Chinese arbitration goes global

Foreign parties have long viewed ­arbitration before the China International Economic and Trade Arbitration Commission (Cietac) with trepidation. One of the main reasons for this was the fact that Cietac’s rules - one of the defining characteristics of an arbitration service provider - were seen by foreign investors as being too ’China-centric’ for requiring arbitrations to take place in China and ­parties to seek assistance of Chinese courts, and for proceedings to be ­conducted in Chinese.

International acceptance of Cietac has increased markedly in recent years, as non-PRC parties have begun to appreciate the professionalism and skill with which Cietac conducts arbitral ­proceedings. That trend will likely be ­accelerated by Cietac’s ­recent adoption of a new body of rules, which will serve to increase party ­autonomy and liberalise ­certain procedural, venue and language requirements.

The changes appear to have been prompted at least in part by Cietac’s desire to improve its competitive standing among arbitration providers. According to Cietac deputy director and secretary ­general Yu Jianlong, the changes ­respond to increased competition among arbitration service providers and are designed “to better satisfy users in this new economic ­environment”.

Four of the recent rule changes stand out as being emblematic of ­Cietac’s desire to evolve from being a local arbitration provider to a fully fledged international dispute resolution institution. First, the new rules permit Cietac to designate a seat in “another location having regard to the circumstances of the case”.

Second, they will permit a tribunal seated outside China to directly order interim measures - important, pre-arbitral orders that may be necessary to freeze assets or preserve evidence - without judicial intervention.

Third, Cietac now has latitude to designate languages other than ­Chinese as the language of the ­proceedings.

Fourth, the new rules permit the ­appointment of arbitrators who are not on Cietac’s roster of arbitrators.

Each of these changes is likely to improve the perception of Cietac as an international dispute resolution centre. In particular, the amendments granting Cietac the authority to select a venue outside China and designate languages other than ­Chinese, if exercised, will open Cietac proceedings to a larger segment of the dispute resolution community, creating new opportunities for non-Mandarin-speaking arbitrators, counsel and parties to participate in Cietac proceedings.

Further, the amendment allowing Cietac tribunals to impose interim measures will give them powers ­commensurate with their counterparts at other international arbitral institutions and make Cietac ­proceedings run more efficiently, and less expensively, by eliminating the need to seek judicial assist-
ance even before an arbitration ­commences.

In all, Cietac’s adoption of these new rules reflects its awareness that arbitration is a competitive industry, and that a provider’s rules are an ­important factor critical to attracting potential disputants. The new rules should succeed in broadening ­Cietac’s acceptance and appeal among international parties.