仲裁领域国际权威杂志《环球仲裁评论》（Global Arbitration Review，或称“GAR”）近期出版了2018版的《商事仲裁实务指引》（Know-how for Commercial Arbitration）。本所合伙人金立宇律师受邀撰写了《指引》的中国篇。争议解决团队赵宇先对本文的写作亦有贡献。《指引》共介绍了34个国家或司法辖区的商事仲裁实务问题和要点。其中，中国篇回答了中国商事仲裁中常见的法律和实务问题，并讨论了有关案例。现经GAR授权刊登如下，以供实务用户参考。该篇详细内容见下文：
The New York Convention
Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
Yes.The New York Convention became effective to China on 22 April 1987.
China made two reservations: the reciprocity reservation and the commercial reservation. Pursuant to the reciprocity reservation, China will recognise and enforce only the arbitral awards rendered in the signatories to the Convention; pursuant to the commercial reservation, only the arbitral awards that have been rendered in commercial cases will be recognised and enforced by China.
Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
As to the recognition and enforcement of arbitral awards, China has entered into the Arrangement for the Reciprocal Enforcement of Arbitral Awards between the Mainland and Hong Kong (Hong Kong Arrangement), the Arrangement for the Reciprocal Recognition and Enforcement of Arbitral Awards between the Mainland and Macau (Macau Arrangement), the Supreme People’s Court’s Provisions on the People’s Courts’ Recognition of Civil Judgments Made By Courts in the Taiwan Area (Taiwan Provisions), and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention or Washington Convention).
The Hong Kong Arrangement allows a party to enforce a Hong Kong arbitral award in mainland China and provides that such an award may be refused by courts in mainland China only on the grounds identical to those listed in article V of the New York Convention.The arrangement also provides that any arbitral awards made by one of the recognised China arbitration commissions (eg, the China International Economic and Trade Arbitration Commission) may be enforced by the Hong Kong courts.As an effect, arbitral awards rendered in ad hoc arbitrations in mainland China may not be enforced through the Hong Kong Arrangement, but not vice versa. The Supreme People’s Court’s Notice Regarding the Enforcement of Hong Kong Arbitral Award in Mainland China provides that the courts in mainland China will recognise and enforce ad hoc arbitral awards rendered in Hong Kong.
The Macau Arrangement allows a party to enforce a Macau arbitral award in mainland China and provides that such an award may be refused by courts in mainland China only on the grounds identical to those listed in article V of the New York Convention.
The Taiwan Provisions allow a party to enforce arbitral awards rendered by Taiwanese arbitration institutions in mainland China and provide that such an award may be refused by courts in mainland China only on the grounds similar to those listed in article V of the New York Convention.As to the ground related to “violation of public interest”, the Taiwan Provisions provide that an award may be refused by courts if its enforcement violates the basic legal principles such as the one-China policy or damage public interest.
As to the ICSID Convention, in 1993, China notified ICSID that, pursuant to article 25(4) of the ICSID Convention, it agreed to submit to ICSID’s jurisdiction only the disputes concerning compensation for expropriation and nationalisation. However, if a later bilateral investment treaty or free trade agreement (or any similar kinds of treaties) ratified by China provides that China agrees to submit all kinds of disputes that arise out of the treaty to ICSID’s jurisdiction, such a provision shall prevail according to the Vienna Convention on the Law of Treaty.
For example, in the case Ansung Housing Co, Ltd v People’s Republic of China, ICSID Case No.ARB/14/25, the parties resolved their dispute in ICSID based on the Agreement Between the Government of the Republic of Korea and the Government of the People’s Republic of China on the Promotion and Protection of Investments that entered into force on 1 December 2007, which allows the parties to submit an “investment dispute” (not limited to disputes concerning compensation for expropriation and nationalisation) to the jurisdiction of ICSID.
Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
The Arbitration Law of People’s Republic of China became effective on 1 September 1995, and was followed by the following judicial interpretations:
● the Interpretation of the Supreme People’s Court concerning Some Issues on Application of the Arbitration law of the PRC (2006 Interpretation), effective as of 8 September 2006;
● Provisions of the Supreme People’s Court on Several Issues concerning the Hearing of Cases Involving the Judicial Review of Arbitration (Hearing Provisions), effective as of 1 January 2018;
● Provisions of the Supreme People’s Court on Issues concerning the Reporting and Examination of Cases Involving the Judicial Review of Arbitration (Reporting Provisions), effective as of 1 January 2018;
●Provisions of the Supreme People’s Court on Several Issues concerning the Handling of Cases of Enforcement of Arbitration Awards by People’s Courts (Enforcement Provisions), effective as 1 March 2018; and
● several official replies issued by the Supreme People’s Court to address questions that arose from specific cases.
China’s Arbitration Law deviates from the UNCITRAL Model Law in the following aspects:
● China’s Arbitration Law provides that an arbitration provision is invalid unless it designates an arbitration institution to administer the arbitration.As a result, an award rendered by an ad hoc arbitration seated in mainland China will not be recognised and enforced by the courts (see question 15 for the 2017 breakthrough on the acceptance of ad hoc arbitration).
● China’s Arbitration Law only allows “foreign-related” arbitrations to have their seats outside mainland China (see question 18 for the definition of “foreign-related” elements);
● “Fork-in-the-road clause” does not work under China’s Arbitration Law. Such a clause will be treated as a selection of a court to resolve the dispute.
● The Arbitration Law does not directly provide certain types of interim measures, such as maintaining and restoring the status quo pending determination of the dispute and taking or refraining from taking certain actions. However, those measures are available under the Civil Procedure Law.
Arbitration bodies in your jurisdiction
What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
The predominant arbitration bodies relevant to international arbitration include the China International Economic and Trade Arbitration Commission (CIETAC), the Beijing International Arbitration Center (BIAC), the Shanghai International Arbitration Center (SHIAC), the Shenzhen Court of International Arbitration (SCIA) and the China Maritime Arbitration Commission (CMAC).
In addition to the above institutions, there are approximately over 200 other arbitration commissions in China established according to the Arbitration Law, including local commissions such as the Xiamen Arbitration Commission.Technically speaking, any arbitration commission established pursuant to the Arbitration Law may accept foreign-related cases according to the General Office of the State Council’s Notice Regarding Certain Issues to be Clarified for the Implementation of the Arbitration Law of the People’s Republic of China. Practically, however, most of the foreign-related cases were handled by the institutions mentioned in the first paragraph.
On 22 October 2013, SHIAC established the Shanghai Pilot Free Trade Zone Arbitration Center. On 1 May 2014, the Shanghai Pilot Free Trade Zone Arbitration Rules (FTZ Rules) were released. The FTZ Rules were considered innovative in the following aspects:
● A third party is allowed to join the arbitration provided that the consents of the parties and the third party are obtained.
● The parties are free to recommend arbitrator(s) outside the panel list.
● Interim measures such as interim injunction, evidence preservation and property preservation are allowed prior to and during the arbitration proceedings.
On 1 January 2015, the FTZ Rules were amended with a few slight changes. For example, the new article 3.2 allows modification or amendment on these rules agreed by the parties, which shall prevail except where such an agreement is inoperative or in conflict with a mandatory provision of the law of the place of arbitration.
On 4 May 2014, the Shanghai Second Intermediate People’s Court issued its opinions on the implementation of the FTZ Rules (the FTZ Opinions).The FTZ Opinions provide that:
● If a party applies for preservation prior to or during the arbitration, such application shall be accepted immediately,” and that “under urgent circumstances, if the relevant requirements provided in laws are satisfied, a decision shall be made within 24 hours and then transferred for enforcement immediately.
● The emergency arbitral tribunal mechanism is provided.
● The parties are allow to agree on rules on evidence. For example, the parties may stipulate that the IBA Rules of Taking of Evidence shall apply.
● The tribunal is allowed to issue a decision on a party’s application for an interim measure (eg, evidence preservation) as long as it is appropriate under the laws of the jurisdiction where the interim measure is to be enforced. (It is not allowed in mainland China.)
● The FTZ Rules provide a “summary procedure” for small-value claims. Under such procedure, the dispute will be determined by a sole arbitrator and an award will be rendered within three months (rather than within six months under the standard procedure).
According to article 31 of the Arbitration Law, any arbitration commission established pursuant to the Arbitration Law may act as the appointing authority when parties cannot reach an agreement on the choice of an arbitrator for the arbitration administered by that arbitration commission.
Can foreign arbitral providers operate in your jurisdiction?
The Arbitration Law does not explicitly stipulate whether foreign arbitral institutions may conduct arbitration in mainland China.
In 2013, the Supreme People’s Court, in its decision The Reply of the Supreme People’s Court regarding the Dispute on the Validity of an Arbitration Agreement between Anhui Longlide Packing and Printing Co, Ltd and BP Agnati SRL ( Min Si Ta Zi No.13), determined that an arbitration agreement, which provided that the dispute between the parties should be resolved in ICC with the “place of jurisdiction” in Shanghai, was valid. In particular, the Supreme People’s Court clarified that since the arbitration agreement unambiguously designated an arbitration institution to resolve the dispute, the arbitration agreement was valid in accordance with article 16 of the Arbitration Law.This decision paved the way for foreign arbitral providers to conduct arbitration in mainland China.
From 2015 to 2016, HKIAC, SIAC and ICC set up their representative offices in Shanghai in succession.Though those offices are only for promotional purposes and do not yet have the authority to administer cases, it is possible that they will obtain such an authority in the future.
However, issues such as the following still remain unclear:
● Whether awards rendered in mainland China by foreign arbitration institutions should be recognised as domestic awards, foreign-related awards, or foreign awards.
● How should the potential inconsistencies between the Arbitration Law and the rules of the foreign arbitration institutions be settled?
Given the above uncertainties, we do not suggest the parties resolve their disputes through foreign arbitration institutions in China until the relevant issues have been clarified. On 9 September 2017, Xiaoli Gao, the Associate Chief Judge of the 4th Civil Adjudication Division of the Supreme People’s Court, published an article the Nationality of an Arbitral Award should be Determined by the Place of Arbitration rather than the Locality of the Arbitration Institution on the People’s Judicature, which is the Supreme People’s Court’s official periodical. In this article, Judge Gao held the opinion that foreign arbitral service providers should be allowed to practice in China, unless it contradicts Chinese mandatory prohibitive law.We will see the evolution.
Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?
There is no specialist arbitration court in China.The Chinese courts, especially the ones in first-tier cities like Beijing, Shanghai, Shenzhen and Guangzhou, are generally familiar with the law and practice of international arbitration and are experienced in recognising and enforcing arbitral awards, including foreign awards.
Agreement to arbitrate
What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
As to the requirements on the formalities of an arbitration agreement, article 16 of the Arbitration Law provides that an arbitration agreement shall include four elements to be valid:
● in writing, no matter stipulated in a contract or provided in a separate agreement;
● the expression of the parties’ intention to submit for arbitration;
● the matters to be arbitrated; and
● the arbitration institution selected by the parties.
In addition, article 17 of the Arbitration Law provides that an arbitration agreement shall be invalid under any of the following circumstances:
● matters agreed upon for arbitration are not arbitrable;
● an arbitration agreement concluded by persons without or with limited capacity for civil acts; or
● one party forces the other party to sign an arbitration agreement by means of duress.
An arbitration agreement can cover future disputes.
Parties may elect the applicable law to govern a foreign-related arbitration agreement.Article 14 of the Hearing Provisions provides that during the court’s identifing the law applicable to determine the validity of a foreign-related arbitration agreement according to article 18 of the Law of the Application of Laws to Foreign-related Civil Relations if parties have not elected the applicable law, the court should make a decision to apply the law which supports the validity of the arbitration agreement, if the law at the locality of the arbitration institution differs from the law at the place of arbitration.
Are any types of dispute non-arbitrable? If so, which?
According to article 3 of the Arbitration Law of PRC, the following disputes shall not be submitted for arbitration:
● disputes concerning marriage, adoption, guardianship, child maintenance and inheritance; and
● administrative disputes falling within the jurisdiction of the relevant administrative organs according to law.
However, it is worth noting that although antitrust disputes are not mentioned in the above article, they were determined to be non-arbitrable in China in a recent judicial decision.
In Nanjing Xusong Technology Co, Ltd v Samsung (China) Investment,(2015) Su Zi Min Xia Zhong Zi No. 00072, the Jiangsu High People’s Court held that antitrust disputes were non-arbitrable based on the following reasons:
● current legal regime explicitly provides civil litigation as the only way to settle civil antitrust disputes;
● public policy plays a pivotal role when weighing the arbitrability and the current statutes do not explicitly provide that antitrust disputes are arbitrable; and
● the case involves the interest of the public, the third party, and consumers, which breaks through the privity of contract. It is worth noting that mainland China is not a jurisdiction where case law has binding effect. The above decision has been criticised by some leading practitioners.
Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
According to the Arbitration Law, a third party cannot be bound by an arbitration agreement without its express consent.The rules on joinder of third parties are provided under the rules of certain arbitration institutions.
For example, according to article 18 of the 2015 CIETAC Rules, prior to the constitution of the tribunal, a party may join an additional party to the arbitration by filing a request for joinder with CIETAC, if there is a prima facie evidence that the arbitration agreement binds the additional party. If the request is filed after the tribunal has been constituted, a decision shall be made by CIETAC after the arbitral tribunal hears from all parties including the additional party if the arbitral tribunal considers the joinder necessary.
Article 31 of the 2015 SHIAC Rules provides that the parties may request a third party to be joined in arbitration with its consent by a joint written application.A third party may also apply in writing to become a party in arbitration with the written consent of both par-ties.The tribunal shall decide on the joinder of a third party, or, if the tribunal has not been constituted, the Secretariat of SHIAC shall make such decision.
Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
The Arbitration Law does not expressly address this issue.The rules on consolidation are provided under the rules of certain arbitration institutions.
For example, article 19 of the 2015 CIETAC Rules provides that CIETAC may consolidate two or more arbitrations per a party’s request under one of the following circumstances:
● all of the claims in the arbitrations are made under the same arbitration agreement;
● the claims in the arbitrations are made under multiple arbitration agreements that are identical or compatible and the arbitrations involve the same parties as well as legal relationships of the same nature;
● the claims in the arbitrations are made under multiple arbitration agreements that are identical or compatible and the multiple contracts involved consist of a principle contract and its ancillary contract(s); or
● all the parties to the arbitrations have agreed to consolidation.
Groups of companies
Is the “group of companies doctrine” recognised in your jurisdiction?
There is no “group of companies doctrine” under Chinese laws.
The basis for piercing the corporate veil is provided under article 20 of the Company Law of the People’s Republic of China.The piercing the corporate veil doctrine makes shareholders severally and jointly liable for the debts of a company if the shareholders abuse the shareholder’s limited liability status or the company’s independent status.
A party may enforce an arbitral award in a court against a company through its shareholders based on that piercing the corporate veil doctrine.This doctrine, however, does not allow a party to drag the shareholders into an arbitration against their company if they are not parties to the relevant arbitration agreement.
Are arbitration clauses considered separable from the main contract?
According to article 19 of the Arbitration Law and article 57 of Contract Law of People’s Republic of China, an arbitration agreement is independent from the contract.
Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
Article 20 of the Arbitration Law provides that if the parties object to the validity of the arbitration agreement, they may apply to the arbitration institution for a decision or to a people’s court for a ruling. If one of the parties requests for a decision from the arbitration institution, but the other party applies to a people’s court for a ruling, the people’s court shall give the ruling.
Prior to the hearing, a party may submit an objection to the tribunal’s jurisdiction to a competent court or the arbitration commission where the arbitration is administered. If former, the court shall decide on the jurisdiction issue; if later, the commission may authorise the tribunal to decide on its own jurisdiction without interference from a court. In practice, the tribunal may determine the jurisdiction issue after it has heard the merits of the case.
Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
If the seat is mainland China, we would suggest the parties choose the predominant institutions like CIETAC, SHIAC, SCIA and BIAC. Foreign parties may consider incorporating the followings into the arbitration agreement:
● the tribunal shall adopt generally accepted international rules and principles;
● the presiding arbitrator shall be of a neutral nationality;
● the parties are free to select arbitrators and not limited by the panel lists of the institutions;
● exclusion of certain types of disputes (eg, intellectual property disputes);
● a mechanism or methodology to evaluate damages and quantum;
● specific requirements on the arbitrators’ expertise (eg, language capability, experience in a specific industry, etc);
● the number of arbitrators;
● rules on document disclosure;
● application of UNCITRAL rules (not recommended if the arbitration is to be conducted in mainland China);
● a cure period for the parties to negotiate; and
● particular rules on evidence such as the IBA Rules on Taking of Evidence
Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
As discussed, the Arbitration Law requires that an arbitration agreement specifically designate an arbitration institution to conduct the arbitration. As a result, an award rendered in an ad hoc arbitration is not enforceable in mainland China.
On 9 January 2017, the Supreme People’s Court issued the Opinion on the Provision of Judicial Protection to the Development of the Free Trade Zone (FTZ Opinion), article 9 of which allow two parties registered in free trade zones to resolve their disputes through ad hoc arbitration, provided that the dispute be resolved in a specific place, under specific arbitration rules, and by specific people.
On 15 April 2017, Zhuhai Arbitration Commission released the Ad Hoc Arbitration Rules of Hengqin Free Trade Zone, which was the first ad hoc arbitration rules in mainland China, responding to the FTZ Opinion.
Given that the above opinion is relatively new and the “facilities” (eg, appointing authority) for ad hoc arbitration have not yet been mature, we do not expect to see many ad hoc arbitrations in the near future.
What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
Rules concerning the appointment of arbitrators in multi-party arbitrations are provided under the rules of certain arbitration institutions.
For example, article 24 of the 2015 SHIAC Rules provides that, under the circumstance where there are two or more claimants and/or respondents, the claimants and/or the respondents each shall, through consultation, jointly appoint or jointly entrust the Chairman of SHIAC to appoint one arbitrator from the SHIAC’s Panel of Arbitrators.The Rules give the Chairman of SHIAC the authority to determine the arbitrator when the parties fail to jointly appoint one.
Commencing the arbitration
Request for arbitration
How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
According to articles 22 and 23 of the Arbitration Law, a party may commence an arbitration by submitting an application for arbitration, which specify:
● the name, gender, age, occupation, work unit and address of the party, the name, domicile and the name and position of the legal representative or the person in charge of the legal entity;
● the arbitration request and facts and grounds on which the claim is based; and
● evidence and the source thereof, the name and address of the witness.
There is no specific time limit for filing an application for arbitration under the Chinese laws.The imitation periods for filing a claim are provided by the statute of limitations in relevant laws. For example, under the Contract Law, the statute of limitations for controversies arising from the international sales of goods or the export and import of technologies is four years.
The application for arbitration could be relatively brief, with only the basic claims and grounds, as long as the claims are specific and clear. Generally, a party is allowed to further supplement the claims and grounds at a later stage.A party may use this as a tactic to file the application for arbitration within the time limit when it is about to expire, to expedite the arbitration proceedings or to create pressure on the other party by commencing the arbitration.
It is worth noting that the application for arbitration in an arbitration conducted in mainland China is different from a notice of arbitration (or request for arbitration) in an international arbitration conducted overseas, such as an HKIAC arbitration seated in Hong Kong, where a party’s notice of arbitration is usually used to provide notice to the other party on the general claims and grounds, which can be further amended or supplemented in a following main submission such as a statement of case.An application for arbitration is like a combination of a notice of arbitration and a statement of case, which not only serves a notice purpose but also provides the “materials” (eg, laws and facts) for a tribunal to consider the case.There will usually be only one round of submission before the hearing, unless a party wish to amend or supplement its claims.
Choice of law
Choice of law
How is the substantive law of the dispute determined?
Where the substantive law is unclear, how will a tribunal determine what it should be?
According to article 126 of the Contract Law, the parties to a foreign-related contract may freely choose the governing substantive law for any controversy arising under the contract. If the parties to a foreign-related contract have not made a selection, the laws of the country to which the contract is most closely connected shall apply.
As to the definition of a foreign-related contract, article 522 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China provides that a contract is considered as a foreign-related contract if:
● a party or both parties involved in the case are foreigners, stateless persons, foreign enterprises or organisations. It is worth noting that a wholly owned foreign enterprise (WOFE) is considered as a Chinese entity;
● a party or both parties involved in the case have their habitual residence outside the territory of the People’s Republic of China;
● the object of the subject matter involved is outside the territory of the People’s Republic of China;
● the legal fact that establishes, changes or terminates the civil relation occurs outside the territory of the People’s Republic of China; or
● other circumstances under which a case may be deemed a foreign-related civil case.
However, article 126 of the Contract Law provides the exception to the application of foreign laws to a dispute involving foreign interests. Pursuant to this article, Chinese laws shall apply to the disputes arising out of the contracts for Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and Sino-foreign cooperative exploration and development of natural resources to be performed within the territory of mainland China.
In addition, article 42 to 47 of the Law of the People’s Republic of China on Application of Law in Foreign-related Civil Relations narrow the scope of the available applicable laws for specific types of disputes such as those arising out of consumer contracts and employment contracts.
Appointing the tribunal
Choice of arbitrators
Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
Generally, arbitration institutions only allow parties to choose arbitrators from their panel lists. Exceptions also exist under the rules of the institutions. For example, article 21 21(2) of the 2015 SHIAC Rules allows the parties to nominate arbitrators from outside the panel list. Such appointment needs to be confirmed by the Chairman of SHIAC. The same applies for article 26(2) of the 2015 CIETAC Rules.
In practice, the parties rarely choose arbitrators outside the panel lists. If the parties do need to choose such an arbitrator, the candidate still need to meet the requirements set forth in article 13 of the Arbitration Law.
Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
Yes.Article 67 of the Arbitration Law expressly provides that a foreign-related arbitration commission may appoint foreigners with professional knowledge in law, economy and trade, science and technology and other fields as arbitrators.
Institutions such as CIETAC and SHIAC provide lists of international arbitrators. In particular, the China-Africa Joint Arbitration Centre (CAJAC) provides a panel of African arbitrators as well as one of Chinese arbitrators.
Foreign parties may make the most of this article to appoint foreign arbitrators (especially those who understand both the practice of international arbitration as well as a specific industry) in their complex and high-profile arbitration cases against Chinese parties.
Default appointment of arbitrators
How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
According to article 32 of the Arbitration Law, if the parties fail, within the time limit prescribed by the relevant arbitration rules, to select the form of the arbitration tribunal or fail to select arbitrators, the arbitrators shall be appointed by the chairman of the arbitration commission.
The Chinese courts play no role in this regard.
Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
According to articles 34, 38, and 58 of the Arbitration Law, an arbitrator can be held liable if he or she engages in any of the following activities:
● meets a party or his or her agent in private;
● accepts an invitation for dinner by a party or his representative;
● accepts gifts presented by any of them; or
● demanded or accepted bribes, committed graft or perverted the law in making the arbitral award.
According to article 399 of the Criminal Law of PRC (added by the sixth amendment), where an arbitrator intentionally goes against the facts or laws and makes any wrongful ruling in the process of arbitration, he or she shall be sentenced to not more than three years of fixed-term imprisonment or detention. If the circumstances are extremely serious, he or she shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years.
Securing payment of fees
Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
The Arbitration Law does not expressly provide any rules in this regard.
It is the common practice in the arbitration in China that the party applying for arbitration must make advanced payment (ie, filing fees and fees for arbitrators) in order to proceed with the arbitration (see article 12(3) of the 2015 CIETAC Rules).
A security payment of fees is rarely seen in practice.
Challenges to arbitrators
Grounds of challenge
On what grounds may a party challenge an arbitrator?
How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
According to article 34 of the Arbitration Law, a party may challenge an arbitrator if he or she:
● is a party or a close relative of a party or of a party’s representative;
● is related in the case;
● has some other relationship with a party to the case or with a party’s agent which might affect the impartiality of the arbitration; or
● meets a party or his agent in private, accepts an invitation for dinner by a party or his representative or accepts gifts presented by any of them.
More specific rules on challenge of arbitrators are also provided in the rules of the arbitration institutions. For example, article 26(5) of the 2015 SHIAC Rules provides that the Chairman of SHIAC shall make a final decision on the challenge with or without stating the reasons.The same applies for the 2015 CIETAC Rules.
The parties may stipulate that the IBA Guidelines on Conflicts of Interest in International Arbitration shall apply to the appointment and challenge of arbitrators, though this is not common in arbitrations conducted in Mainland China. In practice, arbitrators would be required to disclose any facts or circumstances that may raise justifiable doubts as to the impartiality or independence of arbitrators (see article 5 of the CIETAC Rules on Arbitrators).
Types of relief
What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?
Article 272 of the Civil Procedural Law and article 68 of the Arbitration Law allow a party to a foreign-related arbitration to apply directly to the arbitration institution for interim measures, such as property preservation and evidence preservation.Article 100 of the Civil Procedure Law allows a party to request a competent court (through the arbitration institution if in an arbitration case) to request the other party to take or refrain from taking a specific action.
However, an arbitration institution or tribunal does not have the right to issue or enforce such measures.The institution has to transfer such applications to the Intermediate People’s Court in the place where the applicant resides or where the property or evidence in question is located. Parties to an arbitration may not directly request for such interim measures from the courts.
Pre-arbitration interim measures are also available in mainland China. For example,Appendix III of the 2015 CIETAC Rules provides the emergency arbitrator procedures pursuant to which a party may require emergency relief.Article 21 of the FTZ Rules provides the same.
In addition, the above-mentioned FTZ Opinions provide that “if a party applies for preservation prior to or during the arbitration, such application shall be accepted immediately,” and that “under urgent circumstances, if the relevant requirements provided in laws are satisfied, a decision shall be made within 24 hours and then transferred for enforcement immediately.”
Technically speaking, anti-suit injunction has not yet been recognised under Chinese laws. However, if the parties have an arbitration clause or agreement and one of the party initiate a litigation against the other party regardless of the arbitration clause or agreement, the party against whom the litigation is initiated may challenge the court’s jurisdiction based on the existence of such an agreement. If the court determines that the arbitration agreement is valid, it shall reject to accept the case. Generally, Chinese courts adopt a pro-arbitration approach, especially for foreign-related arbitrations. For example, if a court determines that the foreign-related arbitration agreement is invalid, it shall report to the High Court; if the High Court determines the same, it shall report to the Supreme People’s Court, which has the final voice on whether the agreement is valid or not. In the case of a domestic arbitration, however, if a court determines that the arbitration agreement is invalid, it shall report to the High Court and the High Court makes the final decision, with an exception that if the parties’ domiciles are transprovincial, the Supreme People’s Court has the final say.
Security for costs
Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
Chinese laws do not expressly provide that a court or tribunal may order a party to provide security for costs.A security for costs is rarely seen in practice.
However, if a party apply for a property preservation, a court has the authority to require the party to provide security for damages of the party against whom the relief is sought. Unlike the laws of certain common law jurisdictions, Chinese laws generally do not require the applying party to establish a “probability of success” when applying for the preservation.
Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?
Such rules are provided under the Arbitration Law (with relevant interpretations) as well as the rules of the arbitration institutions.
Some institutions like CIETAC, SHIAC, and SCIA allow the parties to supplement or modify the arbitration rules, provided that the supplemented or modified rules are not inconsistent with the mandatory rules (eg, the rules that provide the applicable laws to certain types of disputes) in Chinese laws.
Refusal to participate
What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
According to article 42 of the Arbitration Law, if the respondent was served with a notice of arbitration issued by the arbitration institution together with an application for arbitration but does not appear before the tribunal without due cause or leaves the hearing room during a hearing without the permission of the arbitral tribunal, an award by default may be given. Under such circumstances, a party shall still be mindful of complying with relevant arbitration rules and requirements when proceeding with the arbitration; otherwise the default party may later utilise the “defects” in the proceedings to challenge the enforcement of the arbitral award.
What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?
The arbitral tribunal has a relatively broad discretion as to the admissibility of evidence. In particular, CIETAC has a Guideline on Evidence that the parties are free to adopt in their arbitration.The Guidelines on Evidence provides rules concerning the admission of evidence and other issues.
The most common evidence relied by the tribunal is documentary evidence. Unlike arbitrations conducted in common law jurisdictions, witness testimonies are relatively less common and are considered less reliable by the tribunals.
Parties are free to apply the IBA Rules on the Taking of Evidence in arbitration provided that its application, no matter fully or partially, is not inconsistent with the mandatory evidence rules provided in Chinese laws. For example, article 37(4) of the 2015 SHAIC Rules provides that where the parties have agreed on matters or rules relating to evidence, the parties’ agreement shall prevail except where such agreement is inoperative.
In practice, the IBA Rules were often applied in the arbitrations where the presiding arbitrators were from common law jurisdictions.
Will the courts in your jurisdiction play any role in the obtaining of evidence?
The courts will provide assistance in evidence preservation (see questions 4 and 25.)
What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
According to article 43 of the Arbitration Law, a party bears the burden to produce evidence to support its claims or defences or both. The tribunal may also request or collect evidence itself if it considers it necessary.
According to article 45 of the Arbitration Law, the parties shall produce all the evidence at the hearing in order to allow them to examine each other’s evidence.
The Arbitration Law does not expressly provide if a party may request documents from the other party.
Article 7 of the CIETAC Guidelines on Evidence allows a party to request the tribunal to require the other party to disclose specific documents or documents within a specific scope, provided that the request is specific and clear and that the evidence to be disclosed is relevant and important.This is similar with the relevant disclosure rule in the IBA Rules on Taking Evidence. In addition, according to article 11 of the CIETAC Guidelines on Evidence, a tribunal may request a party to disclose any necessary evidence or collect evidence itself.
Recently, article 16 of Enforcement Provisions set up a determination standard of concealing evidence, whereby one of the conditions is that during the arbitration, it is known that the evidence exists, and one party requests the other party for the evidence or one party applies to the arbitral tribunal for requesting the evidence, but the other party fails to provide the evidence without justifications.
Is it mandatory to have a final hearing on the merits?
According to article 39 of the Arbitration Law, it is mandatory for the tribunal to have a hearing on the merits.The tribunal may, however, not to have such a hearing per the parties’ agreement.
The rules of the arbitration institutions generally provide the same. For example, article 35 (2) of the 2015 CIETAC Rules provides that the tribunal shall conduct oral hearings when examining the case. However, the arbitral tribunal may examine the case on the basis of documents only if the parties so agree and the arbitral tribunal consents or the arbitral tribunal deems that oral hearings are unnecessary and the parties so agree.
Generally, the hearings in the arbitrations conducted in mainland China tend to be short (half a day in most cases and one to two days in exceptional cases).
Seat or place of arbitration
If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?
Chinese laws do not prohibit parties to a foreign-related arbitration from conducting the hearings and procedural meetings at places outside China. For example, article 33 of the 2015 SHIAC Rules allows the parties to conduct the hearing at places other than Shanghai “with the approval of the Secretary General of SHIAC”.Article 36 (1) of the 2015 CIETAC Rules provides the same.
Can the tribunal decide by majority?
According to article 53 of the Arbitration Law, the tribunal must decide by majority.When the arbitrators cannot reach a majority decision, the tribunal shall decide by the opinion of the presiding arbitrator.
Limitations to awards and relief
Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
As to the remedies or relief during the course of arbitration, an arbitral tribunal may not issue interim relief (eg, assets attachment) directly. It will help the applicant transfer the request for such relief to a competent court for the purpose of enforcement.
As to the remedies or relief in the final award, the tribunal is free to grant any kind of remedy or relief available under Chinese laws, including specific performance, as long as it does not violate any requirement provided in article 58 of the Arbitration Law.
Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
Yes.Article 53 of the Arbitration Law provides that the dissenting opinions (or the minority opinions) shall be recorded in writing.The arbitrators who provide the dissenting opinions may choose not to sign the award.
Such opinions are not common in most cases. In exceptional cases where significant amounts of dispute are involved, dissenting opinions may appear.
What, if any, are the legal and formal requirements for a valid and enforceable award?
According to article 54 of the Arbitration Law, a valid and enforceable award shall set forth the parties’ claims, the matters in dispute, the grounds upon which an award is given, the results of the judgment, the allocation of the arbitration fees, and the date of the award.The tribunal may, however, not to include in the award the matters in dispute and the grounds on which the award is based per the parties’ agreement.
The award shall be signed by the arbitrators and sealed by the arbitration commission.The arbitrators who provide the dissenting opinions may choose not to sign the award.
What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
The Arbitration Law does not expressly provide the time limit for arbitrators to render awards in a foreign-related arbitration.
Most of arbitration institutions, however, provide such time limits in their rules. For example, article 48 of the 2015 CIETAC Rules provides that the tribunal shall render an arbitral award within six months from the date on which the arbitral tribunal is formed.Article 62(1) provides that the time limit is three months for an arbitration conducted pursuant to the summary procedure.
The parties should note that a time limit like the above one is subject to extensions, which are not uncommon and could significantly prolong the time frame.
Costs and interest
Are parties able to recover fees paid and costs incurred? Does the “loser pays” rule generally apply in your jurisdiction?
According to article 9 of the Arbitration Fee Collection Measures of Arbitration Commissions, fees paid to the arbitration commission shall, in principle, be borne by the losing party. However, if a party only partially wins, the arbitration tribunal shall determine the allocation of fees based on the parties’ liabilities and the percentage of the party’s success. If the case is settled by the parties or through conciliation by the arbitral tribunal, the parties can reach an agreement on the allocation of fees.
Article 52(1) of the 2015 CIETAC Rules provides that the arbitral tribunal has the power to determine in the arbitral award the arbitration fees and other expenses to be paid by the parties to CIETAC. Article 52(2) provides that the arbitral tribunal has the power to decide in the arbitral award that the losing party shall compensate the winning party for the expenses reasonably incurred by it in pursuing the case. In deciding whether or not the winning party’s expenses incurred in pursuing the case are reasonable, the arbitral tribunal shall take into consideration various factors such as the outcome and complexity of the case, the workload of the winning party and/or its representatives, the amount in dispute, etc. In practice, parties may be invited to provide submissions or arguments in this regard.
In practice, the tribunal will also review the engagement letters and relevant payment records. In particular, the tribunal will determine whether the expenses are reasonable or appropriate by referring to relevant guidelines on legal fees issued by corresponding provinces or cities.
Interest on the award
Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
The Arbitration Law does not expressly provide any rule on interest.
Article 253 of the Civil Procedure Law provides that if a person subject to execution fails to perform his obligations to pay within the time limit specified in a judgment, ruling or other legal document, he shall pay twice the amount of interest on the debt (Judgment Debt) for the period during which the performance is deferred.
Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Calculation of Interest on Debts during the Delay in the Performance of Execution Procedures (Interpretation on Interest) further specifies the calculation of the Judgment Debt.
According to article 1 of the Interpretation on Interest, the formula of calculating the doubled interest on debts shall be as follows:
the doubled interest on debts = the outstanding pecuniary debts determined by the effective legal instruments other than the general interest on debts × 0.175‰/day × the period of delay in the performance.
Therefore, if a party fails to perform in accordance with an arbitral award, the other party may request the court through which the award is being enforced to request that party to pay interest on award in accordance with the above formula.
Grounds for appeal
Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
The grounds for appealing an arbitral award are different for domestic awards, foreign-related awards, and foreign awards.
As to domestic awards, article 58 of the Arbitration Law provides that a party may request a competent intermediate people’s court to set aside an award based on any of the following grounds:
● there is no arbitration agreement between the parties;
● the matters of the award are beyond the scope of the arbitration agreement or not under the jurisdiction of the arbitration commission;
● the composition of the arbitral tribunal or the arbitration procedure is in contrary to the legal procedure;
● the evidence on which the award is based is falsified;
● the other party has concealed evidence which is sufficient to affect the impartiality of the award; or
● the arbitrator(s) has (have) demanded or accepted bribes, committed graft or perverted the law in making the arbitral award.
As to foreign-related awards (see question 18 for the definition of foreign-related), article 70 of the Arbitration Law provides that a party may request a competent intermediate people’s court to set aside a foreign-related award if it involves one of the circumstances prescribed in article 274 of the Civil Procedure Law, which are:
● the parties have neither included an arbitration clause in their contract nor subsequently reached a written arbitration agreement;
● the person against whom the application is made was not requested to appoint an arbitrator or take part in the arbitration proceedings or the person was unable to state his opinions due to reasons for which he is not responsible;
● the composition of the arbitration tribunal or the arbitration procedure was not in conformity with the rules of arbitration;
● matters decided in the award exceed the scope of the arbitration agreement or are beyond the arbitral authority of the arbitration institution; or
● the people’s court determines that the execution of the said award would be against public interest.
In addition, article 21 of Hearing Provisions provides that in judicial review cases where parties apply to the court for determination of validity of arbitration agreements related to Hong Kong, Macao or Taiwan, and in judicial review cases where parties apply to the court for enforcement or set-aside of arbitral awards related to Hong Kong, Macao or Taiwan made by domestic arbitration institutions, the court should review the case by referring to provisions applicable to foreign-related judicial review cases.
As to foreign awards (ie, awards rendered by foreign arbitration institutions such as HKIAC), assuming that those awards are made in countries that are signatories to the New York Convention, a party may request a competent intermediate people’s court to set aside an award only if it involves one of the circumstances prescribed in article V of the New York Convention, which are:
● the arbitration agreement is invalid;
● the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
● the award deals with a matter or dispute out of the scope of the arbitration agreement or the submission to the arbitration;
● the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place;
● the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made; or
● the competent authority in the country where recognition and enforcement is sought finds that:
● the subject matter of the dispute is not capable of settlement by arbitration under the law of that country; or
● the recognition or enforcement of the award would be contrary to the public policy of that country.
It should be noted that foreign-related and foreign awards receive extra “protection” from the Supreme Court.According to articles 2 and 3 of Reporting Provisions and other judicial interpretations, if a local court (ie, the competent intermediate court) decides to set aside a foreign or foreign-related arbitral award, it needs to seek approval from a competent High Court; if the High Court decides the same, it needs to seek approval from the Supreme Court. However, if the competent intermediate court decides to set aside a domestic arbitral award, it should report to the higher level High Court and the High Court has the final voice, with two exceptions where (i) the domiciles of disputing parties are transprovincial, or (ii) the court decides to set aside or not to enforce the award on the ground that the award contradicts with public interests, the High Court should report to the Supreme People’s Court for the final decision.
Given the above, we suggest a foreign company devise its arbitration as a foreign or foreign-related arbitration in order to seek more protection at the enforcement stage. For example, if possible, it may have the arbitration initiated by a foreign entity instead of its China-registered subsidiary.
Other grounds for challenge
Are there any other bases on which an award may be challenged, and if so what?
Other than the ones discussed in question 41, there is no ground to challenge a foreign or foreign-related arbitral award.
Modifying an award
Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
No. Pursuant to article 52(5) of the Contract Law, any agreement inconsistent with the mandatory laws of China shall be null and void. The above rules on the right of appeal are mandatory rules in China’s laws.
Enforcement in your jurisdiction
Enforcement of set-aside awards
Will an award that has been set aside by the courts in the seat of arbitration be enforced in yourjurisdiction?
If the seat is mainland China, an award that has been set aside by the courts will not be enforced.
If the seat is outside mainland China, article V(1)(e) of the New York Convention provides that the recognition and enforcement of an arbitral award may be refused, at the request of the party against whom it was invoked, if that party proves that the award “has been set aside or suspended by a competent authority of the country in which, or under the law of the country in which, that award was made”.
What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
In recent years, the China’s courts have been more flexible in considering whether an arbitration is “foreign-related” in the enforcement of arbitration.
In SIEMENS International Trading (Shanghai) Co, Ltd v Shanghai Golden Landmark Co, Ltd (2013) Hu Yi Zhong Min Ren (Wai Zhong) Zi No. 2 (27 November 2015), the Court decided to recognise and enforce an award rendered by a foreign arbitration (the Singapore International Arbitration Centre), even though the arbitration took place in Singapore between two PRC-incorporated companies and the transaction was mainly conducted in mainland China.The Court determined that the arbitration was foreign-related based on the following reasons:
● both parties were WFOEs registered in the Shanghai Free Trade Zone, which suggested that the source of capital, eventual ownership of interests and the business decisions had close connections to foreign investors.
● although the final delivery of the equipment under the contract was within the territory of mainland China, the equipment was shipped from outside the territory of mainland China in order to be delivered inside mainland China.
This decision goes beyond earlier China courts’ decisions, which held that a dispute between two WOFEs concerning a transaction conducted in mainland China was a domestic dispute and should not be arbitrated outside mainland China.
On 9 January 2017, the Supreme People’s Court issued the Opinion on the Provision of Judicial Protection to the Development of the Free Trade Zone, which further provides that:
if two WOFEs registered in a FTZ resolve their dispute through an arbitration conducted outside Mainland China, a court shall not determine that the arbitration agreement is invalid because there is no “foreign element” in the dispute. if one or two parties are WOFEs registered in a FTZ and the two parties resolve their dispute through an arbitration conducted outside Mainland China, but one of the parties contends that the arbitration agreement is not valid after the award has been rendered, a court shall not support such a contention.
In sum, the China’s courts, especially the Supreme Court, have been putting efforts to respect the parties’ autonomy in arbitrating their dispute by adopting a broad interpretation of the existing laws and enacting new rules.We believe this trend will continue and will make mainland China a more arbitration-friendly jurisdiction.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
China has not introduced any legislation or case law dealing with state or sovereign immunity. China’s position on sovereign immunity can therefore only be implied indirectly from a number of judgments published in places outside China.
In FG Hemisphere Associates LLC v Democratic Republic of Congo & Ors  2 HKC 487 (FG Hemisphere), there is an extract from a letter issued by the Office of the Commissioner of the Ministry of Foreign Affairs of China to the Hong Kong courts, which provides:
The consistent and principled position of China is that a state and its property shall, in foreign courts, enjoy absolute immunity from jurisdiction and from execution, and has never applied the so-called principle or theory of “restrictive immunity”… China has never accepted any foreign courts having jurisdiction over cases in which the state or Government of China is sued as a defendant, or over cases involving the property of the state or Government of China…
According to this letter, China adopts the doctrine of absolute immunity: foreign states are completely immune from the jurisdiction of municipal courts of another state, both in respect of suit and enforce-ment.Therefore, a state may successfully raise a defence of state or sovereign immunity at the enforcement stage.
As to whether a state entity, like a state department may enjoy the same protection, we would also need to imply China’s position from judgments published in places outside China.
In Hua Tian Long (No 3)  3 HKC 557, the court held that the Guangzhou Salvage Bureau is not a separate legal entity but is part of the Ministry of Communication (MOC) under its direct control, and thus enjoy state immunity.Therefore, it would be theoretically possible for a state entity to raise a defence of state or sovereign immunity at the enforcement stage.
In sum, mainland China has no legislation or case law on state immunity or how it may apply in a specific case.The FG Hemisphere case shows that China adopts the doctrine of absolute immunity. Hua Tian Long provides a guideline on how to apply the doctrine of state immunity in the enforcement of a judgment against a Chinese institutional organisation. It should be noted that the rationale of Hua Tian Long only serves as a guideline.
To what extent are arbitral proceedings in your jurisdiction confidential?
Article 40 of the Arbitration Law provides that an arbitration shall not be conducted in public unless the parties stipulate otherwise.
Other rules concerning confidentiality are provided in the rules of the arbitration institutions. For example, article 38 of the 2015 CIETAC Rules provides that the parties and their representatives, the arbitrators, the witnesses, the interpreters, the experts consulted by the arbitral tribunal, the appraisers appointed by the arbitral tribunal and other relevant persons shall not disclose to any outsider any substantive or procedural matters relating to the case.
Given the above, we suggest the parties resolve their dispute through arbitration when there is a particular concern over confidentiality. Moreover, given the Supreme People’s Court’s recent movements on judicial transparency (eg, publish of court judgments, big data, smart courts, etc), arbitration seems to be more attractive where confidentiality is of particular concern.
Evidence and pleadings
What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
As discussed in question 47, an arbitration shall not be conducted in public unless the parties stipulate otherwise. Rules of most of the arbitration institutions also require that evidence produced and pleadings filed in the arbitration shall be confidential.
As to the potential use of those evidence and pleadings in other proceedings, article 9(5) of the Supreme People’s Court’s Certain Requirements on Evidence in Civil Procedure provides that a court may rely on the facts ascertained by an effective arbitral award rendered by an arbitration institution. However, those facts are subject to the other party’s challenge with counter-evidence.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
The ethical codes on counsel are provided in the Law on Lawyers of the People’s Republic of China.
The ethical codes on arbitrators are provided in the Arbitration Law and the rules of the arbitration institutions. For example, article 34 of the Arbitration Law provides the circumstances under which an arbitrator must withdraw from adjudicating an arbitration.Article 25 of the 2015 SHIAC Rules provides that an arbitrator shall sign a declaration and disclose to SHIAC in writing any facts or circumstances that may give a rise to justifiable doubts as to his or her impartiality or independence. Similar rules exist in the 2015 CIETAC Rules and the rules of other arbitration institutions.
In addition, the parties may stipulate that the IBA Guidelines on Conflicts of Interest in International Arbitration shall apply.
Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?
We would suggest a company pay particular attention to the following aspects:
The time frame of an international arbitration administered by institutions in mainland China is relatively shorter than an arbitration conducted overseas (eg, a HKIAC arbitration seated in Hong Kong). For example, article 48(1) of the 2015 CIETAC Rules provides that the arbitral tribunal shall render an arbitral award within six months from the date on which the arbitral tribunal is formed. Extensions would be allowed in certain circumstances and are not uncommon.
By contrast, it usually takes a tribunal of an HKIAC arbitration 12 months to render an award.The six-month time frame is, however, subject to potential extensions. Most of the arbitrations in practice do not complete in six months. Some could last a couple of years.
Disclosures are rarely held in an international arbitration conducted in Mainland China.A party bears the burden to collect and submit evidence to support its claims.
Witnesses are rarely introduced in an international arbitration conducted in mainland China.A tribunal usually relies on documentary evidence on fact-findings.
Interaction with the tribunal
The hearing in an international arbitration conducted in Mainland China is more of an inquisitorial style rather than an adversarial one. That means arbitrators are usually more active in asking questions and engaging in discussions. Counsel usually do not make long statements like the ones seen in international arbitrations conducted overseas.
There are usually lesser rounds of submissions.And the submissions tend to be short.
Parties would usually be required to submit lists of evidence explaining the purposes of each evidence submitted.The parties would then be given opportunities to challenge each other’s evidence.
Most rules allow the presiding arbitrator to be with the same nationality of one or both of the parties.A foreign company may want to stipulate in the arbitration agreement that the presiding arbitrator shall not be with a nationality same as either of the parties.
The arbitration will be Chinese unless the parties agree otherwise.A foreign company may want to stipulate in the arbitration agreement that the arbitration shall be conducted in English or in both English and Chinese.
Foreign counsel, including China-qualified attorneys working at China offices of international firms, are only allowed to provide factual statements and opinions concerning foreign laws.
The Civil Procedure Law applies different standards for setting aside an arbitral awards on domestic arbitrations and foreign-related arbitrations. For domestic arbitrations, a court will not only look at the procedural but also the substantial aspects of the case. For example, article 237(4) and (5) of the Civil Procedure Law provides that a court may set aside an award when:
● the evidence used as a basis for rendering an award is fabricated; or
● the other party to the case conceals important evidence, which is substantial enough to affect the impartial ruling by the arbitration institution.
The implication of the above is that a party may challenge an award rendered by the tribunal on the basis that there are defects in the arbitration such as the other party’s failure to disclosure material evidence that may impact the impartiality of the award.
A foreign company may want to devise the arbitration as a foreign-related one, if possible.As discussed above, a foreign-related award enjoys more protection at the enforcement stage – if an intermediate court decides not to enforce an award rendered in a foreign-related arbitration, it needs to seek approval from a High Court; if the High Court decides the same, it needs to seek approval from the Supreme Court, while in a domestic arbitration only under certain circumstances should the Supreme People’s Court be reported to.
Is third-party funding permitted in your jurisdiction?
Chinese laws do not expressly prohibit third-party funding.
Practitioners in China just started exploring this area in recent years. But there are only limited examples. For instance, on 19 September 2016, a litigation fund called Duomeng Litigation Funding was established by a funding alliance and a law firm in China. According to Duomeng, the fund would cover attorney fees and other expenses incurred in litigation and arbitration and charge a certain percentage of what the client recovers from the legal proceedings. The fund mainly focuses on cases involving the recovery of account receivables.
It is worth noting that third-party funding involves critical issues concerning:
● definition – ie, what exactly is a funder;
● transparency – ie, whether the funder’s participation should be disclosed;
● privilege – ie, whether relevant attorney privileges extend to a funder;
● conflict of interests – ie, how should we evaluate the relationship between the funder, the arbitrator, the attorney and other parties in the arbitration; and
● costs – ie, whether the existence of a funder affects the allocation of costs.
The above issues still remain to be explained by Chinese laws and the rules of the arbitration institutions.
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