UNCITRAL Rules or the Rules ), which has been widely applied. acknowledged as the most successful and representative arbitration
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1 The latest development of the practice of the UNCITRAL Arbitration Rules in China The UNCITRAL Arbitration Rules (hereinafter as the UNCITRAL Rules or the Rules ), which has been widely applied both in ad hoc arbitration and institutional arbitration, is generally acknowledged as the most successful and representative arbitration rules in the world. Moreover, the 2010 revised version of the Rules has adapted itself to the development of international commercial arbitration during the past 30 years. Both the UNCITRAL Rules and the UNCITRAL Model Law on International Commercial Arbitration have become the guideline for many countries and arbitration institutions to draft their domestic arbitration law or arbitration rules. In the practice of China, many foreign arbitral parties tend to choose to apply the UNCITRAL Rules in their disputes. Therefore, we, the Shanghai International Arbitration Center, stipulate expressly in our arbitration rules that parties have the right to apply the UNCITRAL Rules. In practice, we have also accepted and administered some cases that apply the UNCITRAL Rules. Now I would like to share with you my opinion of the latest development of the practice of the UNCITRAL Rules and focused issues in China. 1. The P.R.C. Supreme People s Court confirmed the validity of an arbitration clause in which the parties agree to submit the disputes to a Chinese arbitration institution and apply the UNCITRAL Rules.
2 In June, 2014, the P.R.C. Supreme People s Court conveyed its legal opinion by confirming the validity of an arbitration clause in which parties agree to submit disputes to a Chinese arbitration institution and apply the UNCITRAL Arbitration Rules. It is also the first time for the Chinese highest judicial authority to render a decision on the validity of this type of arbitration clause. In September, 2012, in the case INVISTA Technologies (the Claimant ) vs. Zhejiang Yisheng Petrochemical Ltd. (the Respondent ) by China International Economic and Trade Arbitration Commission, the Respondent applied to the Ningbo Intermediate People s Court for a ruling to confirm the disputed arbitration clause as invalid on the ground that the UNCITRAL Rules is promulgated for ad hoc arbitration and only agreements on the place of arbitration, rather than the arbitration institution, have been reached in the clause since the clause stipulated that arbitration shall take place at CIETAC. After two hearings by the Ningbo Intermediate People s Court and Zhejiang High People s Court, on the date of March 27 th, 2014, the Ningbo Intermediate People s Court ruled to reject the Respondent s application on the validity of the arbitration clause with the instruction of the Supreme People s Court. In the reply letter to the Ningbo Intermediate People s Court, The Supreme People s Court indicated that the parties used the phrases
3 take place at in the arbitration clause which is normally construed as an agreement on the place of arbitration rather than on the arbitration institution, however, this kind of agreement can be interpreted as one on the arbitration institution for the purpose of realizing both parties willingness for arbitration as the dispute resolution. Therefore, the arbitration clause shall be valid. Before this ruling, different opinions on the validity of such arbitration clauses co-existed between practical and academic area. Notwithstanding the confirmation from the Supreme People s Court, the gap between the UNCITRAL Rules and P.R.C. Arbitration Law or arbitration rules of Chinese arbitration institutions still exists. Many issues are worth discussing in cases where UNCITRAL Rules are applied by Chinese arbitration institutions. Therefore, the practice of the UNCITRAL Rules in China may confront limits and potential risks because of the stipulations of P.R.C. Arbitration Law. It is gratifying to see that the UNCITRAL Regional Center for Asia & the Pacific and SHIAC have consensus on many issues after our thorough discussion on this topic. 2. The Potential Conflicts and Risks for the Practice of the UNCITRAL Rules in China The UNCITRAL Rules is not specifically designed for ad hoc arbitration. Despite the fact that the Rules has been applied in more
4 and more arbitration institutions, the original purpose of it was to draft an arbitration rules for ad hoc arbitration that can be widely accepted by countries with varieties of legal, social and economic system. The Rules has no stipulations on the duty and power of arbitration institutions or arbitration commissions, which is essential in the P.R.C. arbitration law system. With the strict requirement of institutional arbitration by Chinese law, the potential conflicts and risks of practicing the Rules in China shall be worthy of attention. The P.R.C. Arbitration Law and arbitration rules of the Chinese arbitration institutions all embody the so-called arbitration-institution-dominated mode, for example, the commencement of arbitration procedure, the delivery and notice of arbitration documents, the appointment of arbitrators, the constitution of the tribunal, the calculation and payment of arbitration fees, the forward of application of interim measures, the decision of extension on the time limits of rending the arbitral award, the review of the award and the distribution of expenses of arbitrators, all the aforesaid issues shall be governed, administered and communicated by arbitration institutions or the secretariat of the institutions. The P.R.C. Arbitration Law expressly stipulates that the award shall be signed by the arbitrators and sealed by the arbitration commission. On the other hand, the UNCITRAL Rules embodies the so-called
5 tribunal-dominated mode, except the stipulation of the power of appointing arbitrators by Appointing Authority, almost all the procedural and substantial issues shall be governed by the tribunal, for example, the jurisdiction of the tribunal, the charge of arbitration fees, the process and administration of the procedure, the approach of rendering the award and the standard of the award. Therefore, every step of the procedure under the UNCITRAL Rules is either agreed by the parties or the tribunal without the decision or communication by arbitration institutions. We can reach the conclusion that, the arbitration under the P.R.C. Arbitration Law is a type of institutional arbitration in which arbitration institutions shall have multiple duties and power, on the contrary, the arbitration under the UNCITRAL Rules has no arbitration institutions but is tribunal or arbitrators centered. Therefore, when Chinese arbitration institutions apply the UNCITRAL Rules, they need to make appropriate alterations of the Rules to adapt to the factors like the place of arbitration, the applicable law of arbitration procedure, the arbitration rules of the arbitration institutions, the agreement of the parties and Chinese Arbitration Law, since the direct application of the Rules may cause legal conflicts and risks. 3. The Supporting Stipulations in SHIAC Arbitration Rules and
6 the Practice of SHIAC SHIAC has administered numeral cases applying the UNCITRAL Rules. We believe and respect the autonomy of the arbitral parties on the agreements of selecting the arbitration institution, the arbitrators, the place of arbitration, the place of hearing, the working language and other special agreements to the procedure, therefore, Article 3.2 of our arbitration rules stipulates that where the parties have agreed to refer their disputes to SHIAC for arbitration under other arbitration rules, or agreed on any modification of these rules, the parties agreement shall prevail except where such an agreement is inoperative or in conflict with a mandatory provision of the law of the place of arbitration. For the purpose of serving the parties who agree on application of the UNCITRAL Rules, Article 2.6 of our arbitration rules further stipulates that SHIAC shall be the appointing authority and shall perform other relevant administrative functions in accordance with the provisions of the UNCIRTAL Arbitration Rules or the agreement of the parties. Therefore, as long as the parties agreement is not in violation to Chinese Arbitration Law and operable, the agreement shall be respected and operated by SHIAC. In our opinion, the extensive applicability of the UNCITRAL Rules is depending on the will and actual practice of other arbitration institutions to apply the UNCITRAL Rules in specific cases besides
7 their own arbitration rules. SHIAC pay much attention to the characteristic of institutional arbitration when determining the validity of arbitration clause involving the UNCITRAL Rules. Unlike ad hoc arbitration, institutions rather than the tribunal shall perform as the administrator of the procedure under institutional arbitration. Therefore, in certain cases, we not only perform as an appointing authority, but also administer the whole procedure of the arbitration. The administration duty and power of organizing the whole procedure in the cases SHIAC has administered are as follows: a. The delivery of documents. The Article 20 and 21 of the UNCITRAL Rules both stipulate that the Claimant itself shall communicate its statement of claim and the Respondent itself shall communicate its statement of defense in writing to the opposing party and each of the arbitrators. While in applying the UNCITRAL Rules by SHIAC, our Secretariat forwards every document. For the convenience of rapid communication, our Secretariat may also forward electronic documents through the means of publicity in discussion groups of each case. Another function of the document forwarding by the institutions is to keep the delivery records for convenient judicial review of this issue. b. The communication of the notice and decision on procedural
8 issues. Under the UNCITRAL Rules, the presiding arbitrator, tribunal or the secretary employed by the presiding arbitrator shall be responsible for communicating with the parties of procedural decisions and administering the whole procedure. While in applying the UNCITRAL Rules by SHIAC, one or two secretary of our Secretariat is designated to contact the parties and issue time sheet, scope of hearing and other procedural documents without hiring private secretary by the tribunal. c. In the case applying the UNCITRAL Rules by SHIAC, the arbitral award shall be signed by the arbitrators and sealed by SHIAC. From the above, after accepting this type of cases, we will stick to the duty and power of administering the case as an arbitration institution prudently. For purpose of making the application of the UNCITRAL Rules more transparent, standard and effective, SHIAC is planning to draft more detailed and operable guide rules to perform certain administering functions. 4. Conclusion and Suggestions With the prerequisite of prohibiting ad hoc arbitration in mainland China, in our opinion, Chinese arbitration institutions shall confront the conflict between the UNCITRAL Rules which embodies the feature of ad hoc arbitration and P.R.C. Arbitration Law. The institution is required to balance the mandatory provisions in Chinese Arbitration
9 Law and the arbitration agreement by the parties to apply the UNCITRAL Rules. Based on the aforesaid analysis, to make an arbitration case applying the UNCITRAL Rules legally effective in mainland China, the arbitration clause shall explicitly prescribe a Chinese arbitration institution with jurisdiction recognized by the P.R.C. Arbitration Law instead of a vague prescription of some institutions. The agreed arbitration institution shall perform the whole duty and power of administration other than merely as an appointing authority. Regarding to the procedure, the arbitration institution shall take necessary organizing measures and conducting appropriate administering procedures and guarantee the procedures are in comply with P.R.C. Arbitration Law and other P.R.C. procedural laws. China has a rapid growing market of arbitration with tremendous potential. The P.R.C. Arbitration Law is to be amended since its release 20 years ago. The issues of applying the UNCITRAL Rules by Chinese arbitration institutions are gradually deepened in Chinese arbitration industry, lawyer professionals and judicial circle. The topic of this Conference is of great significance. We will bring your insights to China, meanwhile, we propose and invite the UNCITRAL RCAP and you all to China, especially Shanghai to host similar seminar and promote the practice of the UNCITRAL Rules in China.
10 SHIAC is willing to provide all the necessary assistance and arrangements. We look forward to meeting and sharing with you all in Shanghai, China.
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