Any dispute arising from or in connection with this Contract shall be submitted to Shanghai International Arbitration Center for arbitration.

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2 Any dispute arising from or in connection with this Contract shall be submitted to Shanghai International Economic and Trade Arbitration Commission for arbitration. Any dispute arising from or in connection with this Contract shall be submitted to Shanghai International Arbitration Center for arbitration. Any dispute arising from or in connection with this Contract shall be submitted to Shanghai International Economic and Trade Arbitration Commission / Shanghai International Arbitration Center for arbitration. The arbitration shall be held in The China (Shanghai) Pilot Free Trade Zone Court of Arbitration. Address: 7-8/F, Jinling Mansion, 28 Jin Ling Road(w), Shanghai , P.R. China Tel: Fax: info@shiac.org Website: Address: Suite , Wai Gao Qiao Mansion, 6 Ji Long Road, Shanghai , P.R.China Tel: Fax: infoftz@shiac.org

3 Notice This article is only for reference, and does not constitute to the official interpretation of China (Shanghai) Pilot Free Trade Zone Arbitration Rules by Shanghai International Economic and Trade Arbitration Commission (Shanghai International Arbitration Center).

4 Table of Contents I. General Instructions Guiding Concepts 1 Structure 2 Innovations 3 Significance 5 II. Improvement on Rules Openness Keywords 6 Status quo 6 Innovations 8 III. Improvement on Interim Measures in Arbitration Keywords 11 Status quo 11 Innovations 13 IV. Founding of the Emergency Tribunal System Keywords 18 Status quo 18 Innovations 20 V. Opening up the Panel of Arbitrators Keywords 21 Status quo 22 Innovations 23 VI. Consolidation of Arbitrations Keywords 25 Status quo 26 Innovations 28

5 VII. Third Party in Arbitration Proceedings Keywords 30 Status quo 31 Innovations 33 VIII. Improvement on Rules of Evidence in Arbitration Keywords 35 Status quo 35 Innovations 37 IX. Improvement on Combination of Arbitration with Mediation Keywords 40 Status quo 41 Innovations 42 X. Implanting Award ex aequo et bono Keywords 44 Status quo 45 Innovations 46 XI. Procedures for Small Claims Keywords 48 Status quo 49 Innovations 50

6 Interpretation of China (Shanghai) Pilot Free Trade Zone Arbitration Rules I. General Instructions The China (Shanghai) Pilot Free Trade Zone Arbitration Rules (hereinafter the FTZ Arbitration Rules or the Rules ) is formulated by the Shanghai International Economic and Trade Arbitration Commission (also Shanghai International Arbitration Center, formerly the China International Economic and Trade Arbitration Commission Shanghai Commission/Sub- Commission, the SHIAC ) for the purpose of resolving, impartially, professionally and effectively, contractual disputes and other disputes over rights and interests in property in connection with the China (Shanghai) Pilot Free Trade Zone in accordance with the P.R.C. Arbitration Law and relevant provisions of other applicable laws.the FTZ Arbitration Rules have been adopted at the Fourth Meeting of the Second Session of the SHIAC, and have been officially released on April 8, The Rules come into force on May 1, Guiding Concepts SHIAC, in making of the FTZ Arbitration Rules, persisted in the framework of China's arbitration law system, combined with the characteristics of the FTZ legal environment construction, made full reference to advanced ideas and mature experience of international arbitration institutions, and followed the impartial, convenient, efficient ideas of proceedings. The Rules showed the maximum respect for the principle of party s autonomy, and carried out innovations and perfections of the arbitration procedures while emphasizing the equality and operability of proceedings. The combination of arbitration with mediation has been set in order to meet the diversified needs of commercial subjects in ways of resolving disputes. SHIAC has tried to make 1

7 the FTZ Arbitration Rules keep in line with the international commercial arbitration development and trend, while fully consider the situation and development of Chinese arbitration. Efforts have been made to promote the Rules to be institutional achievements of the FTZ dispute resolution and legal protection, and to promote the revision of the P.R.C. Arbitration Law. Also, the Rules will improve the internationalization of commercial arbitration. Structure The FTZ Arbitration Rules which consist of 10 chapters, 85 Articles, have taken a leading position both in the number of articles and the detailed contents among other arbitration rules. Compared with arbitration rules of other major domestic arbitration institutions, Sections have been cancelled in the FTZ Arbitration Rules in order to keep the context as compact and clear as possible. The layout of the FTZ Arbitration Rules has taken the progress of arbitration proceedings as the main line. Four important parts including Request for Arbitration and Counterclaim, Tribunal, Hearings, The Award, which usually belong to Arbitral Proceedings, are arranged separately as Chapters. To emphasis on Interim Measures and Combination of Arbitration with Mediation, there are also two independent chapters on such issues. The provisions regarding Summary Procedures and Procedures for Small Claims are collected and put in two independent chapters in order to distinguish from general procedures. Besides, General Provisions is set at the very beginning and Supplementary Provisions is set at the end of the Rules. Reasonable layout and rigorous structure of the FTZ Arbitration Rules will provide convenient guidelines for the parties in application of these Rules and fully reflect the user-friendly principle. 2

8 Innovations The FTZ Arbitration Rules has implanted and improved a series of advanced systems of international commercial arbitration. For example, Interim Measures has been improved and Emergency Tribunal has been adopted. Restriction of in Panel appointment of arbitrators has been removed. Articles such as Consolidation of Arbitrations and Joinder of Other Parties under Same Arbitration Agreement have been refined. Combination of Arbitration with Mediation has been further improved through the foundation of Mediation by Mediator before the constitution of tribunal. Articles such as Evidence in arbitration have been further strengthened. Award ex aequo et bono has been implanted and the Procedures for Small Claims has been added into the Rules, which will reduce the corresponding arbitration fees. The completion of Interim Measures tightly connected to the P.R.C. Civil Procedure Law (2012) in which the preservation of assets, evidences and behaviors are provided. Therefore, Interim Measures in the Rules will benefit protection of parties rights, especially the rights of IPR holders. The Rules are quite flexible and open in scope of application. The Rules not only apply in disputes relating to the Free Trade Zone, but also in other sorts of disputes based on the mutual agreement of parties. As a supporting system of Interim Measures, Emergency Tribunal makes the FTZ Arbitration Rules become more widely adaptable, which is conducive to SHIAC for providing arbitration service in countries where the tribunal has the power to render a decision on Interim Measures and makes itself more appealing to parties. A more open way of arbitrator appointment not only reflects the guidance of the panel of arbitrators, but also proves that no excessive restriction would be imposed so that the parties diversified need of arbitrator appointment 3

9 could be satisfied. Under the circumstance that parties appoint or recommend arbitrators out of the panel, a specific mechanism is founded in the Rules to ensure qualifications of potential arbitrators in accordance with the P.R.C. Arbitration Law. The perfection of Consolidation of Arbitrations, and the founding of Joinder of Other Parties under Same Arbitration Agreement as well as Joinder of Third Parties, all improve the efficiency of solving correlative cases; it also unifies the awards and help to resolve disputes in package. Therefore, the goal of the settlement and reducing disputes can be realized in this way. Under the institutional design of "Combination of Arbitration with Mediation", it is added that mediation can be launched before constitution of tribunal. Therefore parties need for pre-tribunal mediation could be met while influence of mediation process would less affect arbitrator s substantive work, which is an institutional innovation in the Combination of Arbitration and Mediation, and is capable to offer more comprehensive service in dispute resolution to the parties. Procedures for Small Claims consolidate the efficiency of arbitration and realize fast solutions of disputes; and parties burden on costs has been relieved from saving the arbitration costs. All these help to reach the pursuit of efficiency, flexibility and low cost in arbitration. The implementation of Award ex aequoet bono both enriches arbitration practice in China and integrates with the international practice. The above-mentioned contents have made reference to the latest achievements of the United Nations Commission on International Trade Law and main international arbitration institutions, including UNCITRAL Arbitration Rules (2010), Arbitration Rules of the Arbitration Institute of Stockholm Chamber of Commerce (2012) (the SCC Arbitration Rules ), International Chamber of Commerce Rules of Arbitration (2012) (the ICC Arbitration 4

10 Rules ), Arbitration Rules of the Singapore International Arbitration Centre (2013) (the SIAC Arbitration Rules ), Administrated Arbitration Rules of the Hong Kong International Arbitration Center (2013) (the HKIAC Arbitration Rules ) and other relevant arbitration rules. The remainder of this article is going to focus on ten sections and explain each section in the order of Keywords, Status quo and Innovations. Significance To support the comprehensive constructions in the Free Trade Zone, institutional innovations will take place in many aspects. Efforts have been concentrated on the promotion of trade and investment facilitation, convenient and efficient supervision and legal environment administration. Commercial arbitration is an important part of the legal environment for the development of Free Trade Zone. SHIAC s formulating and promulgation of the FTZ Arbitration Rules is a full implementation of General Secretary Xi Jin-ping s instruction of "to explore and experiment with bold initiative and to create independently". SHIAC, with the Rules is promoting institutional innovation achievements of commercial arbitration in the Free Trade Zone, which is of great practical significance. In the process of formulating the Rules, SHIAC has fully respected the principle of parties autonomy. More discretion on procedures and decisions will be given to the tribunal, while at the same time, parties autonomy and procedural options are highly respected. Keeping in line with advanced international arbitration rules and practices, these Rules are deemed to be one of the most internationalized arbitration rules worldwide that have the highest degree of openness and flexibility. It will provide parties with impartial, professional, convenient, efficient arbitration legal services. The enactment of the FTZ Arbitration Rules is an important institutional achievement in the innovation of dispute-settlement mechanism and the development of legal protection. Also, it is a significant action to build the 5

11 rule-of-law and international business-friendly environment in the Free Trade Zone, even in Shanghai. All of these achievements will promote the revise of the P.R.C. Arbitration Law and arbitrations in China. II. Improvement on Rules Openness Keywords The scope of application articles in an arbitration rule refers to articles that stipulate the specific time, place and conditions for applying specific arbitration rules, which are almost the essential articles in all arbitration rules. Open rules mean that the arbitration rules do not exclusively stipulate the scope of application, and allow the parties to alter some contents in these rules or choose to apply other rules. However, considering factors such as different enacting bodies and the convenience of proceeding administration, different arbitration rules contain distinct stipulations on whether to allow the parties to reselect arbitration rules, and whether to conditionally allow the parties to amend the arbitration rules of the institution. In China, it is commonly deemed that once a specific arbitration institution is selected, the arbitration rules of the institution would apply. Conversely, once a specific arbitration rules is chosen to apply, the arbitration shall be administered by the corresponding arbitration institution. Status quo Two things ought to be abided by the tribunal during the arbitration proceedings are: first, articles about arbitration proceedings under the arbitration procedural law; second, the applying arbitration rules chosen by the parties. Usually, domestic legislations will only stipulate due procedures at the lowest level, including equal treatment of the parties, providing opportunities to all parties for them to present and argue the cases and 6

12 providing relevant notices to the parties and so on. All other procedural requirements are stipulated in the arbitration rules. The most typical example is the UNCITRAL Model Law on International Commercial Arbitration, which stipulates that subject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the tribunal in conducting the proceedings. Theoretically, the parties are free to agree on the procedure to be followed by the tribunal. However, in real practice, the parties would only choose an arbitration institution or agree on specific arbitration rules. Therefore, open rules is in fact a matter of balance between parties autonomy and the convenience of proceeding administration by the arbitration institution. To make a survey of the well-known arbitration rules in the world, there are generally several models of open rules: Model 1: the arbitration rule unconditionally allows the parties to amend the rule, or select other arbitration rules. Article 1 of the UNCITRAL Arbitration Rules points out that: Where parties have agreed that disputes between them in respect of a defined legal relationship, whether contractual or not, shall be referred to arbitration under the UNCITRAL Arbitration Rules, then such disputes shall be settled in accordance with these Rules subject to such modification as the parties may agree. The HKIAC Arbitration Rules stipulates that: These Rules shall govern arbitrations where an agreement to arbitrate (whether entered into before or after a dispute has arisen) either: (a) provides for these Rules to apply; or (b) subject to Articles 1.2, 1.3 and 1.4 below, provides for arbitration administered by the HKIAC or words to the same effect. Nothing in these Rules shall prevent parties to a dispute or arbitration agreement from naming the HKIAC as appointing authority, or from requesting certain administrative services from the HKIAC, without subjecting the arbitration to the provisions contained in these Rules. And the SCC Arbitration Rules stipulates that: Under any arbitration agreement referring to the Arbitration Rules of the Arbitration 7

13 Institute of the Stockholm Chamber of Commerce (the Arbitration Rules ) the parties shall be deemed to have agreed that the following rules, or such amended rules, in force on the date of the commencement of the arbitration, or the filing of an application for the appointment of an Emergency Arbitrator, shall be applied unless otherwise agreed by the parties. Model 2: the arbitration rule applies prior to the parties agreement; and the parties may agree on the matters that the arbitration rules do not cover. The Arbitration Rules of International Chamber of Commerce (hereinafter the ICC Rules of Arbitration ) stipulates that: The proceedings before the arbitral tribunal shall be governed by the Rules and, where the Rules are silent, by any rules which the parties or, failing them, the arbitral tribunal may settle on... And the Arbitration Rules of the German Institution of Arbitration stipulates that: Statutory provisions of arbitral procedure in force at the place of arbitration from which the parties may not derogate, the Arbitration Rules set forth herein, and, if any, additional rules agreed upon by the parties shall apply to the arbitral proceedings. Model 3: except for some limitations, the arbitration rule allows amendments of the parties and parties agreement applies prior to the arbitration rule. A few arbitration rules of the Chinese arbitration institutions followed this model. Innovations Article 3 of the FTZ Arbitration Rules stipulates the scope of application and the method of application. For the scope of application, the FTZ Arbitration Rules mainly applies to cases relate the China (Shanghai) Pilot Free Trade Zone. The criterion for FTZ cases is equal to the judging standards of foreign cases in the previous legislative and judicial practice in China. In other words, it is considered as an FTZ case if the subject of legal relations, the object or 8

14 content is related to the Free Trade Zone. The original text in Article 3.1 of the FTZ Arbitration Rules reads: These Rules shall apply where parties have agreed to refer their disputes to SHIAC and the parties or the subject matter to a dispute or the legal facts that lead to the establishment, change or termination of civil and commercial relationship are connected with the China (Shanghai) Pilot Free Trade Zone. But there is one thing special to be noted that the FTZ Arbitration Rules does not only apply to the FTZ cases. As long as the parties intend to apply the FTZ Arbitration Rules, the Rules may apply regardless of the nature of cases. This is also the openness of the FTZ Arbitration Rules, and is also the main method to apply the FTZ Arbitration Rules in the arbitration out of the Free Trade Zone. Through parties agreement, the advanced the FTZ Arbitration Rules system is able to reach a spillover effect, which makes the rules replicable and scalable. For the method of application, the FTZ Arbitration Rules either applies by parties agreement or applies automatically. Firstly, the parties may agree to apply the FTZ Arbitration Rules, which includes the following specific situations: 1. The parties agreed on the arbitration institution and the arbitration rule. The FTZ Arbitration Rules shall apply where parties have agreed to refer their disputes to SHIAC for arbitration and have agreed to apply these Rules for arbitration, which best respects the parties autonomy. 2. The parties only agreed on the arbitration institution. The FTZ Arbitration Rules shall apply where parties have agreed to refer their disputes to SHIAC and the arbitration is to be conducted at the China (Shanghai) Pilot Free Trade Zone Court of Arbitration, or have agreed to refer their disputes to the China (Shanghai) Pilot Free Trade Zone Court of Arbitration or have designated an institution that can reasonably be inferred to be the China 9

15 (Shanghai) Pilot Free Trade Zone Court of Arbitration. The FTZ Arbitration Rules are presumed to apply based on parties agreement on the Free Trade Zone arbitration institution. 3. The parties only agreed on the arbitration rules. Where parties agree to refer their disputes to arbitration under the Rules without designating an arbitration institution, they shall be deemed to have agreed to refer their disputes to SHIAC for arbitration. This method operates in concert with the P.R.C. Arbitration Law and its judicial interpretation. Secondly, the FTZ Arbitration Rules may apply automatically. The automatic application of the FTZ Arbitration Rules shall satisfy three conditions at the same times, which are: the parties agreed to refer their disputes to SHIAC; the dispute relates to the FTZ; and the parties did not exclude the application of the FTZ Arbitration Rules. The first two conditions are positive conditions while the last one is a passive condition. It can be seen that among the two application methods of the Rules, parties agreement is the one prevails. What s more, there is another special situation that should be pointed out. Where parties recognized the internationalized ideas and advanced institutional arrangement of the FTZ Arbitration Rules and have agreed to apply the Rules, would the Rules apply if the arbitration are conducted by other arbitration institutions? This is depending on whether the parties' choice to apply other rules instead of the rules of the chosen institution is allowed. The FTZ Arbitration Rules does not forbid this. From the perspective of parties autonomy, the parties are definitely free to agree on the arbitration rules and institution respectively. However, practically speaking, we still recommend that the parties refer the disputes to SHIAC or the China (Shanghai) Pilot Free Trade Zone Court of Arbitration and choose to apply the FTZ Arbitration Rules. 10

16 III. Improvement on Interim Measures in Arbitration Keywords Interim Measures refers to the preservation measures adopted to prevent parties from abusing their advantage position, transferring or destroying evidence or property, which may lead to an unreasonable award; Or the measures adopted under the circumstance that it is hard to enforce even after the award is rendered. The main characteristics of Interim Measures are: firstly, Interim Measures are sought before the settlement of disputes. In another word, Interim Measures shall be sought before the final award is rendered, which include pre-arbitration or in-arbitration Interim Measures. Secondly, Interim Measures are temporary only. Thirdly, the request of Interim Measures is always urgent. If such measures were not sought, it is likely to cause damage to the party. Status quo International arbitration rules and international laws all have stipulations regarding Interim Measures in arbitration. Article 17 of the UNCITRAL Model Law on International Commercial Arbitration contains comprehensive stipulations, including the tribunal s discretion to render decision on Interim Measures, the types of Interim Measures, the conditions under which Interim Measures are sought, the application for preliminary orders and the conditions of issuing preliminary orders, the specific system of preliminary orders, the amendment, suspension and/or termination of Interim Measures, the guarantees relating to Interim Measures, the parties disclosure obligation, the expense and compensation for damage arising from Interim Measures, the recognition and enforcement of Interim Measures, the Interim Measures issued by court and other issues. Article 26 of the UNCITRAL Arbitration Rules also contains similar regulations. In arbitration rules of world s 11

17 major arbitration institutions, for instance, Article 28 of the ICC Rules of Arbitration (2012) has also stipulated that: 1) Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the arbitral tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate. The arbitral tribunal may make the granting of any such measure subject to appropriate security being furnished by the requesting party. Any such measure shall take the form of an order, giving reasons, or of an award, as the arbitral tribunal considers appropriate. 2) Before the file is transmitted to the arbitral tribunal, and in appropriate circumstances even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures. The application of a party to a judicial authority for such measures or for the implementation of any such measures ordered by an arbitral tribunal shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the arbitral tribunal. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat. The Secretariat shall inform the arbitral tribunal thereof. The P.R.C. Arbitration Law stipulates that: "whereas due to the acts of the other party or other reasons, the arbitration award cannot be or is hard to be executed, the parties concerned may apply for putting the property under custody. Whereas a claimant has applied for custody to the property, the arbitration commission shall, according to the relevant provisions of the Civil Procedure Law, submit the application of the claimant to the people's court. Whereas there are errors in the application, the claimant shall compensate to the respondent for the losses arising from the custody to the property." Whereas evidences are vulnerable to be destroyed or missing and would be heard to be recovered, the parties concerned may apply to put the evidences on custody: When a party applies for custody of evidences, the arbitration commission shall submit the evidences of the party concerned 12

18 to the people's court at the place where the evidences are obtained. Besides, Whereas the parties involved in a foreign arbitration case apply for the custody of evidences, the foreign arbitration commission shall submit the application to the intermediate people's court at places where the evidences are produced. It is worth noting that the P.R.C. Civil Procedure Law (2012) also stipulates the behavior preservation measures beyond the provisions of the property preservation and evidence preservation before arbitration. Innovations Seven articles in Chapter III of the FTZ Arbitration Rules provide Interim Measures. In terms of the content, it is relatively comprehensive and detailed, which is in line with common international practices. First of all, the subject to make orders on Interim Measures is not only the court but also the tribunal. From the development trend of International Commercial Arbitration, we can see clearly that the UNCITRAL Model Law on International Commercial Arbitration, the UNCITRAL Arbitration Rules and arbitration rules of the most famous international commercial arbitration institutions all apply stipulations in which the tribunal may render the decision on Interim Measures at its discretion. However, the P.R.C. Civil Procedure Law stipulates the power to enforce Interim Measures only belongs to the People's Court, which is not good for the internationalization of arbitration in China. Therefore, common international practices have been implanted into the FTZ Arbitration Rules which stipulate that decisionmaking organs of interim measures include the tribunal and emergency tribunal, but the precondition is that the tribunal s discretion on Interim Measures has already been approved by relevant laws and regulations of the states or regions where interim measures are going to be enforced. Secondly, the scope of Interim Measures in arbitration proceedings has been clearly confirmed by Article 18 of the Rules, including preservation 13

19 of properties, preservation of evidence, requesting and/or prohibiting a party to perform and other measures provided by the applicable laws. On one hand, preservation measures on a party s acts provided by the P.R.C. Civil Procedure Law (2012) have been adopted. On the other hand, it is in line with international practice and especially helpful to the protection of parties rights over intellectual property in such cases. In addition, the Rules have comprehensively stipulated Pre-arbitration Interim Measures, Interim Measures after the constitution of the tribunal and Interim Measures during the period between the acceptance of a case and the constitution of tribunal (Emergency Tribunal). Thirdly, the function of arbitration institutions has been clarified. The function of arbitration institutions in the proceedings of Interim Measures is receiving and transferring the application rather than rendering a decision. The only decision-making authority for Interim Measures in China is the people s court while tribunal, emergency tribunal and court are generally entitled to render the decision in other countries arbitration rules. The stipulation in these Rules has met the internationally accepted standards of arbitration rules. Fourthly, Interim Measures must be in accordance with laws of the execution place in order to prevent the risk of the conflict of laws. In another word, laws of the execution place shall prevail when it conflicts with the Rules. This ensures the FTZ Arbitration Rules would not go against the provisions stipulated in the P.R.C. Civil Procedure Law. In specific, if the execution place of Interim Measures is in China, as the P.R.C. Civil Procedure Law does not allow the tribunal to render decisions on Interim Measures, the corresponding stipulation under the FTZ Arbitration Rules shall not apply. Fifthly, the FTZ Arbitration Rules has stipulations regarding the revision or modification on Interim Measures, which provides the other party with 14

20 rights to challenge and obtain legal relief under Interim Measures. According to the FTZ Arbitration Rules, in terms of Interim Measures, the parties involved may carry out steps as follows: 1. Prior to arbitration, the parties involved may, according to provisions of relevant laws of the country/region where the interim measures are to be executed, directly file an application for interim measures to the court having jurisdiction or request the arbitration committee to assist them to file such application for interim measures to the court having jurisdiction. 2. After acceptance of the arbitration case and before constitution of the arbitration tribunal, the parties involved may, according to provisions of relevant laws in the country/region where interim measures are to be executed, submit written application respecting constitution of emergency tribunal to SHIAC. The Chairman of SHIAC may, within 3 days, appoint one arbitrator in the Panel of Arbitrators to constitute the emergency tribunal and handle the application of interim measures. Constitution of such emergency tribunal shall be notified to the parties involved by the Secretariat and such emergency tribunal shall be entitled to render a decision on interim measures application of the parties involved. 3. In the arbitration proceedings taken place after the acceptance of the case by SHIAC, the parties involved may apply for interim measures to SHIAC who shall, according to provisions of the rule and relevant laws in the country/region where the interim measures are sought, refer such application to the competent court for ruling, or submit such application to the tribunal for decision, or submit such application to the emergency tribunal for decision. Though the power to deciding interim measures have been completely granted to tribunals in more and more countries or regions, according to provisions of the P.R.C. Arbitration Law and its judicial interpretation and 15

21 the P.R.C. Civil Procedure Law, China still adopts the single track mode under which decisions are made by the court. If the parties involved file application for interim measures of preservation to the arbitration institution, the arbitration institution shall submit such application to the people s court with jurisdiction which shall decide whether or not interim measures should be granted and what kinds of interim measures are to be taken. In the process of the FTZ Arbitration Rules enactment, two different modes of obtaining interim measures have been tactfully, compatibly and creatively implanted without violating provisions of the laws being in force in China. In practice, if the interim measures are executed in Mainland China, according to provisions of the P.R.C. Arbitration Law, its judicial interpretation, the Civil Procedure Law and other laws, the emergency tribunal or the tribunal shall make written decision and submit the application to the competent people s court for final ruling. On the contrary, if the interim measures are executed overseas, such as in Hong Kong, the emergency tribunal or the tribunal may, according to provisions of Arbitration Rules of Hong Kong, directly render the written decision to accept or reject the application for interim measures without resorting to a court for ruling. As laws of many oversea countries and regions acknowledge that tribunal has the right to render decisions on interim measures independently, provisions in article 22 of the FTZ Arbitration Rules actually constitute an expansion of the limited power of arbitration tribunals under Chinese laws. Such provisions, as an ingenious design and an innovation, are helpful for SHIAC to exploit the arbitration service in countries and regions where the tribunal has the right to render decisions on interim measures and are more attractive to the parties involved. 4. In the event that the parties against whom the interim measures are sought have any objections on decision of the interim measures, they shall, within 3 days upon receipt of such decision, raise the objections to SHIAC in written and then such objections shall be submitted by the Secretariat to the 16

22 emergency tribunal or the tribunal who rendered such decision of interim measures for ruling. If the emergency tribunal who rendered such decision of interim measures has been dissolved, a decision shall be rendered by the tribunal constituted thereafter. It is actually not uncommon to grant the parties against whom the interim measures are sought the reasonable right of defense in arbitration rules of all advanced arbitration institutions in the world, e.g. Arbitration Rules of Hong Kong International Arbitration Centre, Schedule 4 Emergency Arbitrator Procedures, Article 11 prescribes that, the emergency arbitrator shall ensure that each party has a reasonable opportunity to be heard on the Application, the emergency arbitrator may conduct such proceedings in such a manner as the emergency arbitrator considers appropriate. The emergency arbitrator shall have the power to rule on objections that the emergency arbitrator has no jurisdiction. Establishment of the rules of Amendment to Decision on Interim Measures definitely conforms to the international trend, better balances rights and obligations of the parties involved and prevents abuse of rights by either party. 5. Interim measures to be taken by the parties involved include evidence preservation, property preservation, act preservation and other interim measures permitted by laws. Including behavior preservation into the scope of interim measures is in correspondence with provisions of Article 100 in the P.R.C. Civil Procedure Law(amendment) implemented as of January 1, 2013 and it has removed the system obstacles in application of act preservation in relevant arbitration cases. Such change is significant to the parties involved in cases such as intellectual property disputes etc. 6. The parties involved should abide by the decisions on interim measures made by the emergency tribunal and/or the tribunal. 17

23 IV. Founding of the Emergency Tribunal System Keywords Emergency Tribunal System, also known as Emergency Arbitrator system, offers procedures for parties to seek urgent interim relief in case of emergency. The emergency tribunal shall be constituted upon the written application which can be submitted along with the request for arbitration or during the period between the acceptance of a case and the constitution of a tribunal. This is merely for the sake of the parties expedited interim relief which shall not impact the arbitration of the substantial issues or any other procedural rights pertaining to the parties. As provided in the arbitration rules of the world s major arbitration institutions, the tribunals usually have the power to issue, upon the parties application, an order of interim preservation measures concerning property attachment or evidence preservation, providing interim relief for the applicant, which is pretty common in current international arbitration practices. However, in international arbitration proceedings, it can take a long time or even months to constitute a tribunal where the parties are unable to get pre-arbitral interim relief they need from the normal arbitration proceedings. Some institutions have thus introduced provisions in their arbitration rules that provide for some form of emergency relief, either through the appointment of an emergency arbitrator or through the expedited constitution of the emergency tribunal before a tribunal constituted. Status quo The American Arbitration Association was the first that has introduced the Emergency Arbitrator system. In Section 37 of its International Arbitration Rules of the American Arbitration Association (AAA) (2009), there are 9 rules defining the preservation measures in emergency. Nevertheless, a relatively more comprehensive system of Emergency Arbitral Tribunal 18

24 was established in the Arbitration Rules of the Arbitration Institute of Stockholm (AIS) (2010), which has stipulated specifically in APPENDIX II EMERGENCY ARBITRATOR, the appointment of Emergency Arbitrator, application, notice, emergency decisions on interim measures, binding effect of emergency decisions and costs of the emergency proceedings as well. Under its influence, many international arbitration institutions have introduced specific provisions of the Emergency Tribunal, among which the ICC Rules of Arbitration (2012), Arbitration Rules of the Singapore International Arbitration Centre (SIAC) (2013) and Japan Commercial Arbitration Association (JCAA) Arbitration Rules (2014) have all designated a separate appendix of emergency tribunal. For instance, the form and legal force of an emergency arbitrator s order have been provided in general in Article 29 of the ICC Rules of Arbitration and the applicable proceedings are specified in APPENDIX V EMERGENCY ARBITRATOR RULES regarding the application for emergency measures, appointment of the Emergency Arbitrator, transmission of the file, challenge of an Emergency Arbitrator, place of the Emergency Arbitrator proceedings, proceedings, order, costs of the Emergency Arbitrator proceedings, and general rules. Whilst, Arbitration Rules of the Singapore International Arbitration Centre has also set forth in the Appendix I provisions of the Emergency Arbitrator proceedings. Articles of the Japan Commercial Arbitration Association Arbitration Rules provide that before the tribunal is constituted, or when any arbitrator has ceased to perform his or her duties, a party may apply in writing to the JCAA for interim measures by an emergency arbitrator. If the JCAA has received no request for Arbitration before or at the time of receiving the application for emergency measures, the applicant shall submit the request for arbitration within ten days from the date of the application. The emergency arbitrator shall render a decision on the emergency measures within two weeks from his or her appointment. The parties shall be bound by, and forwardly carry out, the emergency measures 19

25 ordered by the emergency arbitrator. The emergency measures shall remain in effect until the tribunal modify, suspend or terminate such emergency measures. So far, this practice has not yet been introduced into either the applicable legislations or arbitration rules of the other arbitration institutions in China. Innovations The procedure of Emergency Tribunal is one of the latest developments of the international commercial arbitration practices in recent years and an important part of the arbitral interim measures. Article 21 of the FTZ Arbitration Rules has incorporated provisions of the Emergency Tribunal which is in line with the development of the international arbitrations and represents an innovation of arbitration rules. In particular, the FTZ Arbitration Rules has established the system of Emergency Tribunal in the following five aspects: Firstly, any party may apply for an emergency tribunal by submitting a written application with reasons. Secondly, SHIAC shall decide whether to constitute an emergency tribunal and the Chairman of SHIAC may appoint an arbitrator to constitute the emergency tribunal. Thirdly, the arbitrator appointed to constitute the emergency tribunal shall perform his/her disclosure obligation and comply with the provisions of challenging. Fourthly, the Emergency Tribunal shares the same terms of reference with the tribunal and shall dissolve on the date when the tribunal is constituted and shall hand over all the materials to the tribunal. Unless otherwise agreed to by the parties, the arbitrator appointed for the Emergency Tribunal shall not act as an arbitrator in dealing with disputes relating to the interim 20

26 measure(s). Fifthly, the procedures of the Emergency Tribunal shall not affect the continuation of the arbitration proceedings. As aforementioned, emergency arbitration system is essentially a kind of special provisions in interim measures of arbitration and it mainly provides remedies to the parties involved in the period between acceptance of the arbitration case and constitution of the tribunal. In practices, such system is usually provided as supplementary provision and is generally a separate system. At present, in China, however, according to provisions of the P.R.C. Civil Procedure Law, only the court has the right to render decision on interim measures in arbitration, therefore, there s still a long way to go for application of Emergency Tribunal System in China. However, if the arbitration is instituted in the countries where the arbitration tribunal is permitted to render interim decisions, setting up Emergency Tribunal System in the arbitration rules will be a necessary guarantee to rights of the parties involved, as under such arbitration rules, the parties involved can fully protect their rights and interests. V. Opening up the Panel of Arbitrators Keywords Panel of Arbitrator refers to a closed-end list of arbitrators with their names and respective specialties and backgrounds for parties, arbitration institutions or designated agencies to appoint arbitrators. This approach of arbitrator appointment has two major advantages: firstly, the list of Panel of Arbitrators can provide references to parties who may feel lost in selection of arbitrators because of little knowledge about the professionals of law or other areas. The Panel of Arbitrators has availed parties of an Experts Database where parties may find necessary supplementary 21

27 information. This should be the very original intention of the approach of Panel of Arbitrators. Secondly, it offers a control over the qualification of the arbitrators. Various countries may have different provisions governing the arbitrators eligibility and the Panel of Arbitrators plays a role of prior selection, which may help to avoid recommendations on ineligible or incompetent persons. Nonetheless, overemphasis on the normative function of the Panel of Arbitrators may lead to the inappropriate constraints on the parties autonomy. On the one hand, the Panel of Arbitrators may not cover all the professionals or specialists necessary for the various arbitration cases and parties may be frustrated in the international arbitrations where multinational arbitrators are needed; on the other hand, some parties are fully capable to select eligible arbitrators without the guidance of the Panel of Arbitrators, in which case, it may have violated and limited the parties will of extensiveness and diversification by forcing them to choose from the closed-end list of arbitrators. Status quo The specified stipulations of the panel of arbitrators are seldom found in the legislations of the other countries; therefore, the application and implementation of this rule is pending on the stipulations of various arbitration institutions. At present, there are two main approaches adopted by the world s major arbitration institutions concerning the panel of arbitrators: the ICC Court of Arbitration and London Court of International Arbitration represent one of the two approaches, who have no panel of arbitrators but may prepare a recommendation list upon requests by parties in certain cases; arbitration institutions including AAA, SIAC and HKIAC are applying the other way, who do make a panel for appointing arbitrators by parties or designated agencies while the appointment of or agreement on any arbitrator from outside of the panel are not prohibited. The latter approach is also known as 22

28 the open panel that provides references and assistance to parties in picking up appropriate arbitrators without imposing unnecessary constraints on the parties rights of selection. For practices in China, Article 13 of the P.R.C. Arbitration Law requests a Panel of Arbitrators to be maintained by the arbitration committees. Accordingly, all the arbitration institutions have established their Panel of Arbitrators and stipulated that parties are only allowed to appoint arbitrators from the Panel of Arbitrators. The parties discretion of arbitrator appointment is therefore limited and the institutions influence on tribunal and arbitration proceedings are inappropriately aggravated. However, it is not a mandatory provision in the P.R.C. Arbitration Law in since it does not expressly stipulate that arbitrators should only be selected from the panel of arbitrators. Innovations Article 27 of the FTZ Arbitration Rules has improved the existing approach of the Panel of Arbitrators and has made an exploratory step to open up the Panel of Arbitrators in force, providing that: First, parties may or mainly appoint arbitrators from the SHIAC s Panel of Arbitrators. Second, parties may recommend person(s) from outside the Panel of Arbitrators as the presiding/sole arbitrator. As for the arbitrators other than the presiding arbitrator, parties may select any person from outside the Panel of Arbitrators as previously agreed upon or in case there is no previous agreement, either select individually from the arbitrators selection procedure or recommend jointly any person from outside the Panel of Arbitrators. As such, parties rights of selection shall be recognized by the arbitration rules rather than previous agreements. The approach of the open panel has become clearer, which means the arbitral 23

29 practices in China have kept up with the practices of the world s major arbitration institutions. Meanwhile, the person recommended by parties who is from outside the Panel of Arbitration needs to be approved and appointed by the Chairman of SHIAC according to the applicable laws and regulations. SHIAC has set a necessary procedure verifying the eligibility and qualification of the candidate arbitrator, protecting the parties autonomy while ensuring the basic mandatory requirements on arbitrators are satisfied as well. If the recommendation is rejected by the Chairman of SHIAC, the party who has recommended such person shall appoint an arbitrator from Panel of Arbitrators or otherwise entrust the Chairman of SHIAC to appoint an arbitrator, within five (5) days upon its receipt of the decision of rejection. The Chairman of SHIAC shall appoint an arbitrator on behalf of the party who failed to appoint one. When it comes to the presiding/sole arbitrator, the parties may jointly recommend a person from outside the Panel of Arbitration upon previous agreement to act as the presiding/sole arbitrator and shall submit the information regarding this person to the Secretariat within fifteen (15) days upon the receipt of the Notice of Acceptance/Notice of Arbitration. These candidates shall also be accepted by the Chairman of SHIAC. Similarly, if the recommendation is rejected by the Chairman of SHIAC, the party who has recommended such person shall appoint an arbitrator from Panel of Arbitrators jointly or otherwise reach an agreement on jointly recommending a person from outside the Panel of Arbitrators as the presiding/sole arbitrator within five (5) days upon its receipt of the decision of rejection. The Chairman of SHIAC shall appoint an arbitrator on behalf of the party who failed to appoint one. For a long time, using a closed-end panel in appointing arbitrators is a common practice among arbitration institutions of China. Even though this may play an important role in strictly checking on the criteria of arbitrator selection, controlling the qualification and quality of arbitrators and keeping 24

30 the quality of arbitration cases, the disadvantage of placing unreasonable restriction on parties autonomy is obvious. Such mandatory requirements that parties shall make their choice in the Panel of Arbitrators are very likely to violate and over restrict parties more extensive and diverse desire in appointing arbitrators. Hence, rules of some arbitration institutions in China have loosed the restrictions to some extent. The FTZ Arbitration Rules has made a further breakthrough in the closed-end panel approach and realized the transition to the open panel, which make the Panel of Arbitrators return back to providing advice and reference standard for parties. This approach not only conforms to international arbitration legislations and practices, but also is more easily recognized and accepted by parties. What is more important, this approach respects parties desire to appoint the arbitrator and to constitute the tribunal on their own willingness to a greater extent. Meanwhile, the stipulation to Chairman s confirmation of procedures in accordance with laws can sufficiently guarantee the arbitrators have the corresponding legal qualification. Therefore, the FTZ Arbitration Rules is an important improvement of the original system of in-panel in China. VI. Consolidation of Arbitrations Keywords Consolidation of arbitrations is the procedural consolidation of two or more arbitration cases, which means that when there are two or more related arbitration proceedings, the particularly designed consolidation system helps to call all parties together and process all those disputes in one time to achieve the goal of dispute resolution in package. In this way, consolidation of arbitration is usually joined with the arrangement when there are multiple parties in the arbitration. Consolidation of arbitrations can be divided into two main types: one is voluntary consolidation; the other is involuntary consolidation, which 25