Update

Chinese Chess or Xiangqi has been played for thousands of years. The game shares common ancestry with the more familiar International Chess, but it also has differences that make it unique. Likewise, resolving disputes by arbitration in China is similar to that conducted at any major international arbitration centre - except that there are some features unique to China.

CIETAC (China’s main international arbitration body) has revised its arbitration rules several times in an effort to strengthen China's arbitration governance. It recognises that a strong dispute resolution regime boosts confidence in foreign investors in the Mainland. The recent round of amendments to the CIETAC rules, effective 1 May 2005, seeks to do just that. This is the first set of amendments since 2000, and is a significant step for CIETAC.

Highlights of the changes in the rules:

• Previous CIETAC rules required parties to appoint arbitrators from the CIETAC's panel of arbitrators only, unlike major international centres which allow freedom in appointing arbitrators. The new rules now permit parties to choose a non-CIETAC arbitrator, provided both parties agree. However, CIETAC still needs to confirm the arbitrator nominated by the parties.
• The new rules also modify the procedure for appointing the presiding arbitrator, where there is a panel of three arbitrators. The choice of the presiding arbitrator is an important one, given that the presiding arbitrator chairs the tribunal and has the tie-breaker vote in the event of a stalemate.

The new rules allow each party to provide a list of candidates for the presiding arbitrator position. If no agreement is reached, CIETAC will choose the presiding arbitrator from outside the lists provided by the parties.

• The new rules expressly spell out that the arbitrator does not represent any party, shall be independent of all parties, and shall treat all parties equally. While this is a given for many international arbitrators, the CIETAC provision does put to rest any doubt a party-appointed arbitrator may have concerning their role.
• CIETAC has also tightened the rules for disclosure of any conflicts of interest, and requires an arbitrator to sign a declaration disclosing any fact or circumstance that "may" cause reasonable suspicion about his or her independence and fairness.
• The new rules shorten the timeframe for various steps in an arbitration proceeding. They also require a tribunal to make its determination within six months of its constitution instead of the previous nine months.
• An important new provision expressly allows a tribunal to convene preliminary hearings and issue procedural directions. This is helpful in clarifying procedures and facilitating an efficient hearing.
• The previous rules restricted a winning party's compensation for costs to 10% of the total award. This restriction is now removed, and the tribunal has wider discretion to award costs to the winning party.
• Another significant change is that a dissenting arbitrator is now required to attach their opinion to the award. This acts as a check on the majority arbitrators and prevents factual and legal assertions without proper basis.
• In the new rules, CIETAC retains the right to determine the jurisdiction of the arbitral tribunal, eg on the existence and validity of an arbitration agreement. On the other hand, the commission may also authorise the tribunal to determine its own jurisdiction. The latter is more in line with international practice. However, should a party apply to a court for such a determination, it is the Chinese People's Court, rather than the arbitral tribunal, which decides issues on the jurisdiction of the tribunal.

Peter Chow
Registered Foreign Lawyer
T +852 3443 1016
peter.chow@mallesons.com

Footnote
* This is an extract from an article that first appeared in the Asian Legal Business, June 2005. Peter Chow was also recently interviewed by South China Morning Post, a leading English language daily in Hong Kong about the latest changes to the Chinese arbitration rules. - Editor