The China International Economic and Trade Arbitration Commission (the “CIETAC”) is the main permanent arbitration institution in Mainland China, but also one of the oldest and busiest arbitration institutions in the world. The CIETAC was established in April 1956. Originally named the Foreign Trade Arbitration Commission of the China Council for the Promotion of International Trade (“CCPIT”), the CIETAC was subsequently renamed as the Foreign Economic and Trade Arbitration Commission of the CCPIT, becoming known as the “CIETAC” as of 1988.
The CIETAC Arbitration Rules currently in force entered into effect on 1 January 2015. The CIETAC Arbitration Rules are available in Chinese, English and several other languages. In addition, the CIETAC has a specific set of arbitration rules for the resolution of Financial Disputes (the so-called CIETAC Financial Disputes Arbitration Rules), also in effect as of 1 January 2015.
The caseload at the CIETAC has been on a steady rise over the past years, including in 2020 (2020 Work Report and 2021 Work Plan). According to the CIETAC, in 2020 alone, there were 3,615 new cases, which represents a growth of 8.5% in comparison to 2019 (3,333 new cases). The CIETAC also saw an increase in the number of foreign-related cases (739 new cases in 2020) and larger amounts in dispute (the total amount in dispute in 2020 reached RMB 112.13 billion, approximately USD 17.4 billion). Interestingly, there were also 67 cases with only non-Chinese parties. As with other major international arbitration centers, the CIETAC has also quite easily adapted to the new situation caused by the COVID-19 pandemic, by establishing new virtual hearing centers, online filings and handling 819 virtual hearings in 2020 alone.
Organizational Structure of the CIETAC
The CIETAC has one Chairman, several Vice-Chairmen and a number of other members. The CIETAC’s primary headquarters are in Beijing. In addition, the CIETAC has established several decentralized “sub-commissions” in Shenzhen, Shanghai, Tianjin, Chongqing, Hangzhou, Wuhan, Fuzhou, Nanjing, Chengdu, Xi’an and Jinan as well as offshore arbitration centers in Hong Kong, Vancouver (Canada) and Vienna (Austria). The CIETAC and its sub-commissions/arbitration centers constitute a single arbitration institution, under the direction of the Vice Chairman and President of the Arbitration Court.
Particularly prominent is the CIETAC Hong Kong sub-commission, established in 2012, as Hong Kong-related cases rank second in the number of total cases administrated by the CIETAC. In 2018, the CIETAC also opened its first North American arbitration centre in Vancouver, Canada.
- The Expert Consultation Committee, which serves as an advisory body responsible for research on matters of arbitration procedures and substantive legal issues, providing advisory opinions on the revision of the arbitration rules and training of the CIETAC’s arbitrators;
- The Case Edition Committee, which compiles and edits the CIETAC’s arbitral awards of concluded cases and publishes the CIETAC yearbooks and statistics;
- The Arbitrator Qualification Review Committee, which examines and reviews the qualifications and performance of the CIETAC’s arbitrators, and makes suggestions regarding the renewal of the assignment of each arbitrator as per the relevant provisions of the arbitration law and the CIETAC Arbitration Rules.
The CIETAC Arbitration Rules: Key 2015 Amendments
The CIETAC Arbitration Rules were amended in 2015, with the aim to improve the efficiency of CIETAC arbitral proceedings and to bring the CIETAC Rules further into line with international best practice. The key changes introduced by the 2015 CIETAC Arbitration Rules include:
- New provisions regarding the appointment of emergency arbitrators (Article 23 and Appendix III)
- Mechanism for joinder of additional parties (Article 18) and consolidation of arbitrations (Article 14);
- An increased threshold for applying the summary procedure (Article 56.1); and
- Introduction of special provisions to cover arbitrations administered by the CIETAC Hong Kong Arbitration Center, including Hong Kong as the default seat and Hong Kong law as the applicable law of the arbitral proceedings (Articles 73-80). Interestingly, in contrast to CIETAC tribunals in Mainland China–seated arbitrations, CIETAC Hong Kong arbitral tribunals have power to order interim relief (Article 77).
The CIETAC Arbitration Model Clause
Parties that wish to include for CIETAC arbitration in their arbitration clause may simply chose one of the two model clauses recommended on the CIETAC’s website:
Model Arbitration Clause (1)
Any dispute arising from or in connection with this Contract shall be submitted to China International Economic and Trade Arbitration Commission (CIETAC) for arbitration which shall be conducted in accordance with the CIETAC’s arbitration rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.
Model Arbitration Clause (2)
Any dispute arising from or in connection with this Contract shall be submitted to China International Economic and Trade Arbitration Commission (CIETAC)___________Sub-Commission (Arbitration Center) for arbitration which shall be conducted in accordance with the CIETAC’s arbitration rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.
The CIETAC also provides for a standard Model Arbitration Clause for the resolution of Financial Disputes, which Parties may readily use:
Any dispute arising from or in connection with this Contract or this transaction shall be submitted for arbitration to China International Economic and Trade Arbitration Commission and such arbitration shall be conducted in accordance with the Financial Arbitration Rules of the Arbitration Commission.
CIETAC Arbitration Costs and Fees
Arbitration fees are determined by reference to the Arbitration Fee Schedule published by the CIETAC. Arbitration fees depend on the amount in dispute, except for cases administered by the CIETAC Hong Kong Arbitration Center where arbitration fees may be charged on an hourly basis, and may be estimated using the CIETAC’s Fee Calculator. Unless otherwise agreed by the parties, or so determined by the CIETAC under exceptional circumstances, an arbitrator’s hourly rate cannot exceed the maximum rate fixed by the CIETAC, published on the CIETAC Hong Kong Arbitration Center’s website on the date of the submission of the Request for Arbitration (the CIETAC Arbitration Rules, Appendix III).
In addition to the Arbitration Fees, the Parties also have to pay a standard Registration Fee and Handling Fee, which covers the expenses for examining the Request for Arbitration, initiating the arbitration proceedings, case management and the archiving of documents (the CIETAC Arbitration Fee Schedule, Appendix II to the CIETAC Arbitration Rules 2015).
Can Foreign Lawyers Represent Parties in CIETAC Arbitrations?
Like most other international arbitration rules, the CIETAC Arbitration Rules do not place restrictions on who may act as the parties’ representatives in arbitration proceedings. In fact, Article 22 of the CIETAC Arbitration Rules explicitly allows this by providing that “[a] party may be represented by its authorized Chinese and/or foreign representative(s) in handling matters relating to the arbitration”. Certain Chinese legislation, however, does impose restrictions on foreign lawyers practicing law in China or expressing opinions on matters involving Chinese law, even though this issue is unclear and a subject of debate. In particular, the Chinese Regulations on the Administration of Resident Representative Offices in China of Foreign Law Firms, applicable to the establishment of representative offices in China by foreign law firms and the legal service activities they conduct, provide in Article 15 that a representative office and its representatives may only conduct activities “other than matters relating to the laws of China”. However, while the Regulations on Foreign Law Firms and the Implementation Provisions provide that foreign law firms’ representative offices in China and their representatives shall not provide opinions on the application of Chinese laws, these provisions do not appear to prohibit such representatives from acting as party representatives in arbitrations in China even if the arbitration proceedings are governed by Chinese law. In fact, in practice, it is not uncommon in arbitration cases in China involving at least one foreign party to be represented by foreign lawyers (see Foreign Attorneys as Party Representatives in Arbitrations Seated in PR China, Kluwer Arbitration Blog, October 2020). One may hope that additional clarity will be provided on this issue over the coming years, as the arbitration laws of the leading arbitral jurisdictions explicitly place no restrictions on who may serve as a party representative in an international arbitration.