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Why CIETAC Hong Kong?
Why Arbitration Compared with other methods of dispute resolution, arbitration has the following advantages: Party Autonomy In arbitration, the parties are free to appoint arbitrators of their own choice, to select the place and language of arbitration and to determine the applicable laws. The parties may also design the arbitration proceedings to meet their special needs by agreeing on patterns of hearings, evidence submissions, and argument presentations. If the parties fail to reach such an agreement, those are largely left to the discretion of the arbitral tribunal of the case. As a result, arbitration is much more flexible than the often rigid procedures and timetables of national courts. Final and Binding Although parties to commercial contracts have a number of options to resolve their disputes, only litigation and arbitration can provide a binding but enforceable decision. Unlike the judgments made in litigation of first instance, arbitral awards become final and binding on the parties as soon as rendered. Even though arbitral awards might either be set aside by courts in the country where the arbitral awards are made, or be refused of recognition and enforcement by courts in the country where enforcement is sought, the grounds of challenge against the arbitral awards are very limited and in international arbitrations, could only be procedural matters often. Confidentiality Arbitration proceedings are not open to the public. Thus, business secrets and the reputation of the parties can be effectively protected. International Recognition and Enforcement of Arbitral Awards Pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The “New York Convention“ of 1958), which has been acceded to by 156 countries so far, arbitral awards may be recognized and enforced in these contracting states. There are several other international arbitration conventions and treaties that may also help the enforcement. China acceded to the New York Convention in 1987 and its entry into the Convention is subject to commercial and reciprocity reservations. Why CIETAC Arbitration Broad Jurisdiction and Internationalized Procedures CIETAC has administered more than ten thousand arbitral cases since its establishment in 1956. CIETAC accepts foreign-related and international cases, as well as domestic ones. Its scope of accepting cases is not limited by the nature of the parties’ business or their nationalities. CIETAC takes the lead among international arbitration institutions in its capacity of administering about one thousand cases per year in recent decades. In terms of its Arbitration Rules and arbitrators, CIETAC is in accordance with global approach. CIETAC Arbitration Rules experienced 7 times of amendment since its first edition came into effect in 1956. The latest effective edition came into force on 1 January 2015 and its content is in line with most leading international arbitral institutions and allows parties’ autonomy to the largest extent that PRC Arbitration Law so agrees. CIETAC Panel of Arbitrators comprise of more than 1000 arbitrators who are experts in arbitration or other professions. There are over 300 foreign arbitrators from over 40 countries in the Panel for parties’ reference. Independence and Impartiality CIETAC is independent of the administrative organs, and free from any administrative interference in handling cases. All parties have equal opportunities to present their cases during the arbitral proceedings. Arbitrators in CIETAC, including co-arbitrators, are impartial and independent from parties. In the arbitral proceedings, parties will be given reasonable and equal opportunities to present their cases. In the past decades, CIETAC have received comprehensive acknowledgement from parties for its fairness, impartiality and awards’ quality. Efficiency Parties can agree on the patterns of conducts in the CIETAC administered arbitration proceedings. In practice, evidence and statements presented by parties are often exchanged in written forms. It generally takes between one and three days to conduct an oral hearing and most CIETAC arbitrations can be concluded within six months after the formation of the arbitral tribunal.
Cost-effectiveness As an international arbitration institution, CIETAC’s arbitration fees for international and foreign-related cases are relatively low. Its arbitration fees for domestic cases are at the same level as those of other arbitration institutions in China. Because of its finality and efficiency, arbitration is also more economical than litigation. Combination of Arbitration with Conciliation A distinctive feature of CIETAC arbitration is the combination of arbitration with conciliation. Such combination brings out the best out of both arbitration and conciliation. It not only encourages dispute resolution but also helps to maintain friendship and cooperation between the parties.
Conciliation can take place in the arbitral proceeding. With the consent of both parties, the arbitral tribunal may conciliate the case in a manner it considers appropriate. During the process of conciliation, the arbitral tribunal shall terminate the conciliation proceedings if either party so requests or if the arbitral tribunal believes that further conciliation efforts shall be futile.
Where the parties wish to conciliate their dispute but do not wish to have conciliation conducted by the arbitral tribunal, CIETAC may, with the consent of both parties, assist the parties to conciliate the dispute in a manner and procedure it considers appropriate.
Where the parties have reached a settlement agreement by themselves through negotiation or conciliation before the commencement of an arbitration proceeding, either party may, based on an arbitration agreement concluded between them that provides for arbitration by CIETAC and the settlement agreement, request CIETAC to constitute an arbitral tribunal to render an arbitral award in accordance with the terms of the settlement agreement. Unless otherwise agreed by the parties, the Chairman of CIETAC shall appoint a sole arbitrator to form such an arbitral tribunal, which shall examine the case in a procedure it considers appropriate and render an award in due course. CIETAC will also reasonably reduce the amount of fees it would otherwise collect under normal circumstance.
Professional Arbitral Administrative Services CIETAC Arbitration Court embodies 90 professional case managers to administer arbitration cases. After CIETAC accepts a case, its Arbitration Court shall designate a case manager to assist with the procedural administration of the case. Most of CIETAC employees hold Master of Law or Doctor of Law degrees and can speak Chinese, English, French, or Russian, etc. at professional level. They engage themselves in providing high quality services for arbitrators and parties. Why CIETAC Hong Kong Arbitration Arbitration in Hong Kong CIETAC Hong Kong Arbitration Center (“CIETAC HK”) is CIETAC’s first sub-commission outside Mainland China. It is committed to promote arbitration services in Hong Kong and cooperate with other arbitral institutions. It provides arbitral consultation and information for the public and administers arbitration cases upon parties’ arbitration agreement. CIETAC HK is engaged in providing high quality arbitral services to the parties and facilitating arbitration development in Hong Kong.
Hong Kong related cases ranked the 2nd in number among CIETAC administered cases nowadays. Many parties of foreign related contracts choose Hong Kong as the seat of arbitration. CIETAC HK’s establishment, with the support of Hong Kong legal system and the geological convenience Hong Kong brings, will be beneficial for Hong Kong’s position as a diversified legal services provider and an international arbitration venue.
Hong Kong has been accredited as the no.1 free economy in the world for almost 20 consecutive years. It also ranked the first in the Financial Development Report 2011 by World Economic Forum. Hong Kong reaches half of the world’s population within 5 hours of flight; its new Arbitration Ordinance (Cap 609) adopted UNCITRAL Model Law on International Commercial Arbitration and therefore consolidates Hong Kong’s lead as a pro-arbitration jurisdiction in Asia.
Courts in Hong Kong uphold the independence and finality of the arbitral system; and awards made in Hong Kong can be enforced in more than 140 countries and places under New York Convention due to PRC’s membership. Enforcement of those awards in mainland is delicately handled by Arrangements of the Supreme People’s Court on the Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region.
Hong Kong attracts world-renowned experts (especially in the fields of international trade, construction, financial areas) to reside. There are more than one thousand registered foreign lawyers in Hong Kong and a large community of arbitrators as well as experts.
Those are all viewed as reasons why Hong Kong is such a preferable seat of arbitration for cross-border disputes. For parties in Mainland especially, the neutrality Hong Kong seated arbitration provides makes Hong Kong an ideal place of arbitration when Mainland companies negotiate over the dispute resolution clause with foreign parties.
CIETAC HK locates in Admiralty next to the government of Hong Kong SAR. Thus Hong Kong Arbitration Ordinance and CIETAC Arbitration Rules both apply to cases administered by CIETAC HK. Therefore, CIETAC HK administered cases boast distinctive features in comparison with those under other Mainland domestic arbitration institutions. Key features of CIETAC Arbitration Rules 1. Options for conduct of arbitration With protection of parties’ arbitral rights in mind, CIETAC keeps on working to design mechanisms that save parties in dispute time and money. The arbitral tribunal shall hold oral hearings when examining the case. However, the arbitral tribunal may examine the case on the basis of documents only if the parties so agree. The arbitral tribunal may adopt an inquisitorial or adversarial approach in hearing the case having regard to the circumstances of the case, and if it considers it necessary, it can issue procedural orders or question lists, produce terms of reference, or hold pre-hearing conferences, etc. unless agreed otherwise by parties.
2. Summary Procedure Unless otherwise agreed by the parties, Summary Procedure shall apply to any case where the amount in dispute does not exceed RMB 5,000,000; or to any case where the amount in dispute exceeds RMB 5,000,000, yet one party applies for arbitration under the Summary Procedure and the other party agrees in writing. And there are several distinctive features under Summary Procedure:
Unless otherwise agreed by the parties, a sole-arbitrator tribunal shall be formed in accordance with Article 26 of these Rules to hear a case under Summary Procedure.
The Respondent shall submit its Statement of Defense, evidence and other supporting documents within 20 days of receipt of the Notice of Arbitration; counterclaim, if any, shall also be filed with evidence and supporting documents within the time period. The Claimant shall file its Statement of Defense to the Respondent’s counterclaim within 20 days of receipt of the counterclaim and its attachments. Under standard procedure (for foreign related cases) however, the time limits for the two are 45 days.
The arbitral tribunal may make a decision on whether oral hearing is necessary and it shall render an arbitral award within 3 months from the date on which the arbitral tribunal is formed. The corresponding time period for standard procedure is 6 months.
3. Conciliation a. Conduct of Conciliation. Where both parties wish to conciliate, or where one party wishes to conciliate and the other party’s consent has been obtained by the arbitral tribunal, the arbitral tribunal may conciliate the case during the course of the arbitration proceedings.
If the parties wish to conciliate their dispute but do not wish to have conciliation conducted by the arbitral tribunal, CIETAC may, with the consent of both parties, assist the parties to conciliate the dispute in a manner and procedure it considers appropriate. The parties may also settle the case by themselves.
b. Awards. If a settlement agreement is reached through conciliation by the arbitral tribunal or by the parties themselves, the parties may withdraw their claim or counterclaim. The parties may also request the arbitral tribunal to render an arbitral award or a conciliation statement in accordance with the terms of the settlement agreement.
Where the parties have reached a settlement agreement by themselves through negotiation or conciliation before the commencement of an arbitration proceeding, either party may, based on an arbitration agreement concluded between them that provides for arbitration by CIETAC and the settlement agreement, request CIETAC to constitute an arbitral tribunal to render an arbitral award in accordance with the terms of the settlement agreement. c. Without Prejudice Privilege. Where conciliation fails, any opinion, view or statement, and any proposal or proposition expressing acceptance or opposition by either party or by the arbitral tribunal in the process of conciliation, shall not be invoked by either party as grounds for any claim, defense or counterclaim in the subsequent arbitration proceedings, judicial proceedings, or any other proceedings.
4. Case Management and Case Consulting After CIETAC HK accepts a case, its Secretariat shall designate a Case Manager to assist with the procedural administration of the case. CIETAC HK boasts several bilingual consultants who are professional in both the Mainland and Hong Kong relevant laws. They will answer all your arbitration-related questions. For example, they can advise on how to draft an arbitral agreement, the validity of arbitral agreement, how to appoint an arbitrator, what is the head-on for procedural matters and Hong Kong Arbitration Ordinance, and enforcement issues, etc. Therefore, they can assist you to have a more efficient arbitral proceeding.
5. Respecting Parties’ Choice of Arbitrators Unless the parties agree otherwise, CIETAC HK is governed by Hong Kong Arbitration Ordinance. It respects parties’ choice of arbitrators. Parties can choose the arbitrators listed in the Panel of Arbitrators in CIETAC, they can also choose arbitrators outside the Panel.
6. Sophisticated and Skilled Arbitrators There are approximately one thousand selective and experienced arbitrators in current list of CIETAC Panel of Arbitrators. Those arbitrators are professionals of both common law and civil laws, and procedural patterns (inquisitorial or adversarial approach). While those arbitrators cover the fields of major jurisdictions in the world, a lot of them are also Chinese law experts or experts from other professional fields. Key Features of Hong Kong Arbitration Ordinance from PRC Arbitration Law 1. Application of Doctrine of Competence-Competence Hong Kong Arbitration Ordinance adopted the doctrine of Competence-Competence, meaning the arbitral tribunal can rule on its jurisdiction. The tribunal can make decision on the validity of the arbitral agreement and challenge against arbitral tribunal, and the legitimacy of composition of the tribunal.
2. Interim Measures – the tribunal can make orders to preserve evidence and assets; and with the leave of the Court, enforce those orders Hong Kong seated arbitral tribunal has the power to order interim measures to protect participants under arbitration. Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures. Under the orders made by the tribunal, parties shall maintain or restore the status quo, take action that would prevent or refrain from taking action that is likely to cause current or imminent harm or prejudice to the arbitral process, or provide a means of preserving assets or preserve evidence, etc.
Unless otherwise agreed by the parties, when conducting arbitral proceedings, an arbitral tribunal may make an order requiring a claimant to give security for costs of the arbitration, direct discovery of documents, inspection, photographing, preservation, custody, detention or sale of relevant property. Such direction is enforceable in the same manner as an order or direction of the Court that has the same effect, but only with the leave of the Court.
3. Arbitral Tribunal’s Power to Make Decisions on Costs Arbitral tribunal may also award costs of arbitral proceedings. It is for the consideration of protecting the party with merit and encouragement of bona fide transactions.
Chinese English Bilingual Consulting Services and Bilingual Case Managing Services CIETAC Hong Kong has several Mainland consultants who understand laws of Mainland and Common Law jurisdictions. They can answer any of your arbitration related questions in Chinese and English, including drafting arbitral agreement, appointment of arbitrators, heads-on for arbitral proceedings and Hong Kong Arbitration Ordinance, and enforcement issues. So your business and arbitral activities can be better facilitated.
Case Managers in CIETAC Hong Kong are also multilingual, and serve as a facilitator in arbitral proceedings.
For enquiry, please call: +852 2529 8066 or email to: hk@cietac.org
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