With effect from 1 January 2024, the China International Economic Trade and Arbitration Commission (CIETAC) has adopted a revised set of arbitral rules (2024 Rules) to replace its 2015 arbitration rules (2015 Rules). The institution has revised more than 30 provisions, and some of the key changes are analysed below.
Taken together, the revision adopts international best practice, anticipates possible changes to the arbitration law of the People's Republic of China (PRC) (effective from 1995, Arbitration Law), embraces digitalisation, and introduces some new procedural features. It represents a significant leap forward and strengthens CIETAC’s position as one of the leading arbitral institutions in Asia.
Key amendments to CIETAC’s arbitral rules
The revised 2024 Rules include the following key amendments:
- Decision on jurisdiction (Article 6): The 2015 Rules provided that the power to determine jurisdiction rested with the arbitration institution (i.e. CIETAC) and would only be delegated to the arbitral tribunal “where necessary”. The rule was made in light of the Arbitration Law, under which challenge to the validity of an arbitration agreement shall be decided by the arbitration institution or the PRC courts. The 2024 Rules provide that, while the power to determine jurisdiction still rests with CIETAC under the Arbitration Law, the power is automatically delegated by CIETAC to the arbitral tribunal once it is constituted. The change reflects CIETAC’s effort to narrow the gap between its arbitration rules with the internationally recognised principle of kompetenz-kompetenz within the bounds of the current PRC laws. China is revising its Arbitration Law, with a draft on the table since 2021 (Draft Revised Arbitration Law). One of the key proposed amendments is to introduce the principle of kompetenz-kompetenz, empowering the arbitral tribunal to determine the existence and validity of an arbitration agreement and its own jurisdiction. It is yet to be seen whether the revised law will come into force.
- Multi-contract arbitrations (Articles 14 and 19): The 2024 Rules also expand the scope of disputes where a single arbitration may be brought under multiple contracts and where multiple arbitrations may be consolidated to include the scenario where the underlying contracts involve “related subject matters” (Article 14(1)). Conversely, in the previous version of CIETAC’s arbitration rules, such contracts had to either consist of (i) a principal contract and its ancillary contract(s), or (ii) involve the same parties as well as legal relationships of the same nature. Further, the 2024 Rules also allow the Claimant to add contracts to an arbitration after the commencement of the arbitral proceedings. This is an important development as allowing disputes involving related contracts to be resolved in a single arbitration helps to increase the efficiency of arbitration. Similar efforts are seen with other leading arbitral institutions in the region, such as the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC).
- Conservatory and interim measures (Article 23): The 2024 Rules allow CIETAC to forward a party’s application for conservatory measures to foreign courts, in addition to PRC courts. This provides an additional option for the parties to seek conservatory measures beyond Mainland China. Moreover, Article 23 allows CIETAC to forward an application for conservatory measures to the courts before the notice of arbitration is served, which will facilitate pre-arbitration measures. The 2024 Rules also maintain provisions which allow tribunals to order interim measures. Despite the status and enforceability of such measures remaining unclear under PRC laws, the 2024 Rules preserve the possibility for tribunals to render these interim measures enforceable in other jurisdictions. The Draft Revised Arbitration Law explicitly empowers arbitral tribunals to order interim measures, which will alter the status of these measures within Mainland China, if it comes into force.
- Increased digitalisation: The 2024 Rules contain several provisions encouraging the use of digitalised arbitrations. These include, in particular: (i) an express provision enabling online video hearings (Article 37(5)), (ii) a stipulation that electronic signatures of the tribunal have the same effect as handwritten signatures (Article 52(7)), and (iii) a provision that awards may be delivered electronically if agreed by the parties or deemed necessary by CIETAC (Article 52(10)). These new features, largely developed during the Covid-19 period, have high practical relevance and would be helpful tools to enhance the efficiency of arbitral proceedings.
- Third-party funding (Article 48): The 2024 Rules include provisions on third-party funding (TPF), requiring the funded party to disclose, without delay, the existence of the TPF arrangement, the financial interest involved, and the identity of the third-party funder. The tribunal may order the funded party to disclose further information where necessary. While the issue of TPF is not explicitly regulated under PRC law, recent court decisions suggest that it may be permissible in the context of arbitrations. CIETAC issued the Guidelines for Third Party Funding for Arbitration in 2017 and incorporated the relevant rules into the CIETAC International Investment Arbitration Rules. The inclusion of provisions related to TPF in the 2024 Rules marks another positive development in fostering transparency and providing more guidance to tribunals on how to deal with TPF. The disclosure requirement for TPF is also in line with the HKIAC rules and the draft SIAC rules.
- Early dismissal (Article 50): Early dismissal is similar to the concept of “summary judgment” or “striking out” in common law litigations. The arbitration rules of several international institutions have adopted the mechanism, such as the HKIAC and SIAC rules. Similar concepts, however, do not exist in PRC law, and the mechanism is unfamiliar to most Chinese arbitration practitioners. For the first time, CIETAC adopts such a mechanism in its 2024 Rules, which allows applications for early dismissal of claims or counterclaims on the ground that “the claim or counterclaim is manifestly without legal merit” or “manifestly outside the jurisdiction of the arbitral tribunal”. The wording used to describe the standard suggests it is a high bar to satisfy. It is yet to be seen how this innovation in the PRC context will play out, and this is another example of efforts by CIETAC to make a breakthrough on its rules in order to align them more closely with international practice.
In addition to the key amendments above, some other new features of the 2024 Rules are also noteworthy. For example:
- CIETAC Guidelines on Evidence (Article 41(4)): CIETAC issued its Guidelines on Evidence (the Guidelines) in 2015, taking into account the rules of evidence in PRC litigations and the IBA’s Rules on the Taking of Evidence. Before the 2024 Rules, the Guidelines would only apply if the parties agreed that they would. Under the 2024 Rules, the tribunal has the power to decide whether to apply the Guidelines, either partially or entirely, unless the parties agree otherwise. The 2024 Rules make it clear, however, that the Guidelines do not constitute an integral part of these rules, and thus, a violation of the Guidelines would not form a basis for setting aside or non-enforcement of the awards.
- Non-compliance with escalation clauses (Article 12): The 2024 Rules expressly provide that failure of the parties to follow an escalation clause (i.e., a clause providing for negotiation and/or mediation before arbitration is commenced) would not prevent a party from commencing an arbitration, unless the applicable law or the arbitration clause provides otherwise. This amendment has taken into account the recent developments in judicial practice.
- Exclude new counsel from joining the arbitration (Article 22): Where a party changes or adds new counsel after the tribunal is formed, giving rise to conflict of interests for an arbitrator, CIETAC may take actions to prevent the conflict from occurring, including the exclusion of new counsel from joining the arbitration.
- Nomination of arbitrators (Articles 26 and 27): The 2024 Rules allow more routes for appointing the presiding arbitrator. Among others, if the appointment of arbitrators procedure agreed by the parties is “manifestly unfair or unjust”, or if a party abuses its rights in a way that results in undue delay of the arbitral proceedings, CIETAC may weigh in and determine the procedure for appointing any arbitrators.
- Language of arbitration (Article 84): Chinese is still the default language in the absence of agreement between the parties, unless CIETAC determines another language is more appropriate. The 2024 Rules allow the tribunal to disagree with CIETAC’s decision and designate another language as the language of arbitration.
- Ad hoc arbitration (Article 85): The 2024 Rules allow CIETAC to provide a wide range of services in support of ad hoc arbitration, envisaging the potential relaxation of ad hoc arbitration in the PRC under the Draft Revised Arbitration Law.
Conclusion and outlook
In sum, CIETAC has adopted many recent innovations in the field of international arbitration, especially the inclusion of an early dismissal mechanism, the expansion of the multi-contract arbitration provisions, and the regulation of TPF. It has also developed new features on its own, including the Guidelines on Evidence and increased digitalisation. The changes, taken together, enhance the efficiency, flexibility and transparency of the arbitral proceedings, and reinforce CIETAC’s position as one of the major players among the Asian arbitral institutions.
