16/01/24

CHINA: New CIETAC arbitration rules aim to improve ‘effectiveness and efficiency’

As published on: pinsentmasons.com, Tuesday 16 January, 2024.

A new version of the China International Economic and Trade Arbitration Commission (CIETAC) arbitration rules came into force on 1 January 2024.

The update reflects best practice, taking account of recent changes implemented in other rules and developments in other jurisdictions to bring the services offered by CIETAC bang up to date.

The changes incorporate new developments in the international arbitration sphere in the nine years since the last rules, and also add clarity and certainty to existing provisions.

Early dismissal
Under article 50 of the CIETAC rules, a party may now request the early dismissal of a claim or counterclaim, in whole or in part, where that claim is manifestly without legal merit or outside the jurisdiction of the tribunal.

Parties are required to submit justifiable grounds for early dismissal requests, with the tribunal holding discretion over whether to accept the request. Decisions must be made within 60 days of requests.

Joinder and consolidation
The rules have been amended to facilitate the efficient resolution of multiple disputes arising from two or more contracts. A further basis for commencement – “related subject matters” – has been added. This means that issues arising between the same parties with the same legal relationship, or disputes arising out of the same transaction, can be resolved as part of the same proceedings.

A specific reference to an ability to consolidate arbitrations after their commencement has also been added.

Jurisdiction
Jurisdiction rules have been expanded by the 2024 update. Article 5 now provides that after its constitution, the tribunal has the power to determine its own jurisdiction.

Conservatory measures
Article 23 of the rules retains a provision to explicitly provide arbitration tribunals’ powers to grant conservatory measures. The update expands the role of domestic courts to which CIETAC can forward an application for conservatory measures to now include courts outside of mainland China. The new conservatory measure rules also allow the party bringing the claim to request CIETAC to send an application for conservatory measures to the competent court in advance of the service of the notice of arbitration.

Third party funding
For the first time, reference is made to third party funding.

Article 48 of the rules requires any funding party to disclose to the CIETAC Arbitration Court the existence of any third-party funding arrangement without delay. The required disclosure includes the nature of the third party’s financial interest, the name and address of the founder, and any other relevant information.

Interim Awards
Article 49 clarifies CIETAC’s position on interim awards, with the confirmation that prior to the final award the tribunal may issue an interim award either following request from a party or on its own volition.

Technological advancement
Digital tools are also embraced by the recent update recognizing the increasing impact digitalisation has on dispute resolution.

Service of arbitration documents including the award are specifically permitted by electronic means (articles 8, 21 and 52). Under article 37, parties can also now participate in remote hearings via video conference if the tribunal deems this appropriate.

CIETAC has made significant effort to accommodate the needs of parties and provide arbitrators and tribunals with further means to effectively and efficiently resolve disputes in a world of increasingly complex, multi-party and cross border disputes and CIETAC clearly has an eye on disputes that may be generated by the Belt and Road Initiative projects.

We will observe with interest how the additional elements of the rules will be implemented in practice and how this will align with the further ongoing development of the legal framework surrounding arbitration in China.

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China Arbitration CIETAC