China International Economic and Trade Arbitration Commission (CIETAC): Commercial Arbitration in China

 

October 8, 2024

BRACE Law Firm ©

 

China is currently a highly attractive venue for foreign investment and international business. Consequently, there is increased interest in commercial arbitration in China, largely due to the strengthening of the state’s position on the international stage and the increase in trade turnover between Chinese and foreign companies.

The expansion of trade and economic cooperation between Russian and Chinese businesses has influenced the growth in the number of commercial disputes, necessitating direct recourse to arbitration within mainland China by Russian entities.

International Commercial Arbitration in China

In China, arbitration may only be conducted by arbitration institutions officially recognized in the country.

If an arbitration agreement provides for proceedings in the territory of China or Hong Kong, the laws of China or Hong Kong, respectively, become the determining factors for assessing its legal validity. These provisions concerning arbitration agreements must be taken into account as early as the contract signing stage [1].

In accordance with the Arbitration Law of the PRC of 1994 [2], an arbitration agreement may be presented either as an arbitration clause contained in a contract or as a separate agreement on arbitration concluded directly before or after the dispute arises. The arbitration agreement must be in writing.

In 2006, the Supreme People's Court of China published an Interpretation On Certain Issues Concerning the Application of the Arbitration Law, which states that an arbitration agreement in writing includes, among other things, a agreed position of the parties evidencing their intent to resort to arbitration (parties may take measures to exchange emails, etc.) [3].

In accordance with the Arbitration Law, the arbitration commission is determined by the agreement of the parties. There are approximately 140 regional arbitration commissions operating in the PRC [4], which may accept cases involving a foreign element if the parties have so agreed.

China International Economic and Trade Arbitration Commission (CIETAC)

One of the most renowned permanent arbitration commissions in the PRC is the China International Economic and Trade Arbitration Commission ("CIETAC"), recognized not only as the most famous in Asia but also as having extensive experience in resolving foreign economic disputes in China.

CIETAC constantly updates its arbitration rules, following the latest trends in international arbitration to most effectively reflect the needs of the parties.

Until 1956, the arbitration commission was named the "Foreign Trade Arbitration Commission"; in 1980, it was renamed the "Foreign Economic and Trade Arbitration Commission," and in 1988, it received its current name. Since 2000, CIETAC has also been known as the Arbitration Court of the China Chamber of International Commerce (CCOIC).

In 2023, CIETAC accepted 5,237 new cases, which is 28.17% more than in 2022 (4,086 cases). The total claim amount reached 151.023 billion RMB. The average claim amount per case reached 28.8377 million RMB. Among these were 645 foreign-related cases, totaling 52.765 billion RMB, averaging 81.8055 million RMB per case. The number of domestic disputes amounted to 4,592 cases (3,444 cases in 2022) with a total claim amount of 98.259 billion RMB [5].

In 2023, cases involved 88 countries and regions, including 62 international cases where neither party was Chinese. The ten most frequently involved countries and regions in foreign-related cases included Hong Kong (China), the United States, the British Virgin Islands, Germany, Singapore, South Korea, the Cayman Islands, the United Kingdom, and Canada. The parties selected a wide range of applicable laws, including the United Nations Convention on Contracts for the International Sale of Goods (CISG), as well as the laws of Hong Kong, England, Pakistan, Mongolia, Russia, Brunei, Iraq, etc. Parties also selected the International Rules for the Interpretation of Trade Terms (INCOTERMS) 2000 and other rules to govern the cases [6].

Structure and Divisions of CIETAC

The China International Economic and Trade Arbitration Commission is based in Beijing.

However, CIETAC has sub-commissions or arbitration centers that serve as branches, including:

• CIETAC South China Sub-Commission;
• CIETAC Shanghai Sub-Commission (CIETAC International Securities/Futures Arbitration Center and CIETAC Financial Disputes Arbitration Center in Shanghai);
• CIETAC Tianjin Sub-Commission (CIETAC Tianjin International Economic and Financial Arbitration Center);
• CIETAC Southwest Sub-Commission;
• CIETAC Zhejiang Sub-Commission, CIETAC Hong Kong Arbitration Center;
• CIETAC Zhejiang Sub-Commission;
• CIETAC Hubei Sub-Commission;
• CIETAC Fujian Sub-Commission;
• CIETAC Jiangsu Arbitration Center;
• CIETAC Silk Road Arbitration Center;
• CIETAC Sichuan Sub-Commission (Chengdu International Arbitration Center);
• CIETAC Shandong Sub-Commission;
• CIETAC European Arbitration Center;
• CIETAC North American Arbitration Center;
• CIETAC Hainan Arbitration Center;
• CIETAC Xiong'an Sub-Commission.

These sub-commissions or arbitration centers accept requests for arbitration and administer arbitration cases with the authorization of CIETAC.

Parties may agree to submit their disputes directly to CIETAC or to a CIETAC sub-commission/arbitration center. If the parties have agreed to CIETAC arbitration, the Arbitral Tribunal accepts the request for arbitration and administers the case. If the parties have agreed to arbitration by a CIETAC sub-commission/arbitration center or agreed to conduct arbitration or an oral hearing in the province, autonomous region, or municipality directly under the central government where a CIETAC sub-commission/arbitration center is located, the tribunal of that sub-commission/arbitration center accepts the request for arbitration and administers the case, unless otherwise agreed by the parties.

CIETAC may authorize and appoint a sub-commission/arbitration center to administer relevant cases based on the circumstances of such cases.

What Disputes Does CIETAC Resolve?

CIETAC accepts cases related to economic, trade, and other disputes of a contractual and non-contractual nature based on the agreement of the parties:

• International or foreign-related disputes;
• Disputes related to the Hong Kong Special Administrative Region, the Macao Special Administrative Region, and the Taiwan region;
• Domestic disputes.

For instance, in 2023, the main types of disputes covered sale of goods, construction projects, corporate/business management, service contracts, finance, leasing, intellectual property rights, cultural, sports and entertainment industries, mandate contracts, real estate, environmental protection, and low-carbon emission issues, etc. In 2023, there was a notable increase in cases related to construction projects, intellectual property rights, finance, and other key sectors [7]:

• Financial disputes related to the management of public/private funds, asset management, equity investments and their transfer, bonds, trusts, and private lending; disputes in the interbank bond market involving bond repurchase/pledge transactions and share repurchase transactions; as well as disputes related to futures, options, and trading of exchange-traded and over-the-counter derivatives;
• Cases related to energy. Specifically, disputes related to traditional energy sources such as coal, oil, and natural gas, as well as new energy sources such as wind, electricity, solar, nuclear, and thermal energy;
• Intellectual property cases. Disputes related to the development of biopharmaceutical technologies, distribution contracts, licensing agreements, licensing of patented processes, trademark disputes, franchising agreements, domain name purchase agreements, and other types of IP disputes.

Currently, the CIETAC Arbitration Rules, revised and adopted by the China Council for the Promotion of International Trade/China Chamber of International Commerce on September 2, 2023, and effective as of January 1, 2024 [8] (the "Rules"), are in force.

The Rules apply uniformly to CIETAC and its sub-commissions/arbitration centers.

If the parties have agreed to submit their dispute to CIETAC for arbitration, they are deemed to have agreed to arbitration in accordance with the Rules. If the parties agree to submit their dispute to CIETAC for arbitration but have agreed to modify the Rules or to apply other arbitration rules, the parties' agreement shall prevail, unless such agreement is invalid or contrary to mandatory provisions of the law applicable to the arbitration proceedings. If the parties have agreed to apply other arbitration rules, CIETAC shall perform the relevant administrative duties.

If the parties agree to submit their dispute to arbitration in accordance with the Rules without specifying the name of the arbitration institution, they are deemed to have agreed to submit the dispute to CIETAC arbitration.

Arbitration Clause and Agreement for Referring a Case to CIETAC

The possibility of resolving disputes at CIETAC must be provided for in an arbitration agreement, which means an arbitration clause in a contract or another form of written agreement concluded between the parties. The arbitration agreement must be in writing. An arbitration agreement is deemed to exist if its existence is asserted by one party and not denied by the other.

An arbitration clause contained in a contract shall be treated as a clause independent and separable from all other provisions of the contract, and an arbitration agreement attached to a contract shall also be treated as independent and separable from all other provisions of the contract. The validity of an arbitration clause or arbitration agreement shall not be affected by any modification, cancellation, termination, transfer, expiration, invalidity, ineffectiveness, rescission, or non-existence of the contract.

CIETAC has developed model arbitration clauses:

• 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.
• 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.

CIETAC has the power to determine the existence and validity of an arbitration agreement and its jurisdiction over an arbitration case. Such power is delegated to the Arbitral Tribunal after its formation.

If CIETAC is satisfied that a valid arbitration agreement exists and decides that it has jurisdiction over the arbitration case, the arbitration proceedings shall proceed. Such decision shall not prevent the Arbitral Tribunal from making a new decision on jurisdiction based on facts and/or evidence it discovers during the arbitration proceedings.

Any objection to the arbitration agreement and/or jurisdiction over the arbitration case must be raised in writing before the first oral hearing held by the Arbitral Tribunal. If the case is to be decided solely on the basis of documents, such objection must be raised before the submission of the first substantive defense.

CIETAC shall make a decision to dismiss the case if a lack of jurisdiction is established.

If the parties have agreed on the place of arbitration, the parties' agreement shall prevail. If the parties have not agreed on the place of arbitration or their agreement is unclear, the place of arbitration shall be the location of CIETAC or its sub-commission/arbitration center administering the case. CIETAC may also determine another place as the place of arbitration taking into account the circumstances of the case. The arbitral award is deemed to have been made at the place of arbitration.

Arbitration Fees and Expenses in CIETAC Cases

An arbitration fee must be paid in accordance with its Arbitration Fee Schedule (Appendix No. 2 to the Rules).

The arbitration fee rates are:

• Up to 1,000,000 RMB: 4%, but not less than 10,000 RMB;
• From 1,000,001 to 2,000,000 RMB: 40,000 RMB plus 3.5% of the amount exceeding 1 million RMB;
• From 2,000,001 to 5,000,000 RMB: 75,000 RMB plus 2.5% of the amount exceeding 2 million RMB;
• From 5,000,001 to 10,000,000 RMB: 150,000 RMB plus 1.5% of the amount exceeding 5 million RMB;
• From 10,000,001 to 100,000,000 RMB: 225,000 RMB plus 1% of the amount exceeding 10 million RMB;
• From 100,000,001 to 300,000,000 RMB: 1,125,000 RMB plus 0.65% of the amount exceeding 100 million RMB;
• From 300,000,001 to 1,000,000,000 RMB: 2,425,000 RMB plus 0.6% of the amount exceeding 300 million RMB;
• From 1,000,000,001 to 2,000,000,000 RMB: 6,625,000 RMB plus 0.45% of the amount exceeding 1 billion RMB;
• From 2,000,000,001 RMB: 11,125,000 RMB plus 0.4% of the amount exceeding 2 billion RMB, and the arbitration fee shall be capped for amounts exceeding 3,000,000,000 RMB.

Filing Documents with the China International Economic and Trade Arbitration Commission (CIETAC)

All documents, notices, and materials concerning arbitration (the "Arbitral Documents") may be delivered in person, by registered or express mail, by fax, by electronic means, or by any other means of communication with a record of delivery, or by any other means that the Arbitral Tribunal deems appropriate. Electronic means of delivery include the delivery of Arbitral Documents by electronic means to email addresses or other electronic addresses agreed/designated by the parties, or through the CIETAC digital information exchange system or another information system easily accessible to all parties, etc.

Arbitral Documents shall be sent to the address provided by the party itself or to the address agreed by the parties. If a party has not provided an address or the parties have not agreed on an address, Arbitral Documents shall be sent to such party's address provided by the other party. Any Arbitral Documents shall be deemed properly served on a party if delivered to the addressee or sent to the addressee's place of business, place of registration, domicile, habitual residence, or mailing address. If none of the above addresses can be found, Arbitral Documents shall be sent by the Arbitral Tribunal to the addressee's last known place of business, place of registration, domicile, habitual residence, or mailing address by registered or express mail or by any other means that can provide a record of the delivery attempt, including but not limited to service by a notary public, entrustment, or retention.

Arbitration proceedings commence on the day the tribunal receives the Request for Arbitration. If the Claimant files the Request for Arbitration in writing and/or through the CIETAC online case filing system, arbitration proceedings commence on the day such request is first received.

The Request for Arbitration must be in writing, signed and/or sealed by the Claimant or its authorized representative, and must include:

• Names and addresses of the Claimant and Respondent, including zip code, telephone, fax, email, or any other means of electronic communication;
• Reference to the arbitration agreement invoked;
• Statement of the facts of the case and the main issues in dispute;
• The Claimant's claim;
• Facts and grounds on which the claim is based.

An arbitration fee must be paid in accordance with its Arbitration Fee Schedule (Appendix No. 2 to the Rules).

In addition to arbitration fees, CIETAC may charge the parties for any other additional and reasonable actual expenses, including but not limited to special remuneration for arbitrators, travel and accommodation expenses incurred in handling the case, stenographer fees, and costs and expenses of experts, appraisers, or interpreters appointed by the Arbitral Tribunal. The special remuneration of an arbitrator may be based on an hourly rate if agreed by the parties.

If a party has appointed an arbitrator but has not paid a deposit for such actual expenses as special remuneration, travel, and accommodation expenses of the appointed arbitrator within the time limit specified by CIETAC, the party shall be deemed not to have appointed an arbitrator.

If the parties have agreed to hold an oral hearing at a place other than the location of CIETAC or its relevant sub-commission/arbitration center, they must pay a deposit for actual expenses, such as travel and accommodation expenses incurred by them. In the event the parties fail to do so within the time limit specified by CIETAC, the oral hearing shall be held at the location of CIETAC or its relevant sub-commission/arbitration center.

If the arbitration agreement stipulates that negotiations or mediation must be conducted prior to arbitration, the Claimant may apply for arbitration after conducting negotiations or mediation. However, the absence of negotiations or mediation does not prevent the Claimant from applying for arbitration and does not prevent the Arbitral Tribunal from accepting the case, unless the law applicable to the arbitration proceedings or the arbitration agreement expressly provides otherwise.

Upon receipt of the Request for Arbitration and its appendices, the tribunal checks that the formalities required for the arbitration application are fully met and sends a Notice of Arbitration to both parties together with one copy of the Rules and the CIETAC Panel of Arbitrators. The Request for Arbitration and its appendices submitted by the Claimant are sent to the Respondent in the same envelope.

If the Arbitral Tribunal, after verification, finds that the formalities required for the arbitration application are incomplete, it may request the Claimant to complete them within a specified time limit. If the Claimant fails to complete the required formalities within the specified time limit, the Request for Arbitration shall be deemed not filed.

The Respondent must file a Statement of Defense within 45 days from the date of receipt of the Notice of Arbitration. The time limit may be extended if there are justified reasons. If objections are filed after the specified time limit, the tribunal has the right to accept or reject such objections.

The Statement of Defense must be signed and/or sealed by the Respondent or its authorized representative and must include the following content and appendices:

• Name and address of the Respondent, including zip code, telephone, fax, email address, or any other means of electronic communication;
• Objection to the Request for Arbitration setting forth the facts and grounds on which the defense is based;
• Relevant documentary and other evidence on which the defense is based.

Failure by the Respondent to file a Statement of Defense shall not affect the conduct of the arbitration proceedings.

The Respondent may file a Counterclaim, if any, in writing within 45 days from the date of receipt of the Notice of Arbitration. The time limit may be extended if there are justified reasons.

When filing a Counterclaim, the Respondent is required to state the nature of the Counterclaim, as well as the facts and grounds on which the Counterclaim is based in the Statement of Counterclaim, attaching relevant documentary and other evidence thereto. When filing a Counterclaim, the Respondent must pay the arbitration fee within the specified time limit; otherwise, the Respondent will be deemed not to have filed a Counterclaim.

In the event that the formalities required for filing a Counterclaim are deemed fulfilled, the Arbitral Tribunal sends a Notice of Acceptance of Counterclaim to the parties. The Claimant must submit its Statement of Defense to the Counterclaim in writing within 30 days from the date of receipt of the notice. This time limit may be extended if there are justified reasons.

Failure by the Claimant to submit a Statement of Defense to the Respondent's Counterclaim shall not affect the conduct of the arbitration proceedings.

The Claimant may apply to amend its claim, and the Respondent may apply to amend its Counterclaim. However, the tribunal may reject any such amendment if it considers that the amendment is too late and may delay the arbitration proceedings.

During the arbitration proceedings, a party wishing to join the arbitration as an additional party may file a Request for Joinder with CIETAC based on the arbitration agreement. The Request for Joinder must contain the case number of the existing arbitration; the name, address, and other means of communication of each party; the arbitration agreement on the basis of which the joinder of the additional party is sought; and the facts and grounds on which the request and claim are based. Relevant documentary and other evidence on which the request is based must be attached to the Request for Joinder.

All Arbitral Documents to be exchanged during the arbitration proceedings are transmitted between the tribunal and the parties.

When filing a Request for Arbitration, Statement of Defense, Counterclaim, evidence, and other Arbitral Documents, the parties may use electronic communication as the preferred means. If the parties submit Arbitral Documents via electronic means, identical hard copies may be required if the tribunal deems it necessary. If the electronic version is not identical to the hard copies, the electronic version shall prevail unless otherwise agreed by the parties.

If the parties submit their submissions in hard copy, such submissions must be in 5 copies. If there are multiple parties, additional copies shall be provided accordingly. If a party applies for interim measures, additional copies shall be provided accordingly. If the Arbitral Tribunal is composed of a sole arbitrator, the number of submitted copies may be reduced by two.

A party may be represented by its authorized Chinese and/or foreign representative. A Power of Attorney must be submitted to the tribunal by the party or its authorized representative, and the tribunal shall send such Power of Attorney to the other parties.

If a party changes or adds a representative after the composition of the tribunal, the presiding arbitrator may take necessary measures to prevent a conflict of interest for the arbitrators resulting from the change, including excluding the new representative from participating in the arbitration proceedings, taking into account factors such as the views of the parties expressed within a reasonable time on the issue of arbitrator challenge and the progress of the case.

CIETAC Arbitrators

An arbitrator shall not represent either party, shall be and remain neutral and independent of the parties, and shall treat them equally. Upon accepting the appointment/nomination, the arbitrator shall perform his/her duties in accordance with the Rules and conduct the arbitration proceedings diligently and efficiently.

The tribunal may consist of 1 or 3 arbitrators. Unless otherwise agreed by the parties or provided by the Rules, the Arbitral Tribunal shall consist of 3 arbitrators.

The parties appoint arbitrators from the Panel of Arbitrators provided by CIETAC. If the parties have agreed to appoint arbitrators from outside CIETAC's Panel of Arbitrators, an arbitrator appointed by the parties or appointed in accordance with the agreement of the parties may act as an arbitrator subject to confirmation by CIETAC.

Within 15 days from the date of receipt of the Notice of Arbitration, the Claimant and the Respondent shall each appoint or entrust the Chairman of CIETAC to appoint an arbitrator. Otherwise, the arbitrator shall be appointed by the Chairman of CIETAC. They shall also jointly appoint or entrust the Chairman of CIETAC to appoint a third arbitrator who will act as the presiding arbitrator. In the absence of such joint appointment or entrustment within the aforementioned time limit, the presiding arbitrator shall be appointed by the Chairman of CIETAC. A sole arbitrator may be appointed in the same manner.

The Claimant and the Respondent may agree that the arbitrators they appoint shall jointly appoint the presiding arbitrator, and the two arbitrators so appointed shall jointly appoint or entrust the Chairman of CIETAC to appoint the presiding arbitrator within 7 days from the date of their acceptance of the appointment. In the absence of such joint appointment or entrustment within the aforementioned time limit, the presiding arbitrator shall be appointed by the Chairman of CIETAC.

Each party may recommend one to five arbitrators as candidates for presiding arbitrator. If there is only one common candidate on the lists, such candidate will be the presiding arbitrator jointly nominated by the parties. If there is more than one common candidate on the lists, the Chairman of CIETAC shall select the presiding arbitrator from among the common candidates taking into account the circumstances of the case, and he/she shall act as the presiding arbitrator jointly nominated by the parties. If there is no common candidate on the lists, the presiding arbitrator shall be appointed by the Chairman of CIETAC from among persons not included in the parties' lists. A sole arbitrator may be appointed similarly.

When appointing arbitrators in accordance with the Rules, the Chairman of CIETAC shall take into account the law applicable to the dispute, the place of arbitration, the language of the arbitration, the nationality of the parties, the type of dispute, and any other factors that the Chairman considers material.

An arbitrator appointed by the parties or the Chairman of CIETAC must disclose any facts or circumstances that may give rise to justifiable doubts as to his/her impartiality or independence. If facts or circumstances subject to disclosure arise during the arbitration proceedings, the arbitrator is obliged to immediately disclose such facts or circumstances in writing.

Upon receipt of the arbitrator's disclosure, a party wishing to challenge the arbitrator based on the disclosed facts or circumstances must submit the challenge in writing within 10 days from the date of such receipt. If a party fails to file a challenge within the aforementioned time limit, it may not subsequently challenge the arbitrator based on the facts disclosed by the arbitrator. A party having justifiable doubts regarding the impartiality or independence of an arbitrator may challenge that arbitrator in writing and must state the facts and reasons on which the challenge is based, attaching supporting evidence.

A challenge by one party must be immediately communicated to the other party, the arbitrator being challenged, and the other members of the Arbitral Tribunal. If an arbitrator receives a challenge from one party and the other party agrees to the challenge, or if the challenged arbitrator voluntarily withdraws from office, such arbitrator shall no longer be a member of the tribunal.

In the event that an arbitrator is legally or factually prevented from performing his/her functions, the Chairman of CIETAC has the power to replace the arbitrator. Such arbitrator may also voluntarily withdraw from office. The Chairman of CIETAC makes the final decision on the replacement of the arbitrator with or without stating reasons. The substitute arbitrator must be nominated or appointed within a reasonable time in accordance with the same procedure applicable to the nomination or appointment of the challenged or replaced arbitrator. If a party fails to nominate or appoint a substitute arbitrator appropriately, the substitute arbitrator shall be appointed by the Chairman of CIETAC. After the replacement of an arbitrator, the tribunal decides whether and to what extent the previous proceedings of the case should be repeated.

Procedure for Hearings under CIETAC Rules

The tribunal shall examine the case in any manner it deems appropriate, unless otherwise agreed by the parties. Under all circumstances, the tribunal shall act impartially and fairly and afford both parties a reasonable opportunity to present their case.

The tribunal shall hold oral hearings when examining the case. However, the tribunal may examine the case on the basis of documents only if the parties so agree or if the tribunal deems oral hearings unnecessary and the parties agree.

Unless otherwise agreed by the parties, the tribunal may adopt an inquisitorial or adversarial approach in examining the case, taking into account the circumstances of the case.

Unless otherwise agreed by the parties, the tribunal may, if it considers it necessary, issue procedural orders or lists of questions, draw up terms of reference, or hold pre-hearing conferences, etc. With the authorization of other members of the tribunal, the presiding arbitrator may, at his/her discretion, decide on procedural arrangements for the arbitration proceedings.

In the event that the parties have agreed on the place of the oral hearing, the case shall be heard at the agreed place. If the parties have not agreed otherwise, the place of oral hearings shall be Beijing or the location of the sub-commission/arbitration center hearing the case.

If the case is to be heard orally, the parties must be notified of the date of the first oral hearing not less than 20 days prior to the oral hearing. A party having valid reasons may request a postponement of the oral hearing. However, the party must communicate such request in writing to the Arbitral Tribunal within 5 days of receipt of the notice of the oral hearing. Postponement of the oral hearing is at the discretion of the tribunal.

After consultation with the parties and taking into account the circumstances of the case, the tribunal may, at its discretion, decide to conduct the oral hearing in person, via remote virtual conference, or using other appropriate means of electronic communication. CIETAC provides facilities for oral hearings, as well as administrative and logistical support for remote virtual hearings.

Hearings shall be held in private (closed session). If both parties request an open hearing, the tribunal shall make a corresponding decision. In cases heard in closed session, the parties and their representatives, arbitrators, witnesses, interpreters, experts consulted by the Arbitral Tribunal, appraisers appointed by the Arbitral Tribunal, and other relevant persons must not disclose to outsiders any substantive or procedural matters concerning the case.

If the Claimant fails to appear at an oral hearing without valid reason or withdraws from an ongoing oral hearing without the permission of the tribunal, the Claimant may be deemed to have withdrawn its Request for Arbitration. In such a case, if the Respondent has filed a Counterclaim, the Arbitral Tribunal shall proceed to hear the Counterclaim and make a default award.

If the Respondent fails to appear at an oral hearing without valid reason or withdraws from an ongoing oral hearing without the permission of the tribunal, the Arbitral Tribunal may proceed with the arbitration proceedings and make a default award. In such a case, if the Respondent has filed a Counterclaim, the Respondent may be deemed to have withdrawn its Counterclaim.

The tribunal may arrange for a written and/or audio-visual record of the oral hearing. The tribunal may, if it considers it necessary, take minutes of the oral hearing and request the parties and/or their representatives, witnesses, and/or other participating persons to sign and/or seal the written record or minutes. If the parties and other relevant participants in the arbitration consider that there is an omission or error in the written record of their statements, they may file a request for correction. At the request of a party, the tribunal may, taking into account the specific circumstances of the arbitration proceedings, decide to engage a stenographer to produce a verbatim record of the oral hearing, the costs of which shall be advanced by the parties.

Proof and Examination of the Case under CIETAC Rules

Each party bears the burden of proving the facts on which it relies to support its claim, defense, or Counterclaim, and to substantiate its opinions, arguments, and counterarguments. The tribunal may specify a time limit for the parties to submit evidence, and the parties must submit evidence within the specified time limit. The tribunal may refuse to accept any evidence submitted after this time limit. If a party has difficulty submitting evidence within the specified time limit, it may apply for an extension before the expiration of the time limit. The tribunal decides whether to grant the extension.

If the party bearing the burden of proof fails to submit evidence within the specified time limit or if the submitted evidence is insufficient to support its claim or Counterclaim, it shall bear the consequences arising therefrom.

Unless otherwise agreed by the parties, the Arbitral Tribunal may decide to apply, in whole or in part, the CIETAC Guidelines on Evidence, which we will discuss below. It should be borne in mind that the Guidelines on Evidence are not an integral part of the Rules.

Unless otherwise agreed by the parties, when examining a case through an oral hearing, evidence shall be presented during the oral hearing and may be examined by the parties. If the case is to be decided solely on the basis of documents or if evidence is submitted after the hearing and both parties have agreed to examine the evidence in writing, the parties may examine the evidence in writing. In such circumstances, the parties must submit their written opinions on the evidence within the time limit set by the tribunal.

The tribunal may conduct an investigation and collect evidence as it deems necessary. When investigating and collecting evidence, the tribunal may notify the parties to appear. If one or both parties fail to appear after notice, the investigation and collection of evidence shall proceed without any consequences. Evidence collected by the tribunal during the investigation shall be sent to the parties for comment.

The tribunal may consult with experts or appoint appraisers to clarify specific issues of the case. Such expert or appraiser may be a Chinese or foreign institution or individual. The tribunal has the right to require the parties, and the parties are also obliged, to provide or present to the expert or appraiser any relevant materials, documents, property, or physical objects for inspection, examination, or appraisal by the expert or appraiser. Copies of the expert opinion and the appraiser's report shall be sent to the parties for comments. At the request of either party or at the request of the tribunal, the expert or appraiser shall participate in the oral hearing and provide explanations on the opinion when the tribunal deems it necessary.

In the event that the parties jointly or separately apply for a suspension of the arbitration proceedings or under circumstances where such suspension is necessary, the arbitration proceedings may be suspended. The arbitration proceedings shall resume when the reason for the suspension disappears or the suspension period expires.

A party may fully withdraw its claim or Counterclaim. In the event that the Claimant fully withdraws its claim, the tribunal may proceed with the examination of the Counterclaim and make an arbitral award thereon. In the event that the Respondent fully withdraws its Counterclaim, the tribunal may proceed with the examination of the claim and make an arbitral award thereon.

If both parties wish to conciliate, or if one party wishes to conciliate and the consent of the other party is obtained by the tribunal, the tribunal may conciliate the dispute during the arbitration proceedings. The parties may also settle their dispute on their own. With the consent of both parties, the tribunal may settle the case in a manner it deems appropriate. During the conciliation process, the tribunal shall terminate the conciliation proceedings if one of the parties so requests or if the Arbitral Tribunal considers that further conciliation efforts would be futile. The parties shall sign a settlement agreement if they reach a settlement through conciliation by the tribunal or on their own.

If conciliation is unsuccessful, the tribunal shall resume the arbitration proceedings and make an arbitral award. If the parties wish to settle their dispute through conciliation but do not wish the conciliation to be conducted by the tribunal, CIETAC may, with the consent of both parties, assist the parties in settling the dispute in a manner and procedure it deems appropriate.

Where the tribunal deems it necessary or where a party so requests and the Arbitral Tribunal approves, the Arbitral Tribunal may make an interim award on any issue of the case before making the final award. Failure by either party to comply with an interim award does not affect the arbitration proceedings and does not prevent the tribunal from making a final award.

A party may apply for the early dismissal of a claim or Counterclaim in whole or in part on the ground that the claim or Counterclaim is manifestly without legal merit or manifestly outside the jurisdiction of the tribunal. The application for early dismissal must be made in writing and must state the facts and legal grounds supporting the application. To prevent abuse of the application for the purpose of delaying the arbitration proceedings, the tribunal may require the requesting party to provide justified grounds for the application and demonstrate that the early dismissal process will expedite the overall proceedings. An application for early dismissal filed by the parties shall not prevent the tribunal from continuing the arbitration proceedings.

The tribunal shall make a decision or order on the application for early dismissal, stating reasons, within 60 days from the date of such application. Upon the request of the tribunal, the Chairman of CIETAC may extend the time limit if he/she considers such extension justified and necessary. If the tribunal decides to grant the application for early dismissal in whole or in part, such decision shall not prevent the Arbitral Tribunal from continuing to hear other claims or Counterclaims, if any.

Award of the Tribunal when Examining a Case under the Rules of the China International Economic and Trade Arbitration Commission

The tribunal shall make an arbitral award within 6 months from the date of formation of the tribunal. Upon the request of the tribunal, the Chairman of CIETAC may extend the time limit if he/she considers it truly necessary and the reasons for the extension truly justified.

The tribunal shall independently and impartially make a fair and reasonable arbitral award based on the factual circumstances of the case and the terms of the contract, in accordance with the law and with reference to international practice.

If the parties have agreed on the law applicable to the merits of their dispute, the parties' agreement shall prevail. In the absence of such agreement or if such agreement conflicts with a mandatory provision of law, the tribunal shall determine the applicable substantive law or principles of law.

The tribunal must state in the award the claims, the facts of the dispute, the reasons on which the award is based, the result of the award, the allocation of arbitration costs, and the date and place of the award. The tribunal has the right to set a specific time limit in the award for the performance of the award by the parties and the liability for failure to perform within the specified time limit. The arbitral award shall be sealed by CIETAC.

If the case is heard by an Arbitral Tribunal composed of three arbitrators, the award shall be made by all three arbitrators or by a majority of the arbitrators. A dissenting opinion in writing shall be kept in the file and may be attached to the award. Such dissenting opinion does not form part of the award. An arbitrator's electronic signature has the same effect as his/her handwritten signature.

If the tribunal cannot reach a majority opinion, the arbitral award shall be made in accordance with the opinion of the presiding arbitrator. The written opinions of the other arbitrators shall be kept in the file and may be attached to the award. Such written opinions do not form part of the award.

The date of the award is deemed to be the date the award enters into legal force. The arbitral award is final and binding on both parties.

In the event that the tribunal considers it necessary or if a party so requests and the tribunal agrees, the tribunal may first make a partial award on any part of the claim before making the final award. A partial award is final and binding on both parties.

Failure by either party to comply with a partial award shall not affect the arbitration proceedings and shall not prevent the Arbitral Tribunal from making a final award.

The tribunal has the power to determine in the arbitral award the arbitration fees and other costs payable by the parties to CIETAC.

The tribunal has the power to decide in the arbitral award, taking into account the circumstances of the case, that the losing party must compensate the prevailing party for the costs reasonably incurred by it in pursuing the case. When deciding whether the costs of the prevailing party incurred in pursuing the case are reasonable, the tribunal takes into account various factors such as the outcome and complexity of the case, the workload of the prevailing party and/or its representative(s), the amount in dispute, etc.

Within a reasonable time after the award is made, the tribunal may, on its own initiative, make corrections in writing of any clerical, typographical, or computational errors or any errors of a similar nature or omissions contained in the award.

Within 30 days of receipt of the arbitral award, either party may apply to the tribunal in writing for the correction of any clerical, typographical, or computational errors or any errors of a similar nature or omissions contained in the award.

The parties are obliged to perform the arbitral award within the time limit specified in the award. If no time limit is specified in the award, the parties are obliged to perform the award immediately. In the event of non-performance of the award by one of the parties, the other party has the right to apply to a competent court for enforcement of the award in accordance with the law.

Guidelines on Evidence when Examining a Case in CIETAC

CIETAC adopted the Guidelines on Evidence [9] (the "Guidelines") in accordance with the Arbitration Law of China, the CIETAC Rules, and CIETAC arbitration practice. Following the principles of evidence in Chinese civil procedure, which are applicable in arbitration to assist the parties, their representatives, and the tribunal in the process of presenting evidence in arbitration proceedings, these Guidelines are not part of the Rules; their application depends in each specific case on the will of the parties to the dispute. The parties may agree to apply them fully or in part, and may also modify certain provisions.

In the event of a conflict between the Rules and the Guidelines that the parties have agreed to adopt for their case, the Guidelines shall apply. In the event that a question arises during the proceedings that is not settled by either the Rules or the Guidelines, it will be decided by the tribunal at its own discretion. The parties may agree that the Guidelines will apply to their dispute as a reference and not as a mandatory requirement.

The Guidelines establish the rule that the Claimant and the Respondent are obliged to prove the facts on which they rely. This applies to the Statement of Claim itself, the Statement of Defense thereto, and the Counterclaim. The tribunal may participate in the evidence collection process on its own initiative if it deems it necessary. In this case, the parties are mandatorily notified and, where necessary, are present during the disclosure of evidence. If one party or both parties are absent, the examination and collection of evidence shall not be conducted.

When examining the case, the tribunal may seek advice from an expert, as well as engage an appraiser to clarify specific points concerning the case. In this case, the parties are obliged to submit or deliver to the expert or appraiser any materials, documents, items, or goods related to the subject matter of the dispute for verification, inspection, or appraisal. The parties may engage their own experts to testify at hearings. The expert opinion or appraiser's report is sent to the parties so that the latter have the opportunity to make any comments.

Upon the request of any party to the case, if necessary, the tribunal may summon the expert or appraiser to the arbitration to provide clarifications on their opinions at the hearing. The possibility of admitting any evidence, including an expert opinion and an appraiser's report, is decided by the tribunal after examination.

The significance, relevance, and admissibility of evidence are determined by the tribunal. Each party proves the facts on which it relies. If the subject matter of the dispute is the entry into force of a contract, the party asserting this must prove this fact, and the party asserting that the contract was modified, terminated, or performed must provide evidence confirming the change in contractual relations.

If the dispute concerns performance, the party that was supposed to perform the contract bears the burden of proving this fact. In the event that a party claims damages and the other rejects this claim, the former party proves its right to claim. In a dispute where the amount of damages incurred, as stated in the contract, is actually higher or lower than the actual costs, the burden of proof lies with the aggrieved party.

Evidence not requiring proof includes: facts not denied by the parties; natural law (laws of nature) and theorems; a known or generally accepted fact; a fact that can be inferred from a legal provision as known or generally accepted in understanding and practice.

All of the above facts need not be proved unless the other party provides sufficient evidence proving the contrary. Thus, each of the arbitrators must possess deep knowledge in various fields and spheres.

The Claimant bears the burden of proof in the case, even if the Respondent fails to fulfill its obligations in the arbitration process without valid reasons; that is, there are no grounds to consider the Respondent's silence as a fact of admission of claims. The arbitration may make rulings regarding the evidence presented by the Claimant, as well as draw negative inferences from the fact of the Respondent's failure to fulfill its obligations.

A mandatory rule to which the parties must submit is the obligation to disclose all evidence to the arbitration and the party so that the process is not delayed. In addition, the tribunal may set reasonable time limits for the presentation of evidence by the parties or establish a schedule for the submission of evidence if it is voluminous. The parties are obliged to comply with the time limits for the submission of evidence established by the arbitration. The arbitration has the right to refuse a party the presentation of new evidence after the expiration of the time limit established for this. The presentation and exchange of evidence generally must end before the start of the oral hearing. In the event that a party encounters genuine difficulties in providing evidence within the established period of time, it may apply to the arbitration for an extension of the time limit, stating the reasons. The arbitration may extend this period of time if it considers the reason valid.

The main evidence in the arbitration process is documents. They may be in printed and handwritten form, and written evidence also includes data on electronic media (e.g., in the form of electronic documents, emails) and any other readable evidence on electronic media. When presenting written evidence to the arbitration, a party may submit a printed copy identical to the original or a hard copy of electronic data. A party is not deprived of the right to provide an electronic version of written evidence. For documents originating outside mainland China, their legalization and certification are not required unless otherwise agreed by the parties. A party has the right to file a motion with the tribunal to request a specific document or part thereof, as well as a category of documents from the other party. But it bears the obligation to justify its motion, as well as the necessity for admitting such document.

Upon receiving such a motion, the tribunal invites the other party to comment on this motion. If that party has no objections, the tribunal adds these documents to the file, and in case of an objection, this issue will be decided by the tribunal at its discretion. The tribunal may set specific time limits for submitting such motions and receiving a response from the other party.

Participation of witnesses is possible in the process; the Parties determine the candidates themselves and must notify the tribunal in advance of the subject of their testimony. A witness can be any person, including an employee of a party, a representative, or an agent. Before the hearing, the witness is obliged to fill out a statement indicating the name and address, his/her relationship with the parties, education, detailed description of facts related to the dispute, sources of information, date, and signature.

In the process of proof, a party may submit an expert opinion on specific issues to support its position. In addition, the arbitration itself may appoint one or more experts on its own initiative, and the parties must provide them with full cooperation. Upon completion of the expertise, the expert sends the opinion to the parties to obtain the parties' comments, even if the expertise is conducted by a specialized institution.

The tribunal, if necessary, on its own initiative or at the request of the parties, may conduct an examination or inspection by a specially appointed person of real estate objects, goods, documents, and other items of the dispute, as well as an appraisal if there are certain professional or technical difficulties. The parties must be notified before these procedures are conducted and may be present at them. Upon completion of the investigation, the inspector or appraiser must submit a report, which is sent to the parties for comments.

During the arbitration proceedings, the tribunal, on its own initiative, may require a party to submit evidence deemed necessary and must guarantee that the other party will have the opportunity to comment on such evidence. Upon a party's motion, where necessary and feasible, the tribunal may independently collect evidence related to the dispute. Evidence obtained by the arbitration must be sent to the parties for comments. In accordance with applicable law, a party may apply to a people's court for interim measures to preserve evidence. If it does not contradict the legislation, the arbitration may make a similar request.

The exchange of evidence takes place through CIETAC; however, after consultation with the parties, the tribunal may decide that other methods and means may be used, in particular, determine whether documents in other languages should be translated into the language of the arbitration. The ruling must indicate whether translation is needed or whether the translation should be done in full or in part, taking into account the linguistic capabilities of the parties and their attorneys to minimize costs. In cases where the arbitration considers that translation of documents is necessary, the translated document is provided to the party along with the original so that it can verify the accuracy of the translation. If there are discrepancies between the translated document and the original, the arbitration admits the document that more correctly reflects the meaning.

The tribunal is obliged to guarantee each party the opportunity to express an opinion on the evidence presented by the other party; this demonstrates the equality of the parties. This can be done orally or in writing. In cases where an oral hearing is provided, all written evidence submitted must be examined, and the parties must have the right to express their views on it.

To avoid unnecessary delays, the parties must submit their comments only on disputed evidence and determine which of them should not be admitted as evidence.

In the event that there are discrepancies between the original and photocopies of the original, the parties and the arbitration may require an examination of the original document. The same rule applies to audio and video evidence, as well as to physical evidence. The arbitration determines which part of the audio recording or the entire recording should be subjected to examination during the hearing.

A witness or expert must be present in person at the hearing or via video conference so that the parties can question them, conducting both direct and cross-examination. The process of conducting the examination is managed by the tribunal. Unless otherwise agreed by the parties, the witness and expert may not be present at the hearing until they give their testimony, while the arbitration must guarantee each party the opportunity to question the witness and expert, and may limit the time for direct or cross-examination. Verification of the testimony of witnesses and experts appointed by the parties should generally be conducted in the following order: direct examination, cross-examination, and re-examination.

All persons appointed by the arbitration participating in the proof—experts, appraisers, and inspectors — must be present at the hearing so that the parties have the opportunity to question their conclusions.

The arbitration, after consultation with the parties, may conduct an online conference call with a witness. When questioning a witness, expert, appraiser, and inspector, the arbitration may not allow said persons to answer certain questions asked by the parties. In addition, they may be questioned at any time.

Issues related to such characteristics of evidence as relevance and admissibility remain at the discretion of the arbitrator. The tribunal, in accordance with guidelines it deems appropriate, may not admit certain evidence related to confidential information obtained between an attorney and his/her client, and evidence obtained during settlement negotiations by the parties.

For disputed documents, that is, when their originals cannot be presented, the tribunal may, taking into account other evidence as well as the testimony of the parties and the circumstances of the case, recognize them as admissible. In the event that the same fact is proven by two contradictory pieces of evidence, the tribunal will decide in accordance with the principle of preponderance of evidence. The arbitration may recognize a fact of fraud only if there is irrefutable evidence.

Procedure for Reviewing Financial Disputes by CIETAC

The CIETAC Financial Disputes Arbitration Rules were adopted on November 4, 2014, and entered into force on January 1, 2015 [10].

The purpose of adopting these rules is to create conditions for the impartial and rapid resolution of disputes resulting from financial transactions between parties.

The term "financial transactions" refers to transactions arising between financial institutions themselves or arising between financial institutions and other individuals or legal entities in the currency, capital, foreign exchange, gold, and insurance markets that are related to financing in both domestic and foreign currencies, as well as the assignment and sale of financial instruments and documents denominated in both domestic and foreign currencies, including but not limited to:

• Loans;
• Certificates of deposit;
• Guarantees;
• Letters of credit;
• Negotiable instruments;
• Fund transactions and fund trusts;
• Bonds;
• Collection and remittance of foreign currency;
• Factoring;
• Reimbursement agreements between banks;
• Securities and futures.

The CIETAC Financial Disputes Arbitration Rules apply when the parties have so agreed and submitted an agreement, even if the name of the arbitration is not precisely specified. In the event of any inconsistency between the Financial Disputes Arbitration Rules and the Rules, the specified rules shall apply. For matters not settled by these rules, the Rules shall apply. In case of disagreements in the interpretation of the review of financial disputes, the tribunal makes the final decision.

The tribunal must make a decision on its competence; if objections regarding the application of these rules to the given dispute are received, the tribunal must establish whether this dispute arose as a result of financial transactions between the parties. The agreement will not apply if it contradicts the legislation of the place of arbitration.

The tribunal decides on the validity of the arbitration agreement in each case; however, such a decision may also be made by the arbitrators who will hear the case. In the event that a question arises regarding the validity of the arbitration agreement and one party has applied to the People's Court of China on this issue, the decision on validity is made by the People's Court. The resolution of this issue in the People's Court does not affect the course of the process in arbitration.

CIETAC provides for the possibility of appointment by the parties of arbitrators not included in the Panel of Arbitrators. In the event that the parties have agreed that arbitrators will be appointed from outside this list, by agreement of the parties or already selected by the parties, their candidacy must be approved by CIETAC.

An arbitrator appointed by the parties or CIETAC must sign a declaration and disclose in writing any information or circumstances calling into question his/her independence or impartiality.

Arbitration proceedings commence on the day the application is filed with CIETAC. The application must be signed by the Claimant or its representative and must contain: names, addresses, and other means of communication with the Claimant and Respondent, including zip code, telephone, telex, fax, and email addresses or any other means of electronic telecommunications; reference to the concluded arbitration agreement; subject matter of the dispute and main claims; Claimant's demands; facts and evidence on which the demands are based. The Claimant must mandatorily pay the arbitration fee.

If the arbitration commission considers that the application meets the requirements, the Claimant is notified thereof within 5 days. If the application is returned by the commission, the reason for the refusal is indicated to the Claimant. Along with the notice of acceptance of the application, the Financial Disputes Arbitration Rules, the Rules, and the CIETAC Panel of Arbitrators are sent to the Claimant and the Respondent.

The dispute may be heard by a sole arbitrator or collegially by a panel of 3 arbitrators. Generally, the parties specify the number of arbitrators in the arbitration agreement; otherwise, this issue is decided by CIETAC. The time limit for appointing an arbitrator is 10 working days from the date of receipt of the Notice of Arbitration. The parties appoint a sole arbitrator jointly, and in case of impossibility to reach an agreement — by CIETAC; a similar rule applies to a collegial composition, only the presiding arbitrator is appointed by the two selected arbitrators or the Chairman of CIETAC.

Unless otherwise provided by the agreement of the parties, the Respondent must, within 15 working days from the date of receipt of the Notice of Arbitration, submit a written Statement of Defense to the Claimant's application, as well as attach necessary evidence.

In addition, within the specified time limit, the Respondent may also file a Counterclaim, to which the Claimant also has the right to file a written Statement of Defense within 15 days from the date of filing the Counterclaim, unless otherwise provided by the agreement of the parties.

The tribunal examines disputes based on the equality of the parties and providing each party with equal opportunities in presenting evidence and defending its position. Unless otherwise established by the agreement of the parties, arbitrators may participate both in the investigation of the case and in the process of examining the circumstances of the case.

During the arbitration proceedings, the tribunal may manage the course of the process and draw up lists of questions for the parties to answer, as well as hold a meeting before the preliminary hearing and a preliminary hearing.

The parties are obliged to submit all evidence in the case within the time limit established by the agreement or the tribunal. In the event that this period is not determined by the parties or the tribunal, the parties must submit all written statements and relevant evidence to the Arbitral Tribunal not less than 3 days before the date of the first oral hearing. Unless otherwise agreed by the parties or the tribunal, the Arbitral Tribunal may refuse to admit any written statements and evidence submitted by a party after the expiration of the time limit.

The tribunal conducts an oral hearing, examining the case materials. An oral hearing may not be held; in this case, the dispute may be resolved based on written documents if the parties so request or agree, and the tribunal considers that an oral hearing need not be held. In the event that an oral hearing is necessary, the Arbitral Tribunal must notify the parties thereof 10 working days prior.

If the parties have agreed on the place of arbitration in the agreement, this condition prevails. If this is not stipulated by the parties, the place of arbitration shall be deemed the location of CIETAC or its arbitration centers and commissions. The arbitral award shall be deemed made at the place of arbitration. Unless otherwise agreed by the parties, the tribunal may hold oral hearings or other actions at any place it considers most appropriate.

Unless otherwise agreed by the parties, the tribunal must make an arbitral award within 45 working days from the date the arbitration tribunal is formed. This period of time may be extended by the Chairman of CIETAC if he/she considers it justified. Such extension cannot exceed 20 working days.

Before signing the award, the Arbitral Tribunal must submit a draft of its award to CIETAC. Without violating the independence of the arbitrators in making the award, CIETAC may draw the arbitrators' attention to issues concerning the award.

This article shows that the established system of international commercial arbitration in China evidences a developed legal system of this state as a whole, which confirms the foreign economic potential of this country and its attractiveness for representatives of foreign states in conducting business with Chinese companies in various industries.

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References

[1] Kozlovskaya V.A. Legal Regulation of Arbitration Agreements in Accordance with the Legislation of Mainland China and Hong Kong. Ural Journal of Legal Research, No. 5, 2020.

[2] Adopted at the 8th Session of the Standing Committee of the 8th National People's Congress and promulgated on August 31, 1994. Website of the Ministry of Commerce of the People's Republic of China.

[3] Kozlovskaya V.A. Legal Regulation of Arbitration Agreements in Accordance with the Legislation of Mainland China and Hong Kong. Ural Journal of Legal Research, No. 5, 2020.

[4] Ibid.

[5] 2023 Report. Data from the official CIETAC website.

[6] 2023 Report. Data from the official CIETAC website.

[7] 2023 Report. Data from the official CIETAC website.

[8] Data from the official CIETAC website.

[9] Data from the official CIETAC website.

[10] Data from the official CIETAC website.