Moving the CIETAC goal-posts…for the better

Bringing China’s arbitration rules up to date and in line with international standards has far-reaching advantages, including greater transparency and more scope for choice from the parties’ point of view. Stuart Dutson and Yang Zhao of Eversheds provide an overview of the key changes to the CIETAC Rules (2012) and outline the impact these amendments will have on arbitral proceedings in China.

The China International Economic and Trade Arbitration Commission (CIETAC), the leading arbitration institution in China, implemented its new rules (the 2012 Rules) on 1 May 2012. The 2012 Rules modernise the previous version of the CIETAC Rules (the 2005 Rules) in various aspects allowing for more flexibility and transparency, and granting further powers to arbitral tribunals.

Location, location, location
In the absence of an express choice, the 2012 Rules allow CIETAC to select as the seat of arbitration a place where CIETAC or the relevant sub-commission is located, or another location, which may be outside China, taking into account the circumstances of the case. This is a significant improvement to the CIETAC Rules, compared with the position under the 2005 Rules, which provided that if the parties failed to agree the place of arbitration, it would be the domicile of CIETAC (Beijing) or the relevant sub-commission (Shanghai, Shenzhen, Tianjin and Chongqing) that administers the case.

A question of consolidation
Under the 2012 Rules, CIETAC tribunals are now empowered to decide, with the agreement of all the parties, to consolidate related arbitrations, including those issued under the same arbitration agreement. These can be arbitrations involving the same parties, or referred to the same arbitrator or tribunal. Article 17 allows CIETAC to exercise its discretion before deciding on consolidation.

Expediting the process
The 2005 Rules required that arbitration documents be filed directly with the CIETAC secretariat, which then forwarded them to the relevant parties. The parties can now agree, with the consent of the tribunal, or the tribunal can otherwise decide that all arbitration documents be directly exchanged between the parties and the tribunal, in addition to being submitted to the CIETAC secretariat or the relevant sub-commission administering the case. This is expected to speed up the process.

Interim measures
The 2012 Rules for the first time allow the tribunal, by issuing a procedural order or an interlocutory award, to grant interim measures it considers proper, and to require the requesting party to provide security in connection with such measures. This is a significant step forward for CIETAC. However, Chinese law currently does not recognise interim measures such as freezing injunctions and anti-suit injunctions. Accordingly, the new Article 21(2) may therefore only be useful for the parties and the tribunal in circumstances where the interim measures requested are not subject to Chinese law, in other words, when enforcement in China is not required.

Conciliation
As an important feature of CIETAC arbitration, the 2005 Rules provides that the arbitral tribunal can conciliate the dispute during the arbitration with the consent of the parties. The 2012 Rules now provide that parties may request CIETAC, in addition to the tribunal, to conciliate their disputes. This is to address the parties’ concern that any weakness in their case revealed during the conciliation process may influence the tribunal, and hence the outcome of the arbitration, if conciliation is unsuccessful.

Governing law
The 2012 Rules now allow the tribunal, in the absence of an express choice by the parties, to exercise its discretion in determining the applicable law governing the merits of the case. This new article brings the CIETAC Rules in line with international arbitration practice.

When given a choice….
The 2005 Rules required that the default language for any arbitration proceedings be Chinese. As another important improvement, the 2012 Rules provide that, in the absence of an agreement between the parties, CIETAC can decide the language of the arbitration according to the circumstances of the case – and that this is not necessarily Chinese.

A welcome change
The changes to the CIETAC Rules will gradually bring them in line with international arbitration standards. They also demonstrate the commitment of CIETAC to improving its flexibility and transparency. These changes are likely to be welcomed by both the Chinese and international business community and users of CIETAC arbitration.

stuartdutson@eversheds.com
yangzhao@eversheds.com
www.eversheds.com

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