Major changes in the 2024 CIETAC Arbitration Rules

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Authored by: Joseph Chung and Vivien Wong

The 2024 CIETAC Arbitration Rules came into force on 1 January 2024. 

CIETAC, one of the leading PRC arbitral institutions, has incorporated a wide range of revisions in the 2024 Rules, to reflect recent developments and trends in international arbitration. The aim of the revisions is to enhance parties’ flexibility, autonomy and efficiency in CIETAC arbitrations and ensure that CIETAC arbitrations are up to international standards and expectations. 

This article gives an overview of the key updates and changes made in the 2024 Rules.

Expansion of Tribunal Powers

• Determining jurisdiction (Articles 6, 14, 18): Under the 2024 Rules, once the tribunal is constituted, it is automatically empowered to determine its own jurisdiction (including resolving disputes over jurisdiction with respect to joinder proceedings).  This contrasts with the position under the previous 2015 Rules, where the power to determine jurisdiction primarily lay with CIETAC and the tribunal only had power to determine jurisdiction where CIETAC considered it necessary to delegate such power to the tribunal.

• Interim Award (Article 49): The 2024 Rules make it clear that the tribunal is able to render an interim award on its own initiative, where it deems necessary or upon a party’s request.

• Early Dismissal (Article 50): Another new feature under the 2024 Rules is that a party may now request and the tribunal is empowered to grant an 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 is beyond the jurisdiction of the tribunal.  To avoid undue delay of the proceedings, a request for early dismissal must be made as early as possible and no later than the submission of the Statement of Defence or the Reply to the Counterclaim. 

Embracing digital tools and electronic means of communication

The 2024 Rules have been modified to meet the demands of the digital era.

• Mode of Submission of Request for Arbitration (Article 11): It is expressly provided that a Request for Arbitration can be submitted in writing and/or via CIETAC’s online case filing system.

• Service of documents (Article 8): In addition to traditional means of delivery, all documents, notices and materials in relation to the arbitration may now be validly served by electronic means.  This includes sending by email or other electronic means agreed by the parties or via the digitalized information exchange system of CIETAC or other information system easily accessible to parties.

• Hard copies (Article 21): Submission of hard copies are no longer compulsory unless required by the Arbitration Court or the tribunal.

• Oral hearing (Article 37): After consulting the parties and taking into consideration the circumstances of the case, the tribunal now has the option to decide whether to conduct an oral hearing by virtual conference or other appropriate means of electronic communication.  The Arbitration Court will provide administrative and logistical support for virtual hearings.

• Signing of awards (Article 52): Arbitrators are now permitted to sign arbitral awards electronically and the awards may be delivered to the parties in electronic form, where the parties agree or where CIETAC deems it necessary.

Consolidation of Arbitration involving multiple contracts

Modifications have also been made to enhance efficiency and flexibility in resolving complex international disputes.

• Addition of contracts (Article 14):  Under the previous 2015 Rules, a claimant may initiate a single arbitration concerning disputes arising out of or in connection with multiple contracts.  Under the 2024 Rules, the claimant may also apply to add contracts to an arbitration after the arbitration has commenced.  The tribunal is empowered to decide applications to add contracts in the arbitral proceedings if such application is made after constitution of the tribunal.  However, an application to add contracts during the proceedings may be denied if it is made too late and may delay the proceedings.  

• Contracts involving related subject matter (Articles 14 and 19):  Under the 2024 Rules, arbitrations can now be commenced under multiple contracts and arbitrations can be consolidated where the relevant contracts have “related subject matters”, provided that the other requirements for a single arbitration under multiple contracts or consolidation are met.

Measures to enhance users’ experience of CIETAC arbitration

CIETAC has also included changes which ensure that practices and procedures in CIETAC arbitrations are aligned with international standards and recent judicial decisions on arbitration-related issues in other jurisdictions.

• Non-compliance with escalation dispute resolution clause (Article 12):  Failure to negotiate or mediate as agreed in the arbitration agreement shall neither prevent the claimant from applying for arbitration nor prevent the arbitration court from accepting the case, unless the applicable law of the arbitration proceedings or the arbitration agreement provides otherwise. This is in line with the recent decision of the Hong Kong Court of Final Appeal in C v D [2023] HKCFA 16.

• Conservatory Measures (Article 23): In alignment with international standards and to better serve parties from multiple jurisdictions, CIETAC may now forward a party’s application for conservatory measures to any courts outside of Mainland China, even before a notice of arbitration has been issued.  This new provision provides for pre-arbitration conservatory measures to be ordered by a competent court in urgent situations.

• Appointment of Arbitrators (Articles 22, 26, 27): The 2024 Rules expressly provide for the Chairman of CIETAC to interfere in the appointment of arbitrators, if the procedures for forming the tribunal agreed by the parties are manifestly unfair or unjust, or if a party abuses its rights in a way that results in undue delay of the arbitral proceedings.  The President of the Arbitration Court may interfere where there is an issue of conflict of interest regarding the appointment of arbitrators and the parties’ representatives. This aims to protect the due process of the arbitration.

The parties may now agree that the presiding arbitrator in a three-arbitrator tribunal be jointly nominated by the party-nominated arbitrators. The parties enjoy greater flexibility in the appointment of arbitrators. Meanwhile, the Chairman of CIETAC retains the residual power to appoint arbitrators, where the parties and/or the party-nominated arbitrators fail to appoint arbitrators within the time limit stipulated under the Rules, to avoid undue delay in the proceedings.

Third Party Funding (Article 48)

New provisions on third party funding reflect the marked increase in the use of third party funding in arbitration globally and the trend for an increasing number of jurisdictions, including Hong Kong, to allow third party funding in arbitration.  Under the new provisions, the funded party has the obligation to inform the Arbitration Court about such funding arrangement without delay, and the tribunal may take into account the existence of third party funding in deciding the costs of the arbitration.

Provision for Ad Hoc Arbitration (Article 2)

Article 2 of the 2024 CIETAC Rules enables CIETAC to provide an extensive range of administration and supporting services for ad hoc arbitration, including but not limited to (1) offering guidance and consultation on the application of the arbitration rules, (2) appointing arbitrators and deciding on challenges to arbitrators, (3) providing oral hearing services, (4) scrutinizing draft awards, (5) managing arbitrators’ remuneration etc.  Such provision of services is subject to the parties’ agreement or request and to such agreement not being inoperative or in conflict with a mandatory provision of the law applicable to the arbitral proceedings. The inclusion of this new provision prepares for the anticipated removal of the prohibition of ad hoc arbitration in cases where Mainland China is the seat under PRC arbitration law.

Limitation of Liability (Article 86)

The 2024 CIETAC Rules now include a provision that expressly excludes civil liability for acts and omissions in connection with the arbitration under the Rules, and any obligation to testify in relation to the arbitration, on the part of CIETAC, its staff members, arbitrators, emergency arbitrators and relevant persons engaged by the tribunal, unless otherwise provided in the law applicable to the arbitration.

Comments

Compared with the previous 2015 Rules, the 2024 Rules have expanded a number of provisions and incorporated the latest developments and trends in international arbitration. The changes will be welcomed by parties, as the 2024 Rules will cater for the increase in complexity and cross-border nature of disputes nowadays. For instance, the expansion of the tribunals’ powers to grant an early dismissal of claims or counterclaims upon a party’s request which promotes the cost effectiveness in CIETAC arbitrations and provisions relating to third party funding.  All in all, the modifications show CIETAC’s commitment to enhancing efficiency and flexibility required in resolving complex international disputes and respecting due process and party autonomy in arbitrations.