CIETAC's New Arbitration Rules

by Sheppard Mullin Richter & Hampton LLP
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The China International Economic and Trade Arbitration Commission (“CIETAC”) recently adopted revised arbitration rules (“Revised Rules”), to be effective on May 1, 2012. The Revised Rules replace the rules that became effective in 2005 (“2005 Rules”).

Some key features of the Revised Rules:

Interim Measures
The Revised Rules provide that at the request of one party, the arbitral tribunal may order any interim measure it deems necessary or proper in accordance with the applicable law. It remains to be seen to what extent an arbitral tribunal can enforce such interim measures under China’s laws of civil procedure, where parties agree to arbitration in China. The 2005 Rules did not provide for interim measures.

Suspension of Proceedings
The Revised Rules provide that arbitration proceedings may be suspended where parties request a suspension or under circumstances where suspension is necessary. The arbitral tribunal decides whether to suspend or resume arbitration proceedings and, where the arbitral tribunal has not yet been formed, the decision is to be made by the Secretary General of CIETAC. The 2005 Rules did not provide a suspension of proceedings provision.

Summary Procedure
The Revised Rules provide that summary procedure applies to any case where the amount in dispute does not exceed RMB 2,000,000 (or to any case where the amount in dispute exceeds RMB 2,000,000, yet one party applies for arbitration under the summary procedure and it is agreed to by the other party). The 2005 Rules provided a summary procedure threshold of RMB 500,000.

Consolidation of Arbitrations
The Revised Rules provide that at the request of one party and with the agreement of the other parties, or where CIETAC believes that it is necessary and all the parties agree, CIETAC may consolidate two or more arbitrations into a single arbitration. In deciding whether to consolidate arbitrations, CIETAC may take into account any factors that it considers relevant with respect to the different arbitrations, including whether the various claims are made under the same arbitration agreement, whether the different arbitrations are between the same parties, and whether one or more arbitrators have been nominated or appointed in the different arbitrations.

Language
The Revised Rules provide that, in the absence of the parties’ agreement, the language to be used in the arbitration proceedings shall be Chinese or any other language designated by CIETAC. The 2005 Rules provided that where parties fail to agree on the language of the arbitration, the arbitration would be conducted in Chinese.

The ability of CIETAC to designate the language of the arbitration proceedings under the Revised Rules will likely help resolve challenges encountered under the 2005 Rules. Under the 2005 rules, where one or more foreign arbitrators are to be members of the arbitration tribunal, and where parties fail to agree on the language of arbitration (by default making the arbitration language Chinese), the pool of foreign arbitrators would be significantly limited to only those fluent in Chinese.

Place of Arbitration
The Revised Rules supplement the terms regarding circumstances in which parties have not agreed to the place of arbitration. The Revised Rules provide that CIETAC may now determine the place of arbitration, taking into account the circumstances of the case. The 2005 Rules provided that where the parties have not agreed on the place of arbitration, it would be the domicile of CIETAC or its Sub-Commission.

CIETAC has for years been regarded as the preeminent arbitration commission for foreign-related arbitrations in China. The Revised Rules reflect increased consistency with the rules of other major arbitration bodies.

Authored By:

Amin Amirkia
86.10.5706.7517
aamirkia@smrh.com

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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