CIETAC v SCC: A comparison of arbitration rules

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The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) has amended its arbitration rules (SCC rules) effective from 1 January 2017. The latest arbitration rules adopted by the China International Economic and Trade Arbitration Commission (CIETAC) took effect on 1 January 2015. The two institutions have maintained sound co-operation and learned from each other in drafting and implementing arbitration rules.

Based on a comprehensive examination of their respective arbitration rules, the authors find that both are striving to provide more procedural facilitation to parties in dispute, including appointing a secretary to handle specific disputes, improving the arbitration tribunal’s hearing procedures, and allowing several contractual disputes to be arbitrated in one case.

Li Hu
Li Hu

In order to strike a balance between protecting the disputing parties’ procedural rights and enhancing procedural efficiency, the two bodies adopt different procedural arrangements. The article seeks to expound on their different arrangements from the aspects of joinder of additional parties, consolidation of arbitrations and consent award.

Joinder of additional parties. During an ongoing arbitration, one party in a dispute might request to add one or several parties not currently involved in the dispute, so as to ascertain the fact and determine responsibility. According to article 13 of the updated SCC rules, each party must have the right to bring parties not involved in the dispute to the arbitration process, but the application must be made as early as possible. Unless otherwise decided by the SCC, any application to add parties concerned that is filed after the arbitration tribunal is formed must not be considered. This provision suggests the SCC rules hope to expedite the arbitration process.

The CIETAC rules allow the joinder of additional parties even after the arbitration tribunal is formed, because it might be necessary as the arbitration process moves forward. In response to the problem of when additional parties are brought to the case after the formation of the arbitration tribunal, they have already been deprived of an important right to select arbitrators, but the CIETAC rules grant the additional parties the right to express their opinions about the tribunal and the arbitration procedures.

Consolidation of arbitrations. An arbitration institution can consolidate several arbitration cases if these cases meet certain conditions, and this is an innovative effort to increase efficiency. Article 15 of the SCC rules lists the conditions to be satisfied for consolidating a new arbitration case with an ongoing case.

Article 19 of the CIETAC rules makes a procedural arrangement regarding the consolidation of arbitrations, but it has two main differences with the procedural arrangement in the SCC rules. First, there are different numbers of cases to be consolidated under the two procedural arrangements. According to the SCC rules, only two cases – one new and one ongoing – can be consolidated, while CIETAC rules allow two or more cases to be consolidated and arbitrated altogether. Second, the consolidation takes place at different stages. SCC rules require two cases to be consolidated in the preliminary stage, while CIETAC rules permit two related cases to be arbitrated altogether, even after the arbitration tribunals have been formed.

Consent award. Under the SCC rules, if the disputed parties agree to settle their dispute before the award is rendered, the arbitral tribunal can, at the request of the disputed parties, make a consent award on the basis of the settlement agreement.

CIETAC has created a new means of resolving trade and commercial disputes by making simultaneous efforts to arbitrate and conciliate the disputes. According to article 47 of the CIETAC rules, upon mutual agreement between the two disputed parties, the arbitrator can also act as a mediator during the arbitration process. During the conciliation process, the arbitral tribunal must terminate the conciliation proceedings if either party requests, or if the arbitral tribunal considers that further conciliation efforts will be futile.

When the parties reach a settlement agreement, they can request the tribunal to render an arbitral award or prepare a conciliation statement based on the settlement agreement, to make the agreement legally binding and validate its extraterritorial effect according to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

CIETAC’s approach of making simultaneous efforts to arbitrate and mediate disputes has been proven successful in practice, and resolved many disputes. The tactic has fully demonstrated the Chinese perception that “harmony is most precious”, and has been recognized and adopted by many international arbitration institutions as an effective option to resolve commercial disputes.

Li Hu is the deputy secretary-general of the CIETAC and a board member of the SCC. Lu Yahan is a case manager at the CIETAC