Important Changes in Arbitration Rules in China

The China International Economic and Trade Arbitration Commission (CIETAC) is the most important Arbitration Commission in China and one of the biggest permanent arbitration institutions in the world dealing with international, foreign-related and domestic cases. Its awards are recognized and enforced in more than 140 countries worldwide.

In February 2012 (effective as of May) the arbitration rules governing CIETAC were modified. Therefore, we recommend to companies and individuals to review the terms and conditions of any arbitration clause or contract choosing CIETAC and to proceed making the appropriate changes. The most important changes are[i]:

  1. Parties free to choose the applicable arbitration rules

Under the 2012 rules disputes submitted to CIETAC could be resolved in accordance with the arbitration rules of other institutions if the parties have agreed to it which was not possible under the 2005 rules that only allowed the application of CIETAC Rules[ii].

  1. Seat or place of the arbitration- China is not Longer the Only Choice

Under the 2005 rules Mainland China was the place of arbitration by default when the parties didn’t provide a clear agreement on this issue. Under the 2012 rules the place of arbitration could be other than China when not specified by the parties depending on the circumstances of the case[iii].

  1. Consolidation of Proceedings- Bringing all the Arbitration Proceedings together

Multiple CIETAC proceedings may now be consolidated in only one proceeding if the parties agree to it which was not possible under the 2005 rules. The consolidation of proceedings has the advantage of avoiding risks of inconsistent decisions resulting from the different arbitrations, and to reduce the cost and length of arbitrations[iv].

  1. Language of the Arbitration

The parties have been always allowed to agree on the language of the arbitration. However, under the 2005 rules in the absence of such agreement Chinese was the default language. Under the 2012 rules, there is not a default language in case of absence of agreement. Instead CIETAC will choose the language, which could be Chinese or any other, depending on the circumstances of the case. Nevertheless, we strongly recommend to parties to make a clear indication that English is the chosen language to avoid any potential controversy.

  1. Interim and Conservatories Measures Ordered by Arbitral Tribunals

Conservatory or interim measures according to Chinese Law can only be granted by the People´s Courts. However, under the 2012 rules where the interim measure is to be taking in a jurisdiction other than China, arbitral tribunals are empowered to grant such measures in accordance with the applicable law[v]. We strongly recommend consulting your Chinese counsel for further details and advice.

  1. Conciliation Within an Arbitration Proceeding- A Unique Feature

Under CIETAC rules arbitral tribunals are allowed with the consent of the parties to conciliate or mediate a dispute during the course of the arbitration. However, under the 2012 Rules the parties can be assisted by CIETAC rather than the tribunal as it used to be specified on the 2005 Rules[vi].

  1. Dispute Threshold Increased- The Option of an Expeditious Procedure

According to the 2012 CIETAC rules disputes with a threshold of less than RMB 2 Million will be subjected to the summary procedure,   the 2005 rules threshold was less than RMB 500,000. However, disputes which value exceeds RMB 2 Million could also be processed under the summary procedure if the parties agree[vii].

Please note that some CIETAC branches or Sub-Commissions (Shanghai, Shenzhen and Tianjin) have decided to reject and not apply the 2012 Rules.


[i] Mun, Catherine, ´New CIETAC Arbitration Rules 2012’ (07 May 2012), available at: http://tinyurl.com/btmhdrq (last accessed 08 August 2012). See also, ‘Arbitration Alignment’, Asian Legal Business ‘ALB’ Magazine- May 2012 Ed., pag. 14-18 and D’Angostino J. & Smith H. LLP, ‘Key Changes to the CIETAC Arbitration Rules´(11 April 2012), available at:http://tinyurl.com/93kv36y (last accessed 09 August 2012).

[ii] Article No. 3(3) of the 2012 CIETAC Rules.

[iii] Article No. 7(2) of the 2012 CIETAC Rules.

[iv] Article No. 17(1) of the 2012 CIETAC Rules.

[v] Article No. 21 of the 2012 CIETAC Rules.

[vi] Article No. 45(8) of the 2012 CIETAC Rules.

[vii] Article No. 54(1) of the 2012 CIETAC Rules.

Advertisements

Subscribe & Connect

Subscribe & Connect

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: