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Arbitral proceedings

Starting an arbitration proceeding
What is needed to commence arbitration?

Under Articles 22 and 23 of the Arbitration Law, in order to commence arbitration proceedings the applicant must submit an application for arbitration along with a copy of the arbitration agreement to the selected arbitration institution.  The Arbitration Law requires the application for arbitration to specify details which are often not required under other laws.  For example, Article 23 of the Arbitration Law requires that the application of arbitration specify, among other things, the evidence, the source of evidence and the names and domiciles of witnesses.

Limitation periods
Are there any limitation periods for the commencement of arbitration?

Under Chinese legislation, parties generally have two years to commence arbitration proceedings for domestic disputes (Article 135 of the General Principles of Civil Law) and four years for disputes involving international sales and technology imports and exports (Article 129 of the Contract Law), commencing from the date on which the party discovered or should have discovered the harm. The four-year limitation period does not apply to disputes arising from joint venture agreements, which are subject to the two-year limitation period. A one-year limitation period applies in relation to disputes connected with personal injury, product liability, late rent payments and damage to property in the care of another (Article 136 of the General Principles of Civil Law).

The limitation period may be suspended during the final six months if:

  • the applicant is prevented from exercising its right to commence a claim by force majeure or other obstacles; or
  • one party makes a claim for or agrees to the fulfilment of obligations (Articles 139 and 140 of the General Principles of Civil Law).

If a party is prevented from exercising its rights, the limitation period will resume on the date that the grounds for suspension are eliminated.  In the latter case a new limitation period will commence from the date of the interruption.

Procedural rules
Are there any procedural rules that arbitrators must follow?

The procedural rules governing arbitration in China are largely set out in the Arbitration Law, which applies to domestic and foreign-related proceedings alike. The Arbitration Law contains various provisions governing general procedures, including:

  • commencement of arbitration;
  • appointment of the tribunal;
  • filing of defences;
  • interim (court-ordered) measures;
  • conduct of hearings; and
  • evidence.

To commence arbitration proceedings, the claimant must submit the written arbitration agreement/clause and a written application for arbitration to the appropriate arbitration institution (Article 22 of the Arbitration Law), accompanied by sufficient copies of the written arbitration agreement and the application, as stipulated by the rules of the relevant arbitration institution.  Where the arbitration institution accepts an application, it must inform the claimant of its decision within five days of receipt of the application (Article 24) and deliver copies of its arbitration rules and its list of arbitrators to the claimant and the respondent, together with a copy of the application. If the arbitration institution considers that the application does not comply with the required formalities and should be rejected, it shall inform the claimant of its decision and state the reasons for rejection in writing within five days of receipt of the application.

Upon receipt of a request for arbitration, the respondent must submit a written defence to the arbitration institution within the time limit specified in the arbitration rules (Article 25). Upon receipt of the respondent’s defence, the arbitration institution shall serve a copy on the claimant within the time limit specified in the arbitration rules. Article 27 of the Arbitration Law provides that the claimant may amend its claim, and the respondent may acknowledge or refute the claim and has the right to raise a counterclaim.

The Arbitration Law provides that arbitration proceedings shall be conducted by means of oral hearings (Article 39) and prescribes how these hearings should be conducted. For example, it sets out rules on:

  • the method of conducting a hearing;
  • the burden of proof;
  • the method of presenting evidence;
  • the way in which arguments are presented by the parties;
  • the preservation of evidence;
  • mediation in the course of the arbitration proceedings; and
  • the issuance of the arbitral award (Articles 39 to 57).

The Arbitration Law requires arbitrations to be conducted in camera (ie, in confidence), unless the parties agree otherwise (Article 40).

Dissenting arbitrators
Are dissenting opinions permitted under the law of your jurisdiction?

As the award may be based on the opinion of the majority of the arbitrators, dissenting opinions are permitted. The opinion of the dissenting minority may be entered in the record (Article 53 of the Arbitration Law). While the tribunal must sign and seal an award handed down, dissenting arbitrators may choose whether to sign it (Article 54).

Judicial assistance
Can local courts intervene in proceedings?

The courts have a very limited role in arbitration, except in relation to challenging and enforcing awards and ordering interim measures. In the event of a dispute over the validity of an arbitration, either the court or the arbitration institution shall issue a ruling; if one party requests the court to rule and the other requests the arbitration institution to do so, the court shall issue the ruling.

Can the local courts assist in choosing arbitrators?

The courts play no role in the selection of arbitrators, cannot compel parties to arbitrate and cannot issue subpoenas to third parties.

What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can they compel parties to arbitrate? Can they issue subpoenas to third parties?

Under Article 42 of the Arbitration Law, if the respondent fails to appear before the arbitration tribunal without justified reasons after receiving notification in writing, or leaves the hearing prior to its conclusion without the permission of the tribunal, a default award may be made.

Third parties
In what instances can third parties be bound by an arbitration agreement or award?

A third party cannot be bound by an arbitration agreement or award under Chinese law without its consent, and may not be joined to arbitration proceedings without the consent of the parties to the proceedings unless, as per Article 8 of the Interpretation of the Supreme People’s Court Concerning Some Issues on Application of the Arbitration Law of China:

  • a party to the arbitration is merged or divided after the arbitration agreement has been concluded, in which case the arbitration agreement will bind the successor which assumes the original party’s rights and obligations; or
  • a party to the arbitration dies following the conclusion of an arbitration agreement, in which case the arbitration agreement will bind the successor who assumes the original party’s rights and obligations in the matter.

Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?

Although individual arbitration institutions usually provide rules regarding the default language and seat, these are not expressly addressed under the Arbitration Law.

The parties’ choice of language will generally be upheld by the arbitration institution administering proceedings. For instance, the 2012 China International Economic and Trade Arbitration Commission Rules provide that the commission will designate the language of the proceedings only in the absence of an express choice by the parties, in which case the default language will be Chinese.

Similarly, there is no default location for arbitrations in China. It is up to the parties to select the arbitration institution and the seat of arbitration.

Gathering evidence
How is evidence obtained by the tribunal?

The Arbitration Law sets out only general rules of evidence. It provides that parties must provide evidence in support of their arguments and empowers the tribunal to collect evidence on its own initiative as it considers necessary (Article 43). In practice, a tribunal rarely initiates the collection of evidence, as it lacks effective powers to do so.

Is confidentiality ensured?

Generally speaking, arbitration proceedings located in China have the advantage of being private, Cases are not heard in open session unless the parties agree to the proceedings being heard in public (except where they involve state secrets) (Article 40 of the Arbitration Law).

Can information in arbitral proceedings be disclosed in subsequent proceedings?

More specific guidelines on confidentiality are provided by the various arbitration institutions. However, as provisions such as those under the 2012 China International Economic and Trade Arbitration Commission Rules arguably do not cover the confidentiality of exchanges, if confidentiality is likely to be an important issue for the parties, they should address this in the arbitration agreement.

Ethical codes
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

The Law on Lawyers is the main source of ethical standards for lawyers in China. The conduct of arbitrators is further circumscribed by the mandatory rules set out in Article 34 of the Arbitration Law.

The codes of conduct of various arbitration institutions may also include more comprehensive rules than those set out in the Arbitration Law. For example, the China International Economic and Trade Arbitration Commission’s Code of Ethics requires that arbitrators conduct proceedings with impartiality, independence and fairness. It further provides guidance on situations where:

  • arbitrators should not accept an appointment;
  • arbitrators should make disclosures or apply for withdrawal; and
  • the arbitration institution may replace the arbitrator.

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