAC is determined to expand its influence. The CIETAC Hong Kong branch is another attempt to hear some cases which do not have a Chinese element and will be purely international arbitration. This is the goal,” said Tim Meng, managing partner at GoldenGate Lawyers in Beijing.
In May this year new CIETAC rules came into effect and are in line with international practices. Christopher To, a professor of arbitration and dispute resolution at City University Hong Kong points out that the CIETAC rules are flexible. There is a lot of room for party autonomy and parties may agree in their arbitration agreement for other rules to apply, for example the United Nations Commission on International Trade Law (UNCITRAL) rules, which is the standard for many agreements.
Choosing CIETAC Hong Kong as the place of arbitration can offer advantages that other institutions cannot. For example, the new Rules allow the tribunal to grant interim relief measures, but this is not permissible under Chinese law, as only PRC courts have this power.
Although this move provided a vital boost to the chances of CIETAC becoming a global institution, the new Rules have lead to a disagreement between the Beijing head commission and the Shenzhen and Shanghai sub-commissions.
As the new Rules became effective, the Shanghai sub-commission of CIETAC announced that it was an independent arbitration body and would follow its own rules. This prompted a response from CIETAC in Beijing reinforcing that all sub-commissions and branches were under their remit.
The South China sub-Commission in Shenzhen soon followed Shanghai. Beijing CIETAC then sent its own arbitrators to administer cases in Shanghai, while the breakaway group is also administering disputes. The disagreement has cast a shadow over dispute resolution arbitration in China.
The launch of the Hong Kong sub-commission expands CIETAC arbitration. It offers new opportunities but it is not yet clear whether parties will choose the Centre if their contracts do not have a Chinese element.
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