By Zhang Shouzhi  He Wei  Chen Jun and Hu Ke   King & Wood Mallesons’ Dispute  Resolution & Litigation Group

張守志何薇On November 14, 2014, China Council for the Promotion of International Trade revised and adopted the China International Economic and Trade Arbitration Commission Arbitration Rules (2015) ( the “2015 Arbitration Rules”), which revised the China International Economic and Trade Arbitration Commission Arbitration Rules (2012) ( the “2012 Arbitration Rules”, effective as of May 1, 2012). The 2015 Arbitration Rules shall go into effect as of January 1, 2015.

I  Summary of the Revised Content

Both the text and appendix of the 2012 Arbitration Rules have been revised. There are 20 changes in the text and 3 in the appendix. The following table reflects all the changes made:


II  Overview and Analysis of the Revisions

The revisions to the 2012 Arbitration Rules by CIETAC were made for different reasons. In doing so, CIETAC is seeking to bring its rules in line with international norms in arbitration procedure.

One of the reasons for the revision was to change the structure of CIETAC. This involved replacing the Secretariat by the Arbitration Court in administering cases, which is a result of the functional division between the Secretariat (responsible for public service) and Arbitration Court (responsible for case management). Another reason was to amend the rules was to take into account practical experiences and to recognize existing practices, for example: service of arbitration documents through a notary public as an effort to resolve the problems that a party refuses to be served or it is difficult to serve on him/her (Article 8); the presiding arbitrator may decide on the procedural arrangements with the authorization of the co-arbitrators (Article 35); and arbitrators’ special remuneration (Article 82). Some changes were made to meet the developing needs of international commercial arbitration practices, such as multiple-contract arbitration (Article 14), joinder of additional parties (Article 18), consolidation of arbitrations (Article 19), emergency arbitrator procedures (Article 23), and so on.

We believe the following eight aspects in the 2015 Arbitration Rules are noteworthy:

1. CIETAC Arbitration Court shall administer the arbitration cases.

On September 26, 2014, CIETAC held an opening ceremony in Beijing for the establishment of the Arbitration Court of CIETAC. According to the newsletter issued at that time and the 2015 Arbitration Rules, the Arbitration Court will be in charge of the administration of arbitration cases, while the Secretariat will be responsible for the public services provided under Article 19 of the Charter of CIETAC. It is noteworthy that the case management function of the Arbitration Court primarily refers to the daily administration services, such as transferring documents and decisions on extension of time limits, etc. Therefore, the Arbitration Court of CIETAC differs from the “Court of Arbitration” in the International Chamber of Commerce (“ICC”), in the London Court of International Arbitration (“LCIA”), and in the Singapore International Arbitration Centre (“SIAC”).

2. Multiple-contract arbitration is allowed under the 2015 Arbitration Rules.

In commercial practice, it is not uncommon that parties in one transaction will enter into multiple contracts. These contracts may be of the same nature, or define different aspects or sections of the transaction, and they may involve the same parties or different parties. Contracts such as this usually contain arbitration clauses submitting disputes to the same arbitration organization. However, because these arbitration clauses are contained in different agreements, the parties were previously required to initiate separate arbitration proceedings. As a result, the total arbitration cost increase considerably, and the efficiency of arbitration is seriously impaired.

Under the 2015 Arbitration Rules, a party may initiate a single arbitration regarding disputes arising out of multiple contracts provided that: the multiple contracts consist of a principal contract and its accessory contract(s) or that the contracts involve the same parties as well as legal relationships of the same nature; the disputes arise out of the same transaction or the same series of transactions; and the multiple arbitration agreements are the same or compatible.
This will avoid the formal restraint of “one contract, one proceeding” and avoid delays caused by multiple arbitration proceedings while there is essentially only one substantive dispute. This revision will also avoid inconsistent awards being delivered in respect of the same substantive dispute. Lastly, this revision will, hopefully, give a satisfactory solution to resolve all the disputes among the parties in a single proceeding, and greatly save costs and other resources.

3. Similar to the changes made on multiple-contract arbitration, the 2015 Arbitration Rules makes significant innovations regarding the consolidation of arbitrations.

Article 17 of the 2012 Arbitration Rules provided for the consolidation of arbitrations, which required the consent of all parties irrespective of whether the consolidation was applied by one party or suggested by CIETAC. The 2015 Arbitration Rules delete the provisions that CIETAC may voluntarily ask for the consent of all parties to consolidate proceedings. Instead, the 2015 Arbitration Rules add three conditions under which CIETAC may decide to consolidate multiple arbitrations of its own accord, even if all the parties do not give their consent:

1) all of the claims in the arbitrations are made under the same arbitration agreement;

2) the claims in the arbitrations are made by the same parties under multiple arbitration agreements that are identical or compatible, and the legal relationships in dispute in the arbitrations are of the same nature; or

3) the claims in the arbitrations are made under multiple arbitration agreements that are identical or compatible between the same or different parties, and the contracts involved consist of a principal contract and its ancillary contract(s).

The added conditions under which arbitrations can be consolidated are essentially the same as the conditions for multiple-contract arbitrations. To some extent, the consolidation is a procedural relief for those parties who fail to initiate multiple-contract arbitration at the very beginning. These revisions have enlarged the scope of conditions for consolidation of arbitrations, which is helpful to avoid fragmented parallel arbitration proceedings, to improve the efficiency of arbitration, to save cost of the parties, and to reduce the risk of inconsistent arbitral awards made by different tribunals.

Compared with the arbitration rules of other arbitration institutions, the conditions for consolidation of arbitrations under the 2015 Arbitration Rules are much broader than those under ICC Arbitration Rules (Article 10), Arbitration Rules of the International Centre For Dispute Resolution (“ICDR”) (Article 8.1), LCIA Arbitration Rules (Article 22.1), Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) (Article 11), SIAC Arbitration Rules (Article 24.1), Arbitration Rules of the United Nations Commission on International Trade Law (“UNCITRAL”) (Article 17.5), but are similar with those under Arbitration Rules of the Council of the Hong Kong International Arbitration Centre (“HKIAC”) (Article 29). Hence, the innovations in the 2015 Arbitration Rules and its practice by CIETAC will provide an important example for other organizations in their efforts to enhance the efficiency of arbitration.

Unfortunately, CIETAC has not amended the provision in the 2012 Arbitration Rules which provided that “[u]nless otherwise agreed by all the parties, the arbitrations shall be consolidated into the arbitration that was first commenced”. In our opinion, CIETAC should have the power to determine whether the latter case should be consolidated into the earlier case or otherwise, especially considering that CIETAC has the power to decide to consolidate proceedings at its own discretion. For example, in the event that the earlier case employs the summary procedures while the later employs the general procedures, then under the current rules the consolidated arbitration would be required to use the summary procedures based on the 2015 Arbitration Rules, which is inconsistent with the conditions for summary procedure; however, if CIETAC refrains from consolidation because of this, it would contradict with the purpose of consolidation.

In addition, there is no provision regulating the details of the consolidation, such as adjustment of arbitration fees or remuneration of the arbitrators, enforcement of court rulings on interim measures, the appointment of arbitrators when more than two parties have conflicts of interests, and the adjustment of the starting point for calculating the time limit for rendering an award, etc. These matters will probably present practical problems in arbitration proceedings.

4. Joinder of additional parties is allowed.

During the arbitral proceedings, a party may file a request with CIETAC to join an additional party, provided the arbitration agreement prima facie binds the additional party. The ability to join additional parties is necessary to meet the needs of increasingly complicated commercial activities (mostly multi-party transactions), to enhance the efficiency of arbitration, and to reduce arbitration costs. For this reason, the main international commercial arbitration organizations (such as HKIAC, SIAC, ICC, LCIA, etc) have amended their arbitration rules to permit the joinder of additional parties. In accordance with Article 18 of the 2015 Arbitration Rules:

1) Any party to the original arbitration procedures has the right to file a request for joinder with CIETAC;

2) Request for joinder may be filed at any stage of the arbitration proceedings;

3) A decision on the joinder of additional parties shall be made by CIETAC;

4) The additional party shall have the right to file a jurisdictional objection;

5) If the joinder takes place prior to the formation of the arbitral tribunal, the additional party shall have the right to participate in the appointment of the arbitrators (including the presiding arbitrator); if the joinder takes place after the formation of the arbitral tribunal, the additional party shall have the right to decide on whether the arbitrator shall be reappointed;

6) The time period for the additional party to submit its statement of defense and statement of counterclaim shall commence from the date of its receipt of the notice of joinder.

5. Emergency arbitrator system is provided.

The emergency arbitrator procedure is a new development in international commercial arbitration practice. It is used to deal with interim measures required for emergent relief. It has been recently adopted by many important international arbitration organizations (ICDR 2006, SCC 2010, ICC 2012, HKIAC 2013, LCIA 2014) and frequently employed by parties. In China, the China (Shanghai) Pilot Free Zone Arbitration Rules effective as of May 1, 2014 takes lead in providing emergency arbitrator procedures. These procedures allow the parties to file an application with the arbitration commission for an emergency arbitrator pursuant to applicable laws after the case is accepted by the commission but prior to the establishment of the arbitral tribunal.

The Arbitration Law of China only provides two kinds of interim measures: evidence preservation and property preservation. Arbitral tribunals or arbitral commissions do not have the power to enforce interim measures. Instead, they only transfer the parties’ request to the competent people’s court. In August, 2012, the Civil Procedure Law of China was amended and a third relief type was introduced, which is to “order the other party to perform certain acts or to prohibit the other party from committing certain acts”. However, the Arbitration Law was not amended accordingly. Consequently, the arbitral tribunal or Arbitration Commission under Chinese law is not in a position to issue any interim order, and even if they do issue one, such order is not supported by the Chinese courts.

Despite the restrictions outlined above, it is still of practical significance to bring in emergency arbitrator procedures. On the one hand, CIETAC has established an arbitration center in Hong Kong, and in accordance with the Hong Kong Arbitration Ordinance, the enforceability of the emergency relief decisions made by emergency arbitrators is equal to the orders or instructions made by the court and the court shall enforce such decisions. Therefore, it is necessary for CIETAC Hong Kong Arbitration Center to keep pace with other arbitration organizations such as HKIAC and ICC in order to maintain the primacy and internationalization of the arbitration rules and to meet the needs of the parties in international arbitration practice. On the other hand, more and more countries have been enacting or revising their arbitration laws based on the UNCITRAL Model Law on International Commercial Arbitration, under which the arbitral tribunal is empowered to make interim decisions. Some countries (such as Singapore) or regions (such as Hong Kong) have granted interim decisions the same level of enforceability as that of arbitral awards. And interim decisions made in other jurisdictions can also be enforced by the court in those countries or regions.

What needs to be pointed out is that the emergency arbitrator procedure in the 2015 Arbitration Rules requires that the arbitrator “shall conduct the proceedings in a reasonable manner, taking into account the nature and the urgency of the emergency relief, and shall ensure that each party has a reasonable opportunity to make statement.” This means that the arbitral tribunal cannot grant emergency relief measures in an ex parte proceeding without noticing the respondent. This provision in CIETAC’s 2015 Arbitration Rules is similar to the provisions in Arbitration Rules of HKIAC, ICC, ICDR, SIAC and SCC (but Article 97 of the latest LCIA Arbitration Rules reserves the possibility of taking emergency relief measures in ex parte proceedings).

6. The threshold for summary procedures is increased.

With the development of the Chinese economy, case loads and the average amounts in dispute have been steadily increasing in recent years. In 2013, CIETAC accepted 1,256 cases with the total amount in dispute of 24.4 billion RMB. The average amount in dispute was 19 million RMB. Given the fixed number of staff, it is therefore necessary that more cases are administered under summary procedures, so as to maintain the quality of case management and to enhance the efficiency of arbitration.

7. Use of a stenographer.

In most CIETAC arbitration cases, there are audio recordings and written records of the oral hearing. The written record prepared by the case secretary is one of the principal documents that the arbitrators refer to when drafting the arbitral award. As the secretary is not a professional stenographer, his or her written record of an oral hearing is generally not complete and only reflects the main views stated by the participants during the hearing. In addition, the written record and the audio-visual recording are not open to the parties. And the parties can only learn the content of the oral hearing through the notes and recollections of their arbitration counsel. In practice, many parties have expressed dissatisfaction with this arrangement.

CIETAC has added a new provision in Article 40 of the 2015 Arbitration Rules, under which a party can apply to the Arbitration Court to engage a stenographer to transcribe the oral hearing. We note that these provisions may initially lead to some practical issues, for example: whether CIETAC secretary is still required to make his or her written record of the oral hearing even though a stenographer is engaged, If the secretary is not required to produce a record of the hearing, is it appropriate for the parties to bear all the stenographic costs and expenses when the secretary workloads is reduced? If the secretary is required to produce a record of the hearing, how would the tribunal deal with the possible inconsistences between the stenographic record and CIETAC’s written record? Can the stenographic record be used as a piece of evidence in court proceedings? If the Arbitral Court decides to engage a stenographer with the opposition from the other party, should the stenographic record be provided to the opposing party? All these detailed issues will need to be resolved by CIETAC.

8. Procedure rules for CIETAC Hong Kong Arbitration Center are individually provided.

In September 2012, CIETAC established the CIETAC Hong Kong Arbitration Center, which is responsible for the acceptance and administration of arbitration cases in Hong Kong. Chapter 6 of the 2015 Arbitration Rules contains special rules that apply to arbitrations administered by CIETAC Hong Kong Arbitration Centre. As the arbitration procedure law in Hong Kong is different from that in the Mainland China, the arbitration practice in those two legal jurisdictions is also different. Therefore, the newly added rules are simply for the administration of arbitration cases by CIETAC Hong Kong Arbitration Center. Relevant parties may come to understand the applicable procedure rules of CIETAC Hong Kong Arbitration Center.

III  Outlook

As outlined above, the 2015 Arbitration Rules have included recent developments in international arbitration practice. The amendments are designed to help CIETAC increase its international exposure, improve its service and enhance the efficiency of its procedures. The innovations in the 2015 Arbitration Rules will bring significant changes to arbitration practice before CIETAC. The changes should more adequately satisfy the needs of parties and should promote CIETAC arbitration at an international level.