Deacons
  May 26, 2005 - Hong Kong

China and Hong Kong: CIETAC New Arbitration Rules 2005

The new Arbitration Rules of the International Economic and Trade Arbitration Commission (CIETAC) came into force on 1 May 2005. The following are the major changes: Specialist Arbitration Rules The new Rules provide for the possibility of using rules tailored made for specific industries. Todate, only rules for financial disputes have been published. Specialist panels of arbitrators have also been set up according to the nature of dispute. Currently, there are 7 panels: • international (foreign related) • domestic • financial • construction and property • food • leather • Australian / New Zealand Standard Contracts Choose your own rules The parties can now choose their own rules for the arbitration unless they cannot be enforced or are in conflict with the law of the place of arbitration. Determination of jurisdiction CIETAC has the power to determine the question of the arbitral tribunal’s jurisdiction according to evidence submitted to it. The new Rules provide that CIETAC may review the determination when conflicting evidence is revealed during the substantive hearing before the arbitral tribunal. If it thinks necessary, CIETAC may authorise the arbitral tribunal to determine the question of jurisdiction. Procedural time limits The time limits for the ordinary and summary procedures are amended as follows: Appointment of the parties’ arbitrator Ordinary Procedures: 15 days from the date of receipt of the arbitration notice from CIETAC Summary Procedures: 15 days Filing of Defence and Counterclaim (if any) Ordinary Procedures: 45 days from the date of receipt of the arbitration notice from CIETAC Summary Procedures: 20 days Filing of Defence to Counterclaim Ordinary Procedures: 30 days after receipt of Counterclaim Summary Procedures: 20 days Notice of the 1st hearing Ordinary Procedures: 30 days before the date of the 1st hearing Summary Procedures: 15 days Award Ordinary Procedures: 6 months from the formation of the arbitration tribunal Summary Procedures: 3 months Choice of arbitrators The parties are free to agree to appoint arbitrators not on CIETAC’s panels of arbitrators but the appointment needs to be confirmed by the Secretariat of CIETAC. Vacancy of arbitrator The new Rules provide that if one arbitrator dies or is removed after the final hearing, the remaining 2 arbitrators may apply to CIETAC for replacement of that arbitrator. If both parties and the Chairman of CIETAC agree, the remaining 2 arbitrators can proceed with the arbitration. Place of arbitration The place of arbitration may be different from the place of the hearing. The new Rules recognise this distinction. The parties can choose both the place of arbitration and the place of hearing. The award is deemed to be made in the place of arbitration chosen by the parties. Dissenting opinion Any dissenting minority opinion will be annexed to the award in an effort to increase the transparency of the award making process. Recovery of Costs There is no longer any cap on the costs which the winning party can recover from the losing party. The arbitral tribunal has the power to award reasonable costs incurred by the winning party. In doing so, the tribunal may take into account various factors such as the outcome of the award, the complexity of the case and the amount in dispute. Please note that the above is only a brief update. It is not a comprehensive list of changes implemented by the new Rules.