Arbitration, an internationally recognized dispute resolution method, plays an important role in protecting the legitimate rights and interests of parties, optimizing business environments, and promoting international economic and trade activities. The China International Economic and Trade Arbitration Commission (“CIETAC”) fully respects the fundamental principles of arbitration, independently, fairly and efficiently examines different kinds of arbitration cases based on law, promoting the sound development of arbitration.
On September 5, 2023, CIETAC issued a new version of Arbitration Rules (hereinafter “the new Arbitration Rules”) that takes effect from January 1, 2024. The new Arbitration Rules are introduced to meet the development needs of arbitration in the new era. Benchmarked against the high-quality international arbitration systems, the new Arbitration Rules summarize the experience of arbitration practices and introduce several innovations and revisions to the current Arbitration Rules.
A Look at the Background of the Revision
“By revising the Arbitration Rules, CIETAC is adapting to the development of arbitration under the new situation and meeting the needs of domestic and foreign parties for dispute resolution, which can enhance the attractiveness, competitiveness and influence of CIETAC”, Wang Chengjie, Vice Chairman and Secretary General of CIETAC, tells ALB. CIETAC spent two years drafting the new Arbitration Rules by learning from past practices. Closely keeping pace with international arbitration practice, CIETAC revised its existing Arbitration Rules after in-depth research and extensive consultation in order to provide modernized and internationalized arbitration services for commercial subjects.
The current Arbitration Rules were implemented on January 1, 2015. In the revised new Arbitration Rules, the number of articles increase from the 84 to 88 and incorporate more than 30 revisions.
“The revised version attaches importance to five aspects. First, it highly respects the autonomy of the parties. Second, it grants the arbitral tribunal more rights in procedural matters. Third, it prevents the abuse of arbitration procedural rights by the parties. Fourth, it improves the fairness and legitimacy of arbitration procedures. And last, it enhances the flexibility, efficiency and transparency of arbitration procedures”, Wang says. In addition to improving and adjusting the existing Arbitration Rules, the new Arbitration Rules also incorporate several procedural innovations for the first time. These are also highlights of the revised Arbitration Rules.
Highlight I: Informatization
Wang notes that the new Arbitration Rules prompt the use of digitalization and artificial intelligence (“AI”) in arbitration procedures.
In April 2020, CIETAC issued the Guidelines on Proceeding with Arbitration Actively and Properly during the COVID-19 Pandemic (Trial). It guided the online case filing, electronic delivery of documents, and online hearing, among other things, during COVID-19, and constructed the provisional rules and guidelines for online arbitration.
The practice of online arbitration during COVID-19 provided experience for the technical construction and mechanism for online arbitration, while arbitration participants enjoyed the advantages of online arbitration, which gave rise to the normalization of online arbitration post-COVID-19. The new Arbitration Rules strive to make arbitration procedures smarter and more digitalized by regulating different aspects of online arbitration.
COVID-19 pushed forward the development of digital and intelligent arbitration services. Information technology is being widely used in serving documents and hearings.
“These practices have provided experience for the development of digitalization and intelligence of arbitration in the post-COVID-19 era. Meanwhile, it showed us faster, more accurate and more economic solutions, which are in line with the requirements of arbitration in terms of efficiency, accessibility and low cost. It also conforms to the trend of being green, low carbon and environment-friendly”, says Wang. “The new version summarizes the practices and good impacts of the application of information technology in arbitration proceedings. It stipulates that electronic delivery of arbitration documents is preferred, and the arbitral tribunal has the right to decide on online hearings. In addition, it clarifies that the electronic signature of an arbitrator bears the same effect of a handwritten signature, and that an award can be delivered electronically. These respond to the requirements of the digital era.”
Highlight II: Efficiency
The new Arbitration Rules improves the system of including multiple contracts in one arbitration case. First, the scope of the rules on multiple contracts in one arbitration are expanded. The new Arbitration Rules allow disputes under multiple related contracts to be filed in a single arbitration. Second, in addition to invoking rules on multiple contracts at the case-filing stage, the new Arbitration Rules also allow the parties to add additional contracts during the arbitration proceedings. Meanwhile, the new Arbitration Rules also make it clear that the decision on jurisdiction can be made by the arbitral tribunal in accordance with the general authorization of the Arbitration Rules after the arbitral tribunal is formed. According to the Arbitration Law of China, when parties have doubt on the validity of an agreement for arbitration, a request can be made to the arbitration commission for a decision, whereas in international arbitration, a more widely accepted practice is “compétence de la compétence”, i.e. an arbitral tribunal has power to decide on questions concerning its own jurisdiction. “This amendment is in line with the current Arbitration Law, while it clarifies the right of the arbitral tribunal to make decisions on jurisdiction, which helps to respond to jurisdictional challenges in a timely and efficient manner. It simplifies procedural management and improves the efficiency”, says Wang.
“The new Arbitration Rules incorporate the early dis-missal procedure, and improves flexibility and efficiency”, Wang adds.
To respond to the concern of the efficiency of arbitration-by-arbitration users, and to consolidate the advantages of efficiency of arbitration vis-à-vis litigation, the procedure of early dismissal is introduced in the arbitration practice. The new Arbitration Rules add an early dismissal procedure, stipulating that the parties may apply for early dismissal of arbitration claims or counterclaims in whole or in part on the grounds that the claims or counterclaims are manifestly lacking in legal basis or beyond the jurisdiction of the arbitral tribunal before the submission of the statement of defense or the statement of defense to the counterclaims.
For the first time, the new Arbitration Rules clarify the effect of pre-arbitral procedures on the filing of arbitration applications. Wang says, “after examining the judicial practice at home and abroad, the new Arbitration Rules make it clear that the pre-arbitral procedures agreed upon in the arbitration agreements do not affect the claimant’s filing of the request for arbitration. This addresses and responds to the existing issues in practice over a long period of time, which is conducive to the timely protection of the legitimate rights and interests of the parties.”
Highlight III: Standardization
The new Arbitration Rules specify that CIETAC not only can forward the applications for conservatory and interim measures of the parties to the relevant cases accepted by CIETAC to the People’s Courts of mainland China, but also can forward such applications to overseas courts. Considering that the foreign-related cases accepted by CIETAC involve parties from over a hundred countries and regions, arbitration institutions should provide convenient procedural services and structure the rules to enable the parties to apply for overseas conservatory and interim measures so that the parties can proceed with conservatory and interim measures in accordance with the provisions of the relevant foreign laws. So CIETAC amended the provisions on the conservatory and interim measures to make it clear that, if the parties apply for conservatory and interim measures, CIETAC shall transfer the parties’ application to the court with jurisdiction specified by the parties.
“In order to properly handle the parties’ applications for conservatory and interim measures and to ensure the People’s Courts to timely make rulings on conservatory and interim measures in accordance with the law, the new Arbitration Rules add the provision to clarify that CIETAC may, upon the request of the parties, forward their applications for conservatory and interim measures to the above courts before the issuance of the notice of arbitration”, says Wang.
In addition, the new Arbitration Rules clarify the application of the Guidelines on Evidence of CIETAC in arbitration proceedings. CIETAC’s Guidelines on Evidence properly com-bines the principles of evidence of civil law and common law systems, which helps the arbitral tribunals and the parties to find and prove the facts of the case by applying the rules of evidence in a more effective and standardized manner. “This rule revision stipulates that the arbitral tribunal may decide to apply or partially apply the Guidelines on Evidence on its own. The arbitral tribunal may determine the application of the rules of evidence based on factors such as whether the disputes have a foreign-related element, the applicable law chosen by the parties in the arbitration agreement, and the seat of arbitration”, says Wang.
Highlight IV: Transparency
In recent years, third-party funding has been increasingly used and developed in international arbitration. While third-party funding helps the parties to legally defend their rights, it also impacts the impartiality and independence of arbitrators. Therefore, the new Arbitration Rules provides that the parties shall timely disclose the information of the third-party funding to the arbitral tribunal, which will contribute to enhancing the transparency and impartiality of the arbitration procedures. The new Arbitration Rules also lower the fees for domestic cases by stopping to charge for arbitration fees for the portion of disputed amounts exceeding RMB3 billion yuan and thus cap-ping the arbitration fees. Meanwhile, the hourly remuneration of arbitrators is clarified and standard hourly rates of arbitrators are disclosed on CIETAC’s official website to improve transparency. “Overall, the new Arbitration Rules bring in institutional innovation while improving the procedures. The flexibility, fair-ness, efficiency, and transparency of the arbitration procedures are enhanced, providing a high level of institutional safeguard for the high-quality development of CIETAC arbitration, as well as offering a more internationalized dispute resolution service for Chinese and foreign parties”, Wang concludes.
