후원로펌 뉴스레터

본문 바로가기

HOME > 후원로펌 현황 > 후원로펌 뉴스레터

후원로펌 현황

Allen & Overy Newsletter

페이지 정보

작성일12-04-20 22:40

본문

If you have difficulty in viewing this publication, please click here
 
 
 
16 April 2012
 
CIETAC in 2012 - a year of change and challenges
 
 
Speed read
The China International Economic and Trade Arbitration Commission (CIETAC), China's main international arbitration body, is about to amend its arbitration rules (the Rules). These Rules will come into force on 1 May 2012 and will replace the existing arbitration rules, which have been in place since 2005. The new Rules contain several important breakthroughs for the conduct of arbitration proceedings and these developments form the focus of the discussions below.
 
 
 

Introduction

The new Rules arrive at a time when a number of international arbitration institutions are taking steps to make their arbitration rules more user-friendly. Both the International Chamber of Commerce (ICC) and the Singapore International Arbitration Centre (SIAC) recently updated their arbitration rules, and the Hong Kong International Arbitration Centre (HKIAC) is also due to amend its rules in the coming period. The Rules represent the culmination of two years of work carried out by the CIETAC working group, as well as consultations with arbitrators, lawyers, in-house counsel, judges and other practitioners.

Overall, the Rules offer much greater party autonomy and follow international arbitration practices more closely. Although there are no radical changes, with the Rules continuing to follow the existing framework provided by the PRC Arbitration Law (1995), there are a number of developments that can be considered as breakthroughs.
 

Conducting arbitration outside of China and interim measures

The 2005 version of the Rules already provided for the conduct of arbitration by CIETAC outside mainland China, for example in Hong Kong, upon the parties’ agreement. With the upcoming opening of the Hong Kong office of the CIETAC Secretariat, this will now become a practical reality, making it possible for CIETAC to administer arbitral proceedings in Hong Kong. The opening by CIETAC of an office in Hong Kong clarifies the enforceability of CIETAC awards where the parties have chosen Hong Kong as the seat of arbitration. Previously, it was not clear how PRC courts would treat awards rendered by CIETAC in Hong Kong, given that CIETAC is a domestically incorporated institution. With the establishment by CIETAC of a physical presence in Hong Kong, there should be little debate that awards made by CIETAC in Hong Kong should be subject to enforcement through the Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region, as are awards made by the HKIAC or the ICC in Hong Kong.
Notably, the Rules also grant the arbitral tribunal the power to issue interim measures, either in the form of a procedural order or an interlocutory award, suspending or prohibiting a party from carrying out certain acts that would amount to a breach of contract or other form of infringement. According to Yu Jianlong, Secretary-General and Vice-Chairman of CIETAC, the new amendment is intended to apply to arbitrations seated outside China. This implies that CIETAC tribunals based in mainland China (and subject to the PRC Arbitration Law) may still not have the power to issue interim measures.
It also raises the question as to whether the parties in a CIETAC arbitration based in Hong Kong may apply to CIETAC for conservatory measures in relation to property or evidence. According to the PRC Arbitration Law and the Rules, for arbitrations conducted in mainland China, CIETAC will forward any such application for determination by the PRC courts. There is currently no mechanism under PRC law which would allow the PRC courts to take any measures to assist with arbitrations conducted outside of China. Due to the way in which the PRC Arbitration Law is worded, we believe it is unlikely that CIETAC and the PRC courts would extend the availability of conservatory measures to CIETAC arbitrations based in Hong Kong.
Another question arises in relation to the power of the arbitration tribunal to determine its own jurisdiction. Although, under Hong Kong law, tribunals seated in Hong Kong are able to rule on their own jurisdiction, it is questionable whether CIETAC tribunals seated in Hong Kong would have the same inherent power. Under the PRC Arbitration Law, jurisdictional decisions should be made by the arbitration institution rather than the individual tribunal constituted for a particular case. The Rules have not departed from the 2005 version in this respect, giving CIETAC the discretion either to determine jurisdiction itself or to delegate such power to the tribunal. In the absence of any further clarification on this point, we do not recommend that parties to an arbitration agreement providing for CIETAC arbitration seated in Hong Kong seek to alter the position stated in the Rules by expressly delegating the power over jurisdictional decisions to the tribunal, as this might be considered in violation of the PRC Arbitration Law and therefore unenforceable.
It is also worth noting that, under the Rules, China is no longer the default seat for CIETAC arbitrations. This creates the possibility that CIETAC could choose any other location as its seat, having regard to the circumstances of the case.
With the entry into force of the Rules, CIETAC offers a new option for the conduct of arbitration in the Asia-Pacific region. On the other hand, CIETAC will likely face new challenges, as controversial issues might arise where the PRC Arbitration Law differs from the arbitration law of a non-mainland China seat, such as the Hong Kong Arbitration Ordinance.

ppointment of arbitrators

Previously, each party was able to recommend up to three candidates to CIETAC for the position of presiding arbitrator. However, the appointment procedure stipulated that if there was no single common name on the parties' lists, then all the candidates named in the lists would be excluded from appointment as the presiding arbitrator. This stipulation made this approach to appointment less attractive for many parties. Under the Rules, parties will now be free to recommend up to five arbitrators, and the parties' nominees will not automatically be eliminated as future candidates for the position of presiding arbitrator if they are not chosen by the other party. This new approach will give the parties better control over the choice of presiding arbitrator.
The Rules also provide clearer guidelines regarding the appointment of the presiding arbitrator, with express criteria that the Chairman of CIETAC is able to take into consideration. These criteria include factors such as the applicable law, the place of arbitration, the language of arbitration, the nationalities of the parties and any other factors that the Chairman considers relevant. This new provision will hopefully bring a greater variety to the pool of presiding arbitrators, which has until now been largely dominated by Chinese appointees. We usually recommend that parties specify in their arbitration clause that the presiding arbitrator must be from a third country independent of the nationalities of the parties to the dispute. In practice, it is also helpful to make it clear whether it is permissible for the presiding arbitrator to have previously held Chinese nationality.
In the case of multi-party proceedings, CIETAC will now appoint all of the arbitrators if any of the parties, either on the claimant or the respondent’s side, cannot come to agreement on the issue of appointment. This is in line with the ICC approach. Previously, it was common for respondents to introduce additional co-respondents, in a deliberate attempt to thwart the possibility of reaching consensus on the choice of arbitrator. The Rules are designed to prevent such tactics and provide for a fairer process in appointing arbitrators.

Conduct of arbitration proceedings

In relation to the conduct of arbitration proceedings, the Rules reflect the efforts made by CIETAC to align itself with more commonly accepted international practice. For instance, if the parties agree, there is no longer any need to transfer documents through the Secretariat. Further, although it is not expressly stated in the Rules, the CIETAC Secretary-General has made it clear that, in certain cases, such as where a case involves complex matters and large claims, CIETAC will ask the tribunal to adopt a more adversarial style. This could include the greater use of cross-examination of witnesses and procedural orders, both of which should help combat the common criticism that CIETAC proceedings progress too quickly, without giving the parties sufficient opportunity to state their cases.
The Rules also allow for the suspension of arbitration proceedings; for example, if the parties decide to attempt to settle the dispute. Previously, if the parties wanted to engage in settlement discussions, they would have to make an application to extend the deadline for the completion of the arbitration proceedings, and sometimes multiple extensions would be required. Now, it is possible to simply suspend the arbitration proceedings. Any suspension period will be excluded when calculating the time limit for rendering the arbitral award.

Summary/expedited procedure

The previous monetary threshold for the application of the summary or expedited arbitration procedure was RMB500,000. Under the Rules, this has now been raised to RMB2,000,000. CIETAC is following the lead of the HKIAC and SIAC in this respect, both of which introduced slightly higher thresholds in the latest revisions of their rules. Furthermore, if amended claims or counterclaims subsequently raise the value of the dispute to over RMB2,000,000, it will still be possible to apply the summary procedure, unless the parties or the tribunal decide otherwise.

Combining arbitration with conciliation

One notable feature of CIETAC's previous procedures was the ability of CIETAC arbitrators to engage in conciliation or mediation between the parties. It has been reported that, last year, around 20-30% of CIETAC's caseload was resolved through a combination of arbitration and mediation. This approach, whereby arbitrators also don the "mediator's hat", has been criticised, as highlighted by a recent Hong Kong judgment that held that the impartiality of arbitrators who had been involved in conciliation proceedings could be affected. To make conciliation more attractive to parties, the Rules now provide for a CIETAC-assisted conciliation process that is not carried out by the arbitral tribunal. This approach, which to a certain extent mirrors the HKIAC approach of having accredited mediators, should help ensure the independence and impartiality of the conciliators.

Consolidation of arbitrations

In an important breakthrough, the Rules now provide for the possibility of consolidating multiple cases into a single proceeding, upon the request of either party and subject to the consent of CIETAC. In making this decision, CIETAC will take into account various factors such as the commonality of facts, the parties involved, the arbitrators appointed and the nature of the claims, i.e. whether the claims arise from the same arbitration agreement. If CIETAC orders consolidation, the cases shall be consolidated into the arbitration that was first commenced. The new amendment will hopefully reduce the number of parallel proceedings, which often arise in sino-foreign joint venture disputes, where a suite of contracts gives rise to the same or similar disputes.

Sub-commissions

Another amendment introduced by the Rules is that if a party merely specifies that it would like to resolve a dispute using CIETAC's arbitration proceedings at a certain location (e.g. Shanghai), those arbitration proceedings will be administered by CIETAC headquarters in Beijing, because the reference to Shanghai will merely be regarded as an expression of preference regarding the location of the arbitration. Therefore, if a party would like its arbitration proceedings to actually be administered by one of the sub-commissions located in cities such as Shanghai, Shenzhen, Tianjin or Chongqing, the arbitration agreement should contain an express reference to the relevant sub-commission and not merely to the name of the city.
The justification for this amendment is that, previously, in cases where the parties did not clearly specify the headquarters or the relevant sub-commission, one party would submit a claim with CIETAC in Beijing whilst another party would file the same claim with one of CIETAC's sub-commissions. The decision on where the claim would be administered would depend solely on which party filed its claim first, sometimes causing confusion and arbitrary results as to the administering office.

Arbitration fees

CIETAC charges an arbitration fee on an ad valorem basis and applies different fee schedules for international cases and domestic cases. Although the arbitration fees charged by CIETAC are relatively low for cases where the amount in dispute is relatively small, this is not the case for cases involving larger disputed amounts. The Rules have revised the fee schedule, increasing the fees for cases where the amount in dispute is no more than RMB 100 million and reducing the fees for cases where the amount in dispute is more than RMB 100 million. In all cases, the arbitration fee is capped at RMB 15 million.

Next steps

Although the Rules have brought in a number of significant improvements, CIETAC has refrained from making any particularly controversial revisions, such as providing a procedure for an emergency arbitrator or making interim measures generally available to the parties. However, it is worth noting that recently published draft amendments to the Civil Procedure Law provide for the granting by the PRC courts of preliminary interim measures before the commencement of an arbitration. Once these amendments are in place, China might well embark on making long-overdue amendments to the PRC Arbitration Law to bring it more into line with international practice, although this is likely to be a slow and gradual process.
 
 
Contact information
 
 
 
Peter Thorp   +44 20 3088 5705
Partner, London peter.thorp@allenovery.com
 
Fai Hung Cheung   +852 2974 7207
Partner, Hong Kong fai.hung.cheung@allenovery.com
 
Huawei Sun   +86 10 6535 4326
Counsel, Beijing huawei.sun@allenovery.com
 
 
 
 
This ePublication is for general guidance only and does not constitute definitive advice.
 
© Allen & Overy 2012 | Legal Notices
 
 
 
 
To unsubscribe from this publication, please click here.
 
후원로펌 뉴스레터 목록
번호 제목 날짜
2313 [법무법인(유한) 대륙아주] 주간입법동향_vol.146 2024-01-05
2312 [법무법인(유한) 대륙아주] Weekly_Legislative_Report_Week_of_December_25_to_December_29_2023 2024-01-05
2311 [법무법인(유) 광장] 국외투과단체 귀속 소득에 대한 과세특례 제도 도입 이후의 변화와 시사점 2024-01-05
2310 [SHIN & KIM] 공장의 지방이전 전후 한국표준산업분류에 따른 업종의 동일성을 증명하여 1,021억 원의 법인세 세무조사결과 통지를 취소시킨 사례 2024-01-04
2309 [SHIN & KIM] COP 28 주요 내용과 시사점 2024-01-04
2308 [SHIN & KIM] 애니메이션 캐릭터 유사성 판단과 표현방식의 부정경쟁방지법상 성과물 해당 여부에 대해 판단한 사례 2024-01-04
2307 [SHIN & KIM] AI의 저작물 사용에 대한 최근 미국 법원의 판결 2024-01-04
2306 [SHIN & KIM] 채무자회생법상 포괄적 금지명령과 압류명령 송달절차의 정지 2024-01-04
2305 [SHIN & KIM] 세종Law Focus - Vol.214 (2023.12.11~12.17) 2024-01-04
2304 [SHIN & KIM] 소비재 · 유통업 뉴스레터 2023_Vol.3 2024-01-04
2303 [SHIN & KIM] 국내 최초 인공지능 신뢰성 단체표준 제정 2024-01-04
2302 [SHIN & KIM] 기업지배구조보고서 공시 점검 및 분석 결과 발표 2024-01-04
2301 [법무법인(유한) 태평양] 보건복지부, ‘지출보고서’ 실태조사 결과 공표 및 시사점 2024-01-04
2300 [법무법인(유한) 태평양] 공정거래위원회의 가맹분야 불공정거래행위 심사지침 제정안 행정예고 2024-01-04
2299 [법무법인(유한) 태평양][국제규제·분쟁대응연구소] 2023년 주요 이슈와 2024년 주목할 이슈 2024-01-04
게시물 검색

사단법인 인하우스카운슬포럼 In-House Counsel Forum

주소 : 서울시 강남구 테헤란로 625, 17층 | 고유번호 : 107-82-14795

E-mail : reps@ihcf.co.kr

Copyright(C) IHCF KOREA. ALL RIGHTS RESERVED.

모바일 버전으로 보기