China’s financial arbitration has been growing rapidly in recent years. Wang Chengjie, Vice Chairman and Secretary-General of China International Economic and Trade Arbitration Commission (“CIETAC”), tells the ALB that two regulations on financial arbitration were promulgated in the second half of this year.

The first one is the Opinions on Strictly Cracking Down on Securities-related Illegal Activities According to Law (the “Opinions”) printed and distributed by the General Office of the CPC Central Committee and the General Office of the State Council, setting forth the task and requirement for “carrying out the pilot arbitration system for the securities industry”; and the second one is the Opinions on Carrying out Pilot Arbitration for the Securities and Futures Industry According to Law (the “Pilot Opinions”) formulated by the China Securities Regulatory Commission in conjunction with the Ministry of Justice, aiming to thoroughly implement the Opinions, and meanwhile, effectively protect the legitimate rights and interests of the investors, improve the diversified dispute settlement mechanism for disputes involving securities and futures, and ensure the healthy development of the securities and futures industry. The Pilot Opinions becomes effective on October 15, 2021.

“These moves indicated three main characteristics of the development trend of the financial arbitration in China: (1) dispute resolution is becoming more specific, specialized and diversified; (2) the development of financial arbitration will be increasingly standardized; and (3) there is great room for development in the financial arbitration sector, indicating a major growing trend and room of financial cases for arbitration institutions,” Wang says. He also points out that under this trend, while the business volume of financial arbitration is expected to grow, it poses higher professional requirements for the practitioners.

In the face of the opportunities and challenges, CIETAC responses with forward-looking plans and flexibility to keep pace with the times. As early as 2003, CIETAC already formulated specialized arbitration rules for handling financial cases, i.e., China International Economic and Trade Arbitration Commission Financial Disputes Arbitration Rules (the “CIETAC Financial Arbitration Rules”). Ever since, CIETAC continues to revise and improve this set of rules based on practical experience. The version currently in effect is the CIETAC Financial Arbitration Rules (2015). CIETAC will formulate the Securities and Futures Arbitration Rules on the basis of the existing Financial Arbitration Rules, in order to meet the requirements of the Pilot Opinions to “formulate arbitration rules in line with the characteristics of the securities and futures industry”, and to better satisfy the needs for dispute settlement in specific industries in the financial sector.

This May, CIETAC took the lead in setting up CIETAC Shanghai International Arbitration Center for Securities/Futures and Financial Disputes (the “CIETAC Shanghai Financial Arbitration Center”), which is in line with the requirements of the Pilot Opinions to “support and promote the implementation of the pilot arbitration system in Beijing, Shanghai, Shenzhen and other cities with active securities and futures business, by setting up securities and futures arbitration court (or centre) within legally established arbitration commissions”.

In addition, CIETAC actively strengthens communication and cooperation with relevant parties. On January 8, 2021, CIETAC and the Securities Association of China officially signed the Strategic Cooperation Framework Agreement. The two sides will carry out exchanges, cooperation and co-construction around commercial mediation cooperation mechanism, commercial arbitration cooperation mechanism and academic research and training in terms of dispute settlement for the securities industry, jointly promote the legal system of commercial arbitration in the securities industry, hold relevant seminars, and raise the awareness of securities-related enterprises and investors to properly resolve disputes, and jointly promote the development of the securities industry and the arbitration system. On June 21, 2021, Wang and other leaders of CIETAC were invited to visit the Beijing Financial Court for inspection and exchanges, and held a colloquium with Li Yanhong, the Vice President and the CPC Group member of the Beijing Financial Court, hoping to establish a long-term mechanism for communication and cooperation between CIETAC and the Beijing Financial Court in the synergy of rule of law and finance, with respect to the financial market development and the settlement of foreign-related commercial disputes. On July 23, Wang led a delegation to visit the Asset Management Association of China (“AMAC”) and had a discussion with He Yanchun, Chairman of AMAC, and other relevant leaders of AMAC. On November 23, CIETAC signed a Strategic Cooperation Framework Agreement with AMAC.

Thanks to its strong financial arbitration team, CIETAC is able to implement such an effective response strategy. Wang tells the ALB that in CIETAC’s current Panel of Arbitrators, there are a total of 560 Chinese and foreign arbitrators with financial background, and they have profound knowledge and in-depth understanding of laws and regulations of the securities industry, as well as the management and cutting-edge development of the industry, enabling them to provide the parties with professional arbitration services and properly resolve their disputes. Furthermore, CIETAC has a group of case managers specialized in handling financial disputes. CIETAC helps them to cultivate and improve their case-handling abilities by organizing internal trainings and regular seminars for them to exchange experience in case management.

In addition to its professional team, Wang also points to other strengths of CIETAC in terms of financial arbitration: “From a vertical perspective, as the earliest arbitration institution engaged in securities dispute resolution in China, CIETAC has extensive experience in handling financial arbitration cases. From a horizontal dimension, CIETAC enjoys a good international reputation, has the strength and the responsibility to do a good job in financial arbitration pilot work. In the 2021 International Arbitration Survey, an authoritative international arbitration survey report published on May 6, 2021, CIETAC ranked among the five most preferred arbitration institutions in the world. Furthermore, CIETAC has a complete set of mechanism for resolving financial disputes, actively carries out theoretical researches on the securities industry, and is good at combining the dispute resolution services with the latest developments in the industry.”

Owing to the synergy of CIETAC’s advantages in many aspects, the financial arbitration cases accepted by it are quite representative, and most of them are major and important cases. In 2020 alone, the average dispute amount of financial arbitration cases accepted by CIETAC reached over RMB41 million, while the average dispute amount of foreign-related financial arbitration cases accepted by CIETAC even reached RMB170 million.

As 2021 drawing to an end, looking forward, CIETAC will focus on seven key aspects of work in financial arbitration: (1) making further efforts in formulating and improving its financial arbitration mechanism and the related rules; (2) taking the oppor-tunity of the revision of the Arbitration Law to propose to the legislature to leave room in the Arbitration Law for the development of arbitration of capital-related disputes, making arbitration law more effective in solving financial disputes; (3) setting up a securities and futures arbitration center at CIETAC’s headquar-ters, and using it as a basis to give full play to its brand advantages and guide securities and futures and other financial companies to familiarize them-selves with new international financial rules, and help market entities prevent financial legal risks, so as to build an internationalized financial dispute resolution mechanism; (4) establishing a communication and long-term cooperation mechanism with the courts; (5) establishing and strengthening cooperation with capital market regulatory authorities and self-disci-plined organizations to improve the effective connec-tion between arbitration, mediation and litigation in resolving securities and futures disputes; (6) holding lectures, seminars and training programs concerning financial arbitration to improve the competency and professional level of arbitrators and case managers; and (7) working with industry associations to study topical and difficult legal issues and compiling finan-cial cases that are independently, fairly, justly, and properly handled, so as to guide the healthy and stable development of the industry.

Wang Chengjie
Vice Chairman & Secretary General of CIETAC
E: wangchengjie@cietac.org

CIETAC
6/F, CCOIC Building, 2 Huapichang Hutong
Xicheng District, Beijing 100035
W: www.cietac.org