New CIETAC Arbitration Rules enter into force in 2015

CIETAC (China International Economic and Trade Arbitration Commission) has again revised its Arbitration Rules following the last amendment in 2012. The new Arbitration Rules enter into force on 01.01.2015. Besides some structural changes, CIETAC has in particular revised its arbitration rules regarding multiple-party arbitration proceedings and arbitration proceedings based on multiple contracts. The new version of the CIETAC Arbitration Rules also provides for the appointment of an emergency arbitrator as of 2015, similar to the Arbitration Rules of the International Center of Commerce (ICC) which were revised in 2012. Since CIETAC has also recently established an Arbitration Center in Hong Kong, the revised Arbitration Rules also contain specific rules for arbitration proceedings administered by the CIETAC Hong Kong Arbitration Center. The changes in detail are as follows:

Structural changes

The main structural change to CIETAC is that the former Secretariat has been replaced by an Arbitration Court. The executive function is no longer held by the Secretary General, but by the Chairman of the Arbitration Court (Article 2 of the revised CIETAC Arbitration Rules). CIETAC has also changed the additional name it uses. Where according to the CIETAC Arbitration Rules issued in 2012 CIETAC concurrently used the name “Court of Arbitration of the China Chamber of International Commerce”, it now uses the additional name “Arbitration Institute of the China Chamber of International Commerce” (Article 1).

Multiple contracts/multiple parties

The newly introduced Article 14 of the CIETAC Arbitration Rules provides that a claimant can initiate a single arbitration concerning disputes arising out of or in connection with multiple contracts, provided that such contracts consist of a principal and ancillary contracts or that such contracts have been entered into by the same contractual parties and involve legal relationships of the same nature. Article 14 also applies if the disputes arise out of the same transaction or the same series of transactions and the arbitration agreements in such contracts are identical or compatible.

The amended Article 19 contains similar requirements for the consolidation of arbitrations. Whilst according to the former Article 17 of the 2012 Arbitration Rules, the consolidation of two or more arbitrations was permissible either at the request of a party or CIETAC and with the consent of all other parties, Article 19 of the revised 2015 Arbitration Rules places more specific requirements on the consolidation of arbitrations. Accordingly, several arbitrations can be consolidated if the claims in the arbitrations are all made under the same arbitration agreement, if 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 or the multiple contracts involved consist of a principle contract and its ancillary contract(s). As a fourth alternative, Article 19 (1) (d) provides for the consolidation of multiple arbitrations if all parties to the arbitrations have agreed to consolidation.

The newly introduced Article 18 of the 2015 CIETAC Arbitration Rules governs the joinder of additional parties to the arbitration. Article 18 requires for the joinder of additional parties that the additional party is bound prima facie by the arbitration agreement. If the arbitral tribunal has already been formed, the party joining the proceedings has the right pursuant to Article 18(5) to appoint a new arbitrator and therefore, if applicable, to change the formation of the arbitral tribunal again in accordance with Article 29 of the CIETAC Arbitration Rules.

Emergency arbitrator

Similar to the amended Arbitration Rules of the ICC, Article 23(2) of the CIETAC Arbitration Rules now also provides for the possibility to request the appointment of an emergency arbitrator. In a similar way, the CIETAC Arbitration Rules also appear to have adopted an opt-out system. Although Article 23(2) and Appendix III of the CIETAC Arbitration Rules do not explicitly state that Article 23(2) on the appointment of an emergency arbitrator shall always apply if the parties have not expressly excluded this regulation, the new CIETAC Arbitration Rules, however, in principle make the request for the appointment of an emergency arbitrator dependent on an agreement between the parties. If the parties agree on the application of the new CIETAC Arbitration Rules in their entirety, this automatically includes the possibility to request the appointment of an emergency arbitrator.

Increase of the dispute amount threshold for summary proceedings

Following an increase in the dispute amount threshold in 2012, the new version of the CIETAC Arbitration Rules again contains an increase in the dispute amount threshold for summary procedure. After the last increase to RMB 2.0 million, the new CIETAC Arbitration Rule provide for a minimum dispute amount threshold of RMB 5.0 million for summary procedure, unless the parties have agreed otherwise.

Hong Kong arbitration

Since CIETAC has now established an Arbitration Center in Hong Kong, it provides as of 2015 for specific rules for arbitration proceedings in Hong Kong administered by the Arbitration Center of CIETAC there. These, in particular, deviate from the regulations in Chapter V of the CIETAC Arbitration Rules concerning domestic arbitration proceedings in mainland China. The other provisions of the CIETAC Arbitration Rules remain, however,applicable. Pursuant to Article 74 of the CIETAC Arbitration Rules, the place of arbitration is Hong Kong, unless agreed otherwise by the parties.

Outlook

It remains to be seen how CIETAC arbitration will develop in future. In the past, the far-reaching influence of CIETAC itself, the limited transparency compared to proceedings administrated by other arbitration institutions and the limited possibility of parties to influence the arbitral tribunal have been criticised especially from the point of view of Western parties. These criticisms have not been addressed by the changes to the CIETAC Arbitration Rules. Despite the structural adjustments, the powers of CIETAC – which are now exercised by the Chairman of the of the Arbitration Court – remain unchanged.

Additional information on arbitration in China and the last revision of the CIETAC Arbitration Rules in 2012 can be found here.

Link to Noerr China Desk.