The main rules of arbitration are at the heart of this rule revision, and the following are the main highlights of the revision:
1. Further enriched the parties’ procedural options
In recent years, in addition to the traditional demands for fairness, professionalism, and convenience, “green”, “wisdom”, “diversity”, “economy”, “transparency,” and “predictability” are becoming new concepts in the development of international arbitration. The New Arbitration Rules respond to these new development concepts in many places:
1） Enriched consolidated arbitration options
For efficiency or strategy reasons, the parties strongly desire to resolve disputes between multiple contracts and multiple parties in a single case. In this regard, article 15 of the New Arbitration Rules adds a new provision for the consolidation of various agreements, which allows the parties to consolidate disputes arising from the same transaction or the same series of transactions or the existence of a principal-subsidiary contractual relationship, or the subject matter of arbitration is the same type of contract or related contracts, under certain conditions. At the same time, article 40 provides for consolidation of arbitration, specifying that in two or more cases where the subject matter of arbitration is of the same kind or related, the arbitral tribunal may, upon the application of one of the parties and with the consent of the other parties, decide to consolidate the cases directly into a single case for hearing.
2） Improved the system of accession of outsiders
Article 41 of the New Arbitration Rules integrates the systems of “joinder of outsiders” and “joinder of other parties to the agreement” in the FTZ Arbitration Rules to form a new method of “joinder of outsiders”. It also regulates the system of constitution of the arbitral tribunal under such circumstances. To strike an effective balance between the parties’ procedural autonomy and the arbitral tribunal’s control over arbitration efficiency, the New Arbitration Rules, in designing the “joinder of outsiders” procedure, also responds to the changes in the manner of constitution of the arbitral tribunal that may be caused by the joinder of outsiders, and distinguishes between “joining before constitution of the tribunal” and “joining before constitution of the tribunal”. It distinguishes between “joining before the constitution of the arbitral tribunal” and “joining after the constitution of the arbitral tribunal”, and makes different procedural designs. Article 41(3) of the New Arbitration Rules addresses the “joining of outsiders before the constitution of the arbitral tribunal”, providing that the secretariat agrees to join outsiders in the arbitration proceedings. The multiple claimants or respondents cannot jointly select an arbitrator for that party; then, unless the parties have reached an agreement on the composition of the arbitral tribunal, the Director of SHIAC shall appoint the arbitrators for the case. The Director shall appoint all the arbitrators in the case unless the parties agree otherwise on the constitution of the arbitral tribunal; Article 41, paragraph (4), on the “Joining of a lay person after the constitution of the arbitral tribunal”, provides that after the constitution of the arbitral tribunal, the arbitral tribunal shall have the right to refuse to consent to the joining of a lay person in the arbitral proceedings if the lay person and the parties have failed to agree on the constitution of the tribunal.
3） Provided interim measures and emergency arbitrator relief
The New Arbitration Rules absorbed the “interim measures” system in the FTZ Arbitration Rules while further optimizing the “emergency arbitrator procedure”, highlighting the urgency and efficiency of the “emergency arbitrator procedure”. At the same time, the Emergency Arbitrator Procedure has been further optimized, underscoring its speed and efficiency. Article 25(2) of the New Arbitration Rules shortens the time for the Director of SHIAC to appoint the Emergency Arbitrator from 3 days to 2 days after the application procedures are completed, and Article 26 further shortens the period for the Emergency Arbitrator to make a decision, of which Paragraph (3) distinguishes between situations in which the claimant is “secured” and “unsecured”, with the time limit for the emergency arbitrator to decide on the interim measure being ten days in the case of an “unsecured” situation, and five days in the case of a “secured” position. In the case of “unsecured”, the time limit for the emergency arbitrator to decide on the interim measure is ten days; in the case of “secured”, the time limit for the decision on the temporary measure is five days. Meanwhile, the New Arbitration Rules continue the system of “pre-arbitration interim measures” of the FTZ Arbitration Rules and shorten the time limit for Shanghai State Administration of arbitration to forward the application for pre-arbitration interim measures to the court of competent jurisdiction after examination to two days.
4） Further liberalized of the selection of arbitrators
In terms of diversification of the manner of the constitution of the arbitral tribunal, Article 30 of the New Arbitration Rules allows the parties to independently agree on the form of the arbitral tribunal without violating the mandatory provisions of the law applicable to the arbitration proceedings; Article 31 extends the scope of arbitrators outside the roster that can be recommended by the parties to the entire composition of the arbitral tribunal; and Article 32 allows the parties to agree that the presiding arbitrator shall be selected by two side arbitrators, and allows the parties to apply to SHIAC to determine the presiding arbitrator in the form of a “recommended short list”. From the viewpoint of the parties’ demand for the selection of arbitrators in arbitration practice, the parties hope that the arbitration rules can enrich the path of their participation in organizing the tribunal and safeguard the exercise of their procedural right of selecting the arbitrators in a multi-dimensional way. The New Arbitration Rules have effectively responded to the parties’ needs in selecting arbitrators, reflecting full attention to and protecting the parties’ exercise of their core procedural right to appoint arbitrators.
5） Smooth full-cycle online arbitration
Articles 10 and 39(2) of the New Arbitration Rules stipulate that the parties may agree by an agreement that all or part of the arbitration proceedings shall be conducted online with the help of the SHIAC Digital Intelligence Platform or other Internet or private networks and that the use of digital intelligence shall follow the principles of technology neutrality, high efficiency, and convenience, equality of rights, security, and reliability. At the same time, Article 9 of the New Arbitration Rules establishes the principle of encouraging green arbitration and stipulates in Article 20 that the parties may prioritize the submission of materials by electronic means and stipulates in Article 85 that the documents and materials may be served by electronic means.
2. Further strengthen the procedural leadership of arbitral tribunals
The New Arbitration Rules provide a clear response in terms of strengthening the competence of the arbitral tribunal:
1） Power of arbitral tribunal to regulate bad faith arbitration
Arbitration in good faith is an essential requirement of the arbitration system. Article 8 of the New Arbitration Rules stipulates that the parties shall participate in the arbitration by the principles of honesty, good faith, and cooperation. At the same time, the New Arbitration Rules give the arbitral tribunal the right to regulate dishonest arbitration behavior. In response to the situation where a party, after learning of the constitution of the arbitral tribunal, intentionally changes its agent and creates a conflict of interest between the agent and the arbitrators, the New Arbitration Rules stipulates in Article 21(3) that the party shall submit a written application to the arbitral tribunal to change its agent and allows the arbitral tribunal to decide whether or not to agree to the participation of the party’s changed or newly added agent in the arbitration proceedings. If a party, after the arbitration hearings have been completed, requests the withdrawal of an arbitration claim to avoid an unfavorable award being made, article 52, paragraph (3) of the New Arbitration Rules allows the arbitral tribunal to refuse to agree to the withdrawal and continue the arbitration proceedings after hearing the views of the parties, or to allow the other party to make a counterclaim in respect of the arbitration costs incurred in the event of the agreement to the withdrawal. Article 63 (4) of the New Arbitration Rules empowers the arbitral tribunal to discipline a party for late submission of arbitration documents, claim documents, evidentiary materials, etc., or intentional delay in the proceedings.
2） Authority of the arbitral tribunal to declare the hearings closed
In practice, whether the arbitral tribunal can still accept the parties’ representations or additional evidence after the hearings involves the issues of “closing the door on evidence” and “closing the door on procedure”. To encourage the arbitral tribunal to improve the quality and efficiency of hearings, article 51 of the New Arbitration Rules stipulates that the arbitral tribunal may decide the deadline for the parties to submit arbitration documents and evidential materials during the arbitration proceedings, and after that deadline, decide to close the hearings and no longer accept the arbitration documents and evidential materials submitted by the parties; if there are particular circumstances, upon the application of the parties, and the tribunal also considers that there is a genuine need to do so, the tribunal may decide to reactivate the hearings at any time before making the award. The arbitral tribunal may, upon application of the parties and if it deems it necessary, decide to reopen the proceedings at any time before making the award.
3） Arbitral tribunal empowered to make procedural decisions
Article 6 of the New Arbitration Rules stipulates the principle of “arbitral tribunal’s self-adjudicating jurisdiction”, i.e., after the arbitral tribunal is constituted, the Shanghai State Administration authorizes the arbitral tribunal to decide on its jurisdiction, and its decision on jurisdiction based on prima facie evidence does not prevent the arbitral tribunal from making a new decision based on facts or evidence inconsistent with the prima facie evidence found in the course of the hearings. The arbitral tribunal shall be allowed to make a new decision based on facts or evidence consistent with the prima facie evidence discovered during the hearing. Meanwhile, Article 6 also newly stipulates that the arbitral tribunal may decide on the existence of a written arbitration agreement between the parties when there are circumstances such as the parties’ active participation in the arbitration proceedings. Article 39 of the New Arbitration Rules provides that the arbitral tribunal may decide to hold hearings in whole or in part online through the Internet, or issue procedural directives, issue lists of issues, have pre-trial meetings, convene preparatory hearings, prepare a statement of the scope of the hearings, make interlocutory awards or partial awards, etc. when it deems it necessary to do so, and may also make arrangements for the exchange and checking of evidentiary materials, the testimony of witnesses, the opening proceedings, and the post-hearing proceedings.
4） Authority of the arbitral tribunal to determine the rules of evidence
The rules of evidence are the methodology of the arbitral tribunal for ascertaining the facts of the case. International practice shows that arbitration rules of evidence do not necessarily follow the litigation rules of evidence; especially in foreign-related arbitration cases, the cross-jurisdictional characteristics of the elements of the case make it difficult for a set of fixed paradigm rules of evidence to meet the needs of the case practice, and at the same time may also be inconsistent with the parties in the arbitration agreement on the rules for the handling of evidence expectations. Therefore, the arbitration rules of evidence, on the one hand, give the parties the right to determine their own rules of evidence; on the other hand, in the absence of agreement by the parties, the arbitral tribunal shall also be empowered to determine the rules of evidence in the arbitration proceedings by the circumstances of the case. From past practice, the arbitral tribunal has an apparent practical need for the right to determine the rules of evidence in the hearing of foreign-related intellectual property disputes. Therefore, article 46, paragraph (5), of the New Arbitration Rules provides that the form of evidence submitted by the parties and matters relating to the submission of proof shall conform with the rules of evidence applicable to the case; if the parties have not agreed on the management of evidence or if the agreement is not enforceable, the arbitral tribunal may decide by reference to the relevant provisions of the law applicable to the arbitral proceedings.
5） Authority of the arbitral tribunal to decide on the applicable law
In the process of hearing foreign-related cases, the application of law is the first issue to be resolved by the arbitral tribunal in its hearings, and it is a common concept in international arbitration to give the arbitral tribunal the right to decide on the application of law. Article 59 of the New Arbitration Rules provides explicitly for the identification and application of law in foreign-related cases, i.e., in cases with foreign-related elements, where the parties have not agreed on the application of law, the arbitral tribunal has the right to decide on the law and rules applicable to the arbitration agreement and the substantive dispute. At the same time, the arbitral tribunal may decide on the methods of ascertaining foreign laws and rules, including the use of legal opinions of expert witnesses retained by the parties that have been cross-examined. Where the parties have agreed to do so in the arbitration agreement or have made a request in writing by consensus during the arbitration proceedings, the arbitral tribunal, subject to mandatory provisions of the laws of the place of arbitration and public order and morals, may make an award solely based on the principles of fairness and reasonableness.
3. Further clarify the agency’s process management authority
The New Arbitration Rules makes the following innovative attempts to strengthen the case management function of the institution:
1） Enhanced information disclosure
Article 35 of the New Arbitration Rules improves the information disclosure regime for arbitrators by stipulating the obligation of arbitrators to disclose information throughout the arbitration process from the time they serve as arbitrators in the case to the end of the arbitration proceedings and extends the subject of disclosure to emergency arbitrators and conciliators, while adding the possibility of applying the IBA Guidelines on Conflicts of Interest in International Arbitration as a reference and disclosure of the third-party financing of the arbitration, among other provisions. In addition, considering that the independence and impartiality of experts in the arbitration process is also an important aspect affecting the procedural rights of the parties, Article 48(4) of the New Arbitration Rules stipulates that before accepting the selection or appointment of an expert or expert, the expert or expert shall also disclose in writing the circumstances that may give rise to doubts as to his or her independence and impartiality. At the same time, to prevent parties from abusing their right to disclose information, article 36, paragraph (e), of the New Arbitration Rules provides that if, after being informed of the composition of the arbitral tribunal, there is a matter between a party and an arbitrator that the arbitrator should have disclosed due to the party’s initiative, it is deemed to have waived its right to apply for the arbitrator’s disqualification for such a reason.
2） Improved the efficiency of the arbitration process
Based on basically retaining the existing framework system of arbitration procedures for international, foreign-related, and domestic cases, the New Arbitration Rules has further optimized the arbitration process by unifying the procedural deadlines for foreign-related cases and non-foreign-related cases except for the award period; for example, it no longer distinguishes between the provisions on the deadlines for defending, proof-raising, and counterclaims for foreign-related cases and domestic cases. Instead, it has uniformly stipulated that the deadlines for supporting, proof-raising, and counterclaims are 30 days. The New Arbitration Rules also merged the original summary procedure and the minor amount procedure under the FTZ Arbitration Rules into a new summary procedure, clarifying that the conditions for application of the summary procedure are that the amount in dispute is less than RMB 5 million or that the parties have agreed to apply the process on their initiative, and uniformly set the deadlines for defense, proof, and counterclaims under the summary procedure at 15 days, to reflect further the effects of simplifying and speeding up the process.
3） Optimized the delivery system
With regard to the issue of “service”, which is prone to disputes in practice, article 85 of the New Arbitration Rules provides specific and operational procedural regulations. Article 85 consists of seven paragraphs, which make clear provisions on the subject of the obligation to serve, the manner of service, the rules on service by post, the rules on electronic service, the change of address for assistance, the time of service and the handling of objections to service by the parties. In particular, article 85, paragraph (7), provides that if a party applies to re-exercise the relevant procedural rights in arbitration proceedings on the ground that it has not received the arbitration documents or notice, it shall state reasonable grounds for not receiving the documents.
4） Increased transparency in arbitration
The New Arbitration Rules respond to the concerns of international arbitration on transparency, considering the principle of non-publicity in arbitration. For example, in its past practice, SHIAC has already provided a channel for parties to closely observe SHIAC’s business practice by publishing its annual report and summaries of its awards. Article 11(4) of the New Arbitration Rules stipulates that SHIAC may publish awards after desensitization with the parties’ written consent. Meanwhile, the New Arbitration Rules have also deleted the provision in the old version of the Rules that the Chairman of SHIAC is not required to give reasons for his decision on the shunning of an arbitrator.
5） Upgraded mediation services
The New Arbitration Rules have incorporated the mediator mediation system pioneered by the FTZ Arbitration Rules and covered all cases with the mediator mediation before the panel hearing without increasing the cost burden of the parties. The mediator will no longer become a member of the same arbitral tribunal, which will effectively increase the willingness of the parties to mediate. Meanwhile, to facilitate the parties to implement the settlement agreement in the countries where the Singapore Conciliation Convention is in force in the future, Article 54(6) of the New Arbitration Rules has added the provision that the parties may request the conciliator to sign the settlement agreement, and they may also apply for the issuance of certificates related to conciliation procedures from SHIAC, which has provided a solution for the parties to reach the conciliation agreement and obtain the recognition and implementation by the Singapore Conciliation Convention.
The New Arbitration Rules continue the practical contents and practices of the FTZ Arbitration Rules, incorporate the representative contents of the current development of the rules of major domestic and foreign arbitration institutions, and put forward innovative practices in combination with the practice of SHIAC. These updated Rules have been received warmly.