Member Article

The China International Economic and Trade Arbitration Commission ("CIETAC") also updated its financial arbitration rules, the Arbitration Rules for Financial Disputes of CIETAC. The revised Financial Arbitration Rules replace the 2003 rules (as discussed in the July 2003 Issue of China Legal Update - http://www.deacons.com.hk/eng/knowledge/knowledge_156.htm) and took effect on 1 May 2005. Scope and rules application The revised Financial Arbitration Rules add to the scope of financial transactions that may be arbitrated under them to include disputes over the assignment and sale of securities and futures. The revised Financial Arbitration Rules include similar changes as have been effected in the revised CIETAC Arbitration Rules. Parties are permitted to modify the revised Financial Arbitration Rules unless such modifications cannot be enforced or are in conflict with the law of the place of arbitration. If the parties have agreed to refer their disputes to arbitration under the revised Financial Arbitration Rules without providing the name of an arbitration institution, they are deemed to have agreed to refer the dispute to arbitration by the CIETAC. CIETAC may itself determine the existence and validity of an arbitration agreement and its jurisdiction or CIETAC may, if necessary, delegate this power to the arbitral tribunal. Choice of arbitrators The revised Financial Arbitration Rules affirm the parties’ freedom to appoint arbitrators from the Panel of Arbitrators in Financial Industry of CIETAC, from another panel of arbitrators designated by CIETAC or from outside CIETAC’s panels of arbitrators. However, where a dispute relates to securities and futures transactions, the parties are required to appoint arbitrators from the Panel of Arbitrators in Securities and Futures Industry of CIETAC. The revised Financial Arbitration Rules require an appointed arbitrator to sign a declaration and disclose to CIETAC in writing any facts or circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence.