Arbitration in the PRC A Real Alternative or Not?
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1 Arbitration in the PRC A Real Alternative or Not? (Thomas Weimann, Düsseldorf) July 2 nd,
2 Contents 1. Main Characteristics of Arbitration Legislation in the PRC 2. Main Arbitration Institutions and Their Rules 3. PRC Arbitration Law Quite Modern but Somehow Special 4. Recent Trends in the PRC Arbitration System 5. Reading Materials 6. Questions 6
3 Main Characteristics of Arbitration Legislation in the PRC International Law China has not adopted the UNCITRAL Model Law New York Convention came into force on 22 April 1987 China has signed a bilateral agreement with Hong Kong (2000) China has signed a bilateral agreement with Macao (2007) Taiwan awards are enforced based on the so called Regulation 1998 Domestic Law PRC Arbitration Law of 1994 Supreme People s Court Interpretation of 2006 PRC Civil Procedure Law of
4 Main Arbitration Institutions Arbitration institutions for China related disputes There are quite a few arbitration centres in- and outside Mainland China offering arbitration and mediation services tailor made for China disputes. The most well known are the following: CIETAC, also known as the China International Economic and Trade Arbitration Commission is the best known Chinese Arbitration Commission. Founded in April 1956, CIETAC handles the highest number of international cases in China. BAC, also known as the Beijing Arbitration Commission, is a local commission established by the Beijing municipal government. Dramatic growth during the last years. Competing with CIETAC for international cases. Western trained Arbitrators. SHIAC, also known as Shanghai International Arbitration Center or Shanghai International Economic and Trade Arbitration Commission is a CIETAC spin off. SAC, also known as Shanghai Arbitration Commission, is a local commission established by the Shanghai municipal government. CEAC, also known as the Chinese-European Arbitration Center, is an international institution established under the patronage of the Hamburg Bar and the Hamburg Chamber of Commerce specializing in Sino-European disputes outside the PRC. 8
5 PRC Arbitration Law does not allow ad-hoc arbitration (Art. 16 PRC Arbitration Law ): Art. 16 PRC Arbitration Law: An agreement for arbitration shall include the arbitration clauses stipulated in the contracts or other written agreements for arbitration reached before or after a dispute occurs. An arbitration agreement shall contain the following: 1. The expression of application for arbitration. 2. Matters for arbitration. 3. The arbitration commission chosen 9
6 PRC Arbitration Law has requirements for arbitrators: (Art. 13 PRC Arbitration Law): Art. 13 PRC Arbitration law: An arbitrator shall meet one of the following requirements: 1. At least eight years of work experience in arbitration. 2. At least eight years of experience as a lawyer. 3. At least eight years of experience as a judge. 4. Engaging in law research and teaching, with a senior academic title.. 10
7 PRC Arbitration Law restricts free choice of arbitrators: (Art. 25, 31 PRC Arbitration Law, Art. 24 CIETAC Rules): Art CIETAC Rules: CIETAC establishes a Panel of Arbitrators which uniformly applies to itself and all its sub-commissions/centers. The parties shall nominate arbitrators from the Panel of Arbitrators provided by CIETAC. Art CIETAC Rules: Where the parties have agreed to nominate arbitrators from outside CIETAC s Panel of Arbitrators, an arbitrator so nominated by the parties or nominated according to the agreement of the parties may act as arbitrator subject to the confirmation by the Chairman of CIETAC in accordance with the law. 11
8 PRC Arbitration Law has special route to find a chairman: (Art. 31 PRC Arbitration Law, Art. 25 para 2 CIETAC Rules): Art CIETAC Rules: Within fifteen (15) days from the date of the Respondent s receipt of the Notice of Arbitration, the parties shall jointly nominate, or entrust the Chairman of CIETAC to appoint, the third arbitrator, who shall act as the presiding arbitrator. Art CIETAC Rules: The parties may each recommend one to five arbitrators as candidates for presiding arbitrator [ ] Where there is no common candidate on the lists, the presiding arbitrator shall be appointed by the Chairman of CIETAC. 12
9 In absence of an agreement, the language can well be Chinese: (Art. 71 para 1 CIETAC Rules): Art. 71 para 1 CIETAC Rules: Where the parties have agreed on the language of arbitration, their agreement shall prevail. In the absence of such agreement, the language of arbitration to be used in the proceedings shall be Chinese or any other language designated by CIETAC having regard to the circumstances of the case. 13
10 Competence-Competence rests with the commission or the court (Art. 20 PRC Arbitration Law): Art. 20 PRC Arbitration Law : Whereas parties concerned have doubt on the validity of an agreement for arbitration, a request can be made to the arbitration commission for a decision or to the people's court for a ruling. If one party requests the arbitration commission for a decision while the other party requests the people's court for a ruling, the people's court shall pass a ruling. Art. 6.1 CIETAC Rules: CIETAC shall have the power to determine the existence and validity of an arbitration agreement and its jurisdiction over an arbitration case. CIETAC may, where necessary, delegate such power to the arbitral tribunal. 14
11 PRC Law allows for investigative tribunals (Art. 43 PRC Arbitration Law, Art. 33 para 3 CIETAC Rules): Art. 43 PRC Arbitration Law: The parties concerned shall provide evidence to support their respective claims. Whereas an arbitration tribunal deems it necessary to collect evidence, it may collect it on its own initiative. Art. 33 para 3 CIETAC Rules: Unless otherwise agreed by the parties, the arbitral tribunal may adopt an inquisitorial or adversarial approach in hearing the case having regard to the circumstances of the case. Art. 41 para 1 CIETAC Rules: The arbitral tribunal may undertake investigations and collect evidence on its own initiative as it considers necessary. 15
12 PRC Law allows to combine arbitration and ADR (Art. 49 PRC Arbitration Law, Art. 45 CIETAC Rules): Art. 45 para 1 CIETAC Rules: Where both parties wish to conciliate, or where one party wishes to conciliate and the other party s consent has been obtained by the arbitral tribunal, the arbitral tribunal may conciliate the case during the course of the arbitration proceedings. The parties may also settle the case by themselves. 16
13 PRC Law requires extensive and signed minutes: (Art. 48 PRC Arbitration Law): Art. 48 PRC Arbitration Law: The arbitration tribunal shall record the hearings in writing. Whereas the parties concerned or other people involved in the arbitration find something in their statements left out in the recording or misrecorded, they have the right to apply for correction. Whereas corrections are not made, the application shall be recorded. The written records of the hearings shall be signed or affixed with seals by the arbitrators, minute keepers, the parties concerned and other people participating in the arbitration. 17
14 CIETAC performs scrutiny test: (Art.49 CIETAC Rules): Art. 49 CIETAC Rules: Scrutiny of Draft Award. The arbitral tribunal shall submit its draft award to CIETAC for scrutiny before signing the award. CIETAC may bring to the attention of the arbitral tribunal issues addressed in the award on the condition that the arbitral tribunal s independence in rendering the award is not affected. 18
15 Recent Trends in the PRC Arbitration System Recent Trends Agreements in domestic mediations can be declared enforceable under PRC law. Some local courts have now accepted awards issued in arbitrations administered by a foreign commission in the PRC however, no clear line. Commentators are discussing ad hoc arbitration in the PRC again no clear line. Close cooperation of the PRC Arbitration Commissions with the Chinese European Arbitration Centre. Spin off of the Shenzhen and Shanghai Sub Commissions from CIETAC and formation of the new Shanghai International Arbitration Centre. Enforceability of awards is still under discussion. Suzhou Intermediate People s Court denied enforceability of Shanghai International Arbitration Centre award under a CIETAC Shanghai Sub Commission arbitration clause. 19
16 Further Reading Material Jingzhou Tao Arbitration Law and Practice in China Price: USD 203,00 Thomas Weimann et al. Austrian Arbitration Yearbook 2012: Enforcements of Foreign Arbitral Awards in Greater China Austrian Arbitration Yearbook 2013: CEAC Arbitration - Bridging the Gap. Kun Fan Arbitration in China: A Legal and Cultural Analysis (China and International Economic Law) Price: USD 130,00 Thomas Weimann et al. Getting the Deal Through: Arbitration Chapter on CEAC Arbitration Price: EUR 325,00 20
17 Arbitration Contact for Mainland China Thomas Weimann Partner, President of the Chinese European Legal Association Member of the Board of the Chinese European Arbitration Centre, Königsallee 59, Düsseldorf Telephone:
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