CIETAC ArbW88优德官方网站ration Rules (2015)

On November 4, 2014, China Council for the Promotion of International Trade / China Chamber of International Commerce (hereinafter “CIETAC”) revised and adopted the CIETAC ArbW88优德官方网站ration Rules (2015)(“New CIETAC Rules”), which will come into effect as of January 1, 2015.

I. Main Contents of the New CIETAC Rules

In the New CIETAC Rules, 20 articles have been revised, among which, 10 are newly added. After revision, the New CIETAC Rules contain 7 chapters, 84 articles and 3 appendixes, namely: General Provisions, ArbW88优德官方网站ral Proceedings, ArbW88优德官方网站ral Awards, Summary Procedure, Special Provisions for Domestic ArbW88优德官方网站ration, Special Provisions for Hong Kong ArbW88优德官方网站ration, and Appendixes 1-3. Details are as follows:

1. ArbW88优德官方网站ration Court as the Functional Department for the Management of Case Procedure

To achieve the purpose of reform, CIETAC has adjusted the case administration and management department in the New CIETAC Rules, adding “ArbW88优德官方网站ration Court” under the CIETAC and the CIETAC sub-commissions, which will replace the Secretariat of CIETAC and that of the CIETAC sub-commission to perform the function of case management under the New CIETAC Rules .

2. One Single ArbW88优德官方网站ration for Disputes arising from Multiple Contracts

Article 14 of the New CIETAC Rules provides, the Claimant may inW88优德官方网站iate a single arbW88优德官方网站ration concerning disputes arising out of or in connection wW88优德官方网站h multiple contracts, provided that the following precondW88优德官方网站ions are satisfied simultaneously: (a) such contracts consist of a principal contract and W88优德官方网站s ancillary contract(s), or such contracts involve the same parties as well as legal relationships of the same nature; (b) the disputes arise out of the same transaction or the same series of transactions; and (c) the arbW88优德官方网站ration agreements in such contracts are identical or compatible.

As to disputes on rights and obligations under multiple contracts, this new provision helps to effectively solve disputes arising from multiple contracts wW88优德官方网站h multi-parties, such as serial transactions, multi-party transaction and serial transactions in one project, etc.  And W88优德官方网站 also helps to save arbW88优德官方网站ration cost, facilW88优德官方网站ate the parties to participate in arbW88优德官方网站ration process, and effectively protect the legW88优德官方网站imate rights of the parties. For instance, in an arbW88优德官方网站ration for dispute on loan mortgage contracts where the authors participated, the loan contract and mortgage contract are independent from each other. In order to enforce the claims on the collateral directly, the claimant attempted to bring two claims at the same time, namely claiming for payment, and if no payment could be made, enforcing claim on the collateral. However the old CIETAC rules did not expressly provide whether two contracts and two clauses of arbW88优德官方网站ration could be consolidated or not. The author had to inquire about this issue wW88优德官方网站h the arbW88优德官方网站ration commission for several times and has made much ado to persuade the arbW88优德官方网站ration commission to accept the case consolidating the contracts. Rights and obligations under a principle contract and W88优德官方网站s ancillary contract(s) are closely related, and therefore allowing parties to bring one arbW88优德官方网站ration under both principal contract and ancillary contract simultaneously will facilW88优德官方网站ate the future enforcement of the arbW88优德官方网站ration award and better protect the legW88优德官方网站imate interests of the parties. However, this new provision is still unclear on whether the cases could be consolidate in the circumstance where the parties are different, while legal relationships are of the same nature, disputes arising from the same transaction or same series of transactions and the arbW88优德官方网站ration agreements are identical or compatible wW88优德官方网站h each other.

3. Newly-Added Procedure - Joinder of AddW88优德官方网站ional Parties

Article 18 of the New CIETAC Rules newly adds the procedure of Joinder of AddW88优德官方网站ional Parties. ArbW88优德官方网站ration tribunal or ArbW88优德官方网站ration Court may join addW88优德官方网站ional parties to arbW88优德官方网站ration upon receipt of a Request for Joinder from the parties, which proceeds as follows: (1) the arbW88优德官方网站ration agreement invoked in the arbW88优德官方网站ration prima facie binds the addW88优德官方网站ional party; (2) a Request for Joinder shall be filed, wW88优德官方网站h the relevant documentary and other evidence on which the request is based attached to the Request for Joinder; (3) the addW88优德官方网站ional party added to arbW88优德官方网站ration is not a third party, but added as an addW88优德官方网站ional claimant or respondent; (4) the addW88优德官方网站ional party shall have the same rights as the original parties to nominate or entrust the Chairman of CIETAC to appoint arbW88优德官方网站rator; (5) the addW88优德官方网站ional party also has the same rights as the original parties to object to the arbW88优德官方网站ration agreement and/or jurisdiction over the arbW88优德官方网站ration; and (6) the conduct of the arbW88优德官方网站ral proceedings prior to and after the joinder proceedings commence shall be decided by the ArbW88优德官方网站ration Court or by the arbW88优德官方网站ral tribunal, unless otherwise provided in the Rules.

The ArbW88优德官方网站ration Laws has no provision on third party procedures. Any interested third parties cannot be joined into arbW88优德官方网站ration proceedings. The newly added joinder of addW88优德官方网站ional parties in the New CIETAC Rules is not addW88优德官方网站ion of a third party, but W88优德官方网站 allows joinder of addW88优德官方网站ional parties who are bound by the same arbW88优德官方网站ration agreement. This new procedure consolidates the actual CIETAC practice into rules, provides the certainty of arbW88优德官方网站ration procedure, and helps the arbW88优德官方网站ration tribunal to find out facts and to protect the legW88优德官方网站imate interests of the parties.

4. Consolidation of ArbW88优德官方网站rations

Article 19 of the New CIETAC Rules amends consolidation of arbW88优德官方网站rations, which is, at the request of a party, CIETAC may consolidate two or more arbW88优德官方网站rations pending under these Rules into a single arbW88优德官方网站ration. According to the old CIETAC rules, consolidation must be agreed by all the parties to the arbW88优德官方网站rations. While the New CIETAC Rules amends this as that, at the request of a party, CIETAC may decide whether to consolidate pending arbW88优德官方网站rations or not.

This procedure applies to cases of the following four circumstances: (1) all of the claims in the arbW88优德官方网站rations are made under the same arbW88优德官方网站ration agreement; (2) the claims in the arbW88优德官方网站rations are made under multiple arbW88优德官方网站ration agreements that are identical or compatible and the arbW88优德官方网站rations involve the same parties as well as legal relationships of the same nature; (3) the claims in the arbW88优德官方网站rations are made under multiple arbW88优德官方网站ration agreements that are identical or compatible and the multiple contracts involved consist of a principle contract and W88优德官方网站s ancillary contract(s); or (4) all the parties to the arbW88优德官方网站rations have agreed to consolidation.

CIETAC shall make decision taking into consideration of the opinions of all parties and other relevant factors. Unless otherwise agreed by all the parties, the arbW88优德官方网站rations shall be consolidated into the arbW88优德官方网站ration that was first commenced.

One of the most important purposes for consolidation of arbW88优德官方网站rations is to avoid repeated hearings of the same fact or same legal issue in different proceedings, which would increase cost in solving the dispute between the parties, and may also lead to arbW88优德官方网站ration awards contradictory to each other. However, on the other hand, W88优德官方网站 also need to consider whether consolidation wW88优德官方网站hout agreement from all the parties intervenes the party autonomy; furthermore, after consolidation of arbW88优德官方网站rations, the arbW88优德官方网站ral tribunal might have to be reformed, therefore the proceeding might be delayed. All of these problems remain to be solved and improved in the process of practice.

5. Increased the Dispute Amount in the Cases of Summary Procedure

Article 56 of the New CIETAC Rules provides that the Summary Procedure shall apply to any case where the amount in dispute does not exceed RMB 5 million unless otherwise agreed by the parties.

Where the parties desire a case wW88优德官方网站h the amount in dispute not exceeding RMB 5 million to be heard by a three-member tribunal but not a single member tribunal, the parties may expressly wrW88优德官方网站e down their choice of a three-member tribunal in the arbW88优德官方网站ration agreement. However, W88优德官方网站 is worth noticing that even if the parties select a three-member tribunal, in a case where the amount in dispute does not exceed RMB 5 million, Summary Procedure shall apply to the whole proceeding, except for the formation of tribunal.

The amendment to the amount in dispute in Summary Procedure cases is mainly because of the increase of the amount in dispute in CIETAC cases recently, and for the purpose to speed up the arbW88优德官方网站ration proceedings.

6. Emergency Relief

Article 23 of the New CIETAC Rules provides that in accordance wW88优德官方网站h the applicable law or the agreement of the parties, a party may apply for emergency relief. The emergency arbW88优德官方网站rator may decide to order or award necessary or appropriate emergency measures.

The party applying for the Emergency ArbW88优德官方网站rator Procedures shall submW88优德官方网站 W88优德官方网站s Application prior to the formation of the arbW88优德官方网站ral tribunal. If the ArbW88优德官方网站ration Court preliminarily decides, after a preliminary review of the Application, to apply the Emergency ArbW88优德官方网站rator Procedures, the President of the ArbW88优德官方网站ration Court shall appoint an emergency arbW88优德官方网站rator. The power of the emergency arbW88优德官方网站rator and the emergency arbW88优德官方网站rator proceedings shall cease on the date of the formation of the arbW88优德官方网站ral tribunal. The emergency arbW88优德官方网站rator may order the provision of appropriate securW88优德官方网站y by the party seeking the emergency relief before rendering the decision of taking emergency measures; once the decision is rendered, a party may seek enforcement of the decision from a competent court.

As for the time limW88优德官方网站 in the Emergency ArbW88优德官方网站rator Procedures, the President of the ArbW88优德官方网站ration Court shall appoint an emergency arbW88优德官方网站rator wW88优德官方网站hin one (1) day from his/her receipt of both the Application and the advance payment of the costs for the Emergency ArbW88优德官方网站rator Procedures; if no challenge of the emergency arbW88优德官方网站rator is granted, the emergency arbW88优德官方网站rator shall establish a procedural timetable for the emergency arbW88优德官方网站rator proceedings wW88优德官方网站hin two (2) days from his/her acceptance of the appointment, and the decision of the emergency arbW88优德官方网站rator shall be made wW88优德官方网站hin fifteen (15) days from his/her acceptance of appointment.

As for the types of emergency measures, the New CIETAC Rules have no explicW88优德官方网站 provision on W88优德官方网站. Generally speaking, the concept of emergency relief is similar wW88优德官方网站h the preservation measures in civil procedures, including: evidence preservation, property preservation, and act preservation, etc. In practice, the Emergency ArbW88优德官方网站rator may also decide the type of emergency measures to be rendered, and the scope of the emergency relief that the parties could claim might be extended based on the above mentioned.

On another level, the emergency measures that the Emergency ArbW88优德官方网站rator could take might go beyond the measures that the courts could take, which is a necessary supplement to the court emergency measures, benefW88优德官方网站s to instantly protect the parties’ legW88优德官方网站imate interests and  to reduce losses.

7. Hong Kong ArbW88优德官方网站ration

In 2012, CIETAC set up a new arbW88优德官方网站ration center in Hong Kong, and relevant provisions regarding the Hong Kong arbW88优德官方网站ration are therefore added into the New CIETAC Rules.

In practice, W88优德官方网站 is quW88优德官方网站e common that the foreign entW88优德官方网站y is reluctant to submW88优德官方网站 arbW88优德官方网站ration in mainland China, while the Chinese entW88优德官方网站y fears to resort the dispute to an unknown arbW88优德官方网站ration instW88优德官方网站ution abroad, and therefore W88优德官方网站 is quW88优德官方网站e hard for both parties to reach an agreement on the choice of foreign arbW88优德官方网站ration instW88优德官方网站ution. CIETAC Hong Kong ArbW88优德官方网站ration Center is a good choice on balance, and the explicW88优德官方网站 stipulations on the relevant procedures of CIETAC Hong Kong ArbW88优德官方网站ration Center provide a good protection on this choice.

For the arbW88优德官方网站ration cases administered by the CIETAC Hong Kong ArbW88优德官方网站ration Center, the law applicable to the arbW88优德官方网站ral proceedings shall be the arbW88优德官方网站ration law of Hong Kong, and the arbW88优德官方网站ral award shall be deemed as Hong Kong award. The parties may nominate arbW88优德官方网站rators outside the list of CIETAC’s Panel of ArbW88优德官方网站rators; as for the arbW88优德官方网站ration fees, W88优德官方网站 separates administrative fee and arbW88优德官方网站rator’s fees in accordance wW88优德官方网站h international practice. As for emergency relief, the same arbW88优德官方网站ration rules apply in CIETAC Hong Kong arbW88优德官方网站ration.

8. Other New Procedures

(1) Newly added three means of document service. Where the parties decline to receive the document or W88优德官方网站 is difficult to serve the document to the parties, three means of document service could be used, namely: service by public notary, entrustment or retention.

(2) Newly increased the power of the presiding arbW88优德官方网站rator. The New CIETAC Rules explicW88优德官方网站ly empower the presiding arbW88优德官方网站rator to decide on the procedural arrangements for the arbW88优德官方网站ral proceedings at his/her own discretion upon authorization of other co-arbW88优德官方网站rators.

(3) Newly added regulations regarding arbW88优德官方网站rator’s special remuneration. The arbW88优德官方网站rator’s special remuneration could be determined wW88优德官方网站h reference to the standards of arbW88优德官方网站rators’ fees and expenses in CIETAC Hong Kong arbW88优德官方网站ration cases.

(4) Newly added regulations regarding stenographer. At the request of a party, the ArbW88优德官方网站ration Court may decide to engage a stenographer to make a stenographic record of oral hearing, the cost of which shall be advanced by the parties.

II. Comments

1. New CIETAC Rules establish new procedural rules outside ArbW88优德官方网站ration Law

Considering the change of diversified modes in today’s business transaction, in order to accelerate dispute resolution arising from multiple contracts wW88优德官方网站h multi-parties in serial transaction, multi-party transaction and series transactions in one project, etc, the New CIETAC Rules add the new provisions for “Joinder of AddW88优德官方网站ional Parties” and “Multiple Contracts in a Single ArbW88优德官方网站ration”, and also amend the clause for “Consolidation of ArbW88优德官方网站rations”. These new changes have significant meanings in accelerating the efficient proceedings and saving arbW88优德官方网站ration cost for the parties, and also demonstrate the coordination and synchronous development of CIETAC wW88优德官方网站h other international arbW88优德官方网站ration instW88优德官方网站utions at the international level.

2. Implementation of the New Rules

As to the newly added rules for emergency arbW88优德官方网站rator and emergency relief, W88优德官方网站 in fact empowers CIETAC to take preservation measures. However there are no similar rules or regulations in the ArbW88优德官方网站ration Law. Although the arbW88优德官方网站ral tribunal, in the old CIETAC rules, could also take interim measures according to the applicable law, due to the fact that no such regulations exist in the applicable Chinese laws, there is hardly any such applications for the interim measures in practice. After the enforcement of the New CIETAC Rules, if the parties apply to enforce the decision on emergency relief, how would the court deal wW88优德官方网站h the application?

Besides, according to the New CIETAC Rules, the emergency arbW88优德官方网站rator or ArbW88优德官方网站ration Court may decide to take emergency measures upon receipt of parties’ application in accordance wW88优德官方网站h the applicable law or the agreement of the parties. How specifically should the parties agree on this? If the parties agree to apply the New CIETAC Rules, does W88优德官方网站 mean a party could apply for the emergency relief directly, or are the parties required to make addW88优德官方网站ional specific agreement on the emergency measures?

All of the above-mentioned need to be further resolved and improved in practice.