Arbitration Rules of the China International Economic and Trade Arbitration Commission (2024 Edition) Come into Force

On January 1, 2024, the China International Economic and Trade Arbitration Commission (hereinafter referred to as the "CIETAC") officially implemented the new version of the arbitration rules, published on September 5, 2023, (hereinafter referred to as the "2024 Edition"). These rules are applicable to CIETAC arbitration initiated on or after this date. The 2024 Edition involve amendments to nearly fifty provisions (including non-substantive textual changes), increasing the total number of articles from 84 to 88.

From a broad perspective, the 2024 Edition, while building upon the foundation of the 2015 Edition, incorporate new systems that have emerged in the international arbitration field in recent years. They assimilate common practices from both domestic and international arbitration, as well as judicial review practices. The rules also address the new provisions introduced in the revision of China's Arbitration Law. Simultaneously, certain practices tested and validated by CIETAC in its own practical experience have been incorporated into the rules. Fundamentally, the revised provisions aim to enhance procedural flexibility, expand the scope of party autonomy, and reduce the costs incurred by the parties.

Supreme People's Court Issued Working Guidelines for the "One-stop" Platform for Diversified Settlement of International Commercial Disputes (for Trial Implementation)

On December 29, 2023, the Supreme People's Court issued the Working Guidelines for the "One-stop" Platform for Diversified Settlement of International Commercial Disputes (for Trial Implementation) (hereinafter referred to as the "Working Guidelines"), which will come into effect on January 30, 2024.

The Working Guidelines represent a specific initiative by the Supreme People's Court to implement the important principles outlined in General Secretary Xi Jinping's speech on strengthening the construction of foreign-related legal systems. It aims to coordinate and advance specific measures in both domestic and foreign legal systems, serving as a vibrant practice in support of the high-quality co-construction of the "Belt and Road" initiative. This initiative holds significant practical significance for optimizing the mechanism of diversified resolution of international commercial disputes through the organic connection of litigation, mediation, and arbitration. It leverages the functions of the "One-stop" Platform for Diversified Settlement of International Commercial Disputes (hereinafter referred to as the "One-stop Platform") and strives to create a preferred location for the resolution of international commercial disputes.

The Working Guidelines center on the objectives of the "one-stop" mechanism and address the practical needs identified through research. They highlight four innovative aspects, leveraging the achievements of the Smart Court construction:

1. Multi-span Synergy: Achieving full-process online dispute resolution services.

2. Intensive Efficiency: Aggregating the multi-disciplinary dispute resolution efforts of multiple locations and organizations.

3. Innovative Mechanism: Clearly defining neutral assessment-related procedures.

4. Strengthening Safeguards: Supporting the healthy development of arbitration.

In terms of content, the Working Guidelines are organized into six parts, comprising a total of 32 articles. They specify how to provide services to platform institutions and parties through the "One-stop" Platform, outlining how parties can engage in neutral assessments, mediation, arbitration, and litigation through the platform. The guidelines also detail the specific workflow of the interconnection of these mechanisms.

 The Fujian Australian Center for International Commercial Arbitration: ACICA Connect to Go Live in 2024

In 27 December 2023, Australian Center for International Commercial Arbitration (hereinafter referred to as the "ACICA")  is pleased to announce the launch of ACICA Connect, its online case management system for arbitration and mediation administered by ACICA and AMTAC (Australian Maritime and Transport Arbitration Commission). All new administered cases filed with ACICA from 1 January 2024 will use ACICA Connect unless the parties agree otherwise. ACICA Connect provides a secure online depository for communications and documents shared between the parties and the arbitral tribunal or the mediator with the intention of ensuring that a complete case file is maintained. ACICA Connect will facilitate case management by providing a secure centralised location for uploading and storage of documents, communication between parties, tribunals and ACICA, and tracking deadlines and dates. It is intended to create efficiencies and reduce the environmental footprint of ACICA cases. ACICA Connect is accessible online, providing a completely portable case management solution.

Turpan Intermediate People's Court:

The Arbitration Award Listed the Arbitrators and Stamped the Official Seal of the Arbitration Commission, the Absence of the Arbitrators' Signatures did not Affect the Validity of the Award

Legal Basis:

"The Arbitration Law of the People's Republic of China"

Article 58

Where the parties concerned can provide evidence disproving the arbitration award in any of the following circumstances, they may request a cancellation of the arbitration award by an intermediate People's Court at the place where the arbitration commission is located:

(1) there was no arbitration agreement;

(2) items for arbitration were not within the scope of the arbitration agreement or were those upon which the arbitration commission had no right to arbitrate;

(3) the establishment of the arbitration tribunal or arbitration procedures are in contravention of legal proceedings;

(4) the evidence upon which the arbitration award is made was counterfeit;

(5) the other party has concealed evidence to the degree that fairness has been affected;

(6) arbitrators have accepted bribes, resorted to deception for personal gain or perverted the course of justice by the award.

Where the People's Court has formed a collegiate bench and has examined and verified that the award was made under one of the aforesaid situations, it shall order the cancellation of the award.

Where the People's Court decides that it should make a ruling to the effect that there has been a violation of the public interest, it shall order the cancellation of the award.

Case Description：

On March 25, 2023, Mr. Ruan (hereinafter referred to as the "Respondent") applied for arbitration to the Turpan Arbitration Commission, which issued No. 59 (2023) Tu Zhong Zi Arbitration Award (hereinafter referred to as the "Arbitration Award") on September 13, 2023.

A hotel in Urumqi City and a company in Urumqi City (hereinafter referred to as the "Applicant") considered that there were procedural errors made by the Turpan Arbitration Commission in the Arbitration Award. The Applicant argued that according to Article 54 of the Arbitration Law of the People's Republic of China (hereinafter referred to as the "Arbitration Law"), none of the arbitrators had signed the Arbitration Award; and that the Turpan Arbitration Commission's failure to safeguard the Applicant's right to adduce and defend evidence, as well as its failure to require the arbitrators to sign the Arbitration Award according to the provisions of the Law, constituted procedural errors. Based on the above reasons, the Applicant requested the Turpan Intermediate People's Court to set aside the Arbitration Award made by the Turpan Arbitration Commission.

The Respondent argued that the Arbitration Award listed the arbitrators and stamped the official seal of Turpan Arbitration Commission, and the failure of the arbitrators to sign the award did not affect the validity of the Arbitration Award. The Applicant's application to set aside the award on the ground that the Turpan Arbitration Commission had made a procedural error had no factual basis and did not comply with Article 58(1)(c) of the Arbitration Law, which states that "the establishment of the arbitration tribunal or arbitration procedures are in contravention of legal proceedings".

Court’s View:

This case is an application to set aside an Arbitration Award, which should be examined in accordance with the provisions of Article 58 of the Arbitration Law:

The arbitration procedures of Turpan Arbitration Commission were found not to violate statutory procedures. Concerning the issue of the Arbitration Award's validity, the Applicant contended that the arbitrators' failure to sign constituted a procedural violation. However, upon examination, the Arbitration Award listed the arbitrators and stamped the official seal of the Arbitration Commission, and the absence of the arbitrators' signatures did not affect the validity of the Arbitration Award. The Applicant's request to set aside the Arbitration Award on this ground was not in accordance with the law.

Therefore, in accordance with Article 58 of the Arbitration Law of the People's Republic of China, the Turpan Intermediate People's Court ruled to reject the the application made by a hotel in Urumqi City and a company in Urumqi City to set aside No. 59 (2023) Tu Zhong Zi Arbitration Award.

Taiwan's New Taipei District Court: Recognizing and Enforcing Shanghai 

International Arbitration Center Arbitration Award

Case Description：

In 2020, a Changzhou Company (hereinafter referred to as the "Applicant") signed a capital increase agreement and a supplementary agreement with Mr. Chen and others (hereinafter referred to as the "Respondent"). The agreement stipulated that the Applicant would invest RMB 10 million in a Dongguan Company, becoming a shareholder with 4% equity and enjoying the rights under the capital increase agreement and supplementary agreement. On May 10, 2021, the People's Court of Nanshan District, Shenzhen issued a "Restriction on Consumption Order" with the number 2021 Yue 0305 Zhi 331, listing Mr. Liu and Dongguan Company as restricted consumers. Mr. Liu is not only one of the substantial controllers of Dongguan Company but also a senior executive of the company's management. According to Article 2.3 of the supplementary agreement to the capital increase agreement, if Dongguan Company fails to achieve a performance guarantee of actual operating income not less than RMB 150 million in 2020, or if there is a significant integrity issue with the actual controller or management of the company, the Applicant has the right to demand that Dongguan Company and its actual controller repurchase all the equity of Dongguan Company held by the Applicant at the repurchase price stipulated in the agreement. After the Applicant issued a notice, the Respondent did not pay the equity repurchase amount according to the agreement, constituting a breach of contract. The Applicant then filed for arbitration with the Shanghai International Economic and Trade Arbitration Commission (hereinafter referred to as "SHIAC"). On June 27, 2022, SHIAC rendered No. 0623 (2022) Shanghai Trade Arbitration Arbitration Award (hereinafter referred to as "Arbitration Award"), ordering the Respondent to repurchase all the equity of Dongguan Company held by the Applicant and jointly pay the Applicant RMB 11.32 million for equity repurchase and liquidated damages, lawyer fees of RMB 75,000, and arbitration fees of RMB 268,261. After winning the case, as the Respondent Mr. Chen is a Taiwanese, the Applicant applied to the New Taipei District Court (hereinafter referred to as the "Court") for recognition and enforcement.

The Respondent argued that the "buyback clause" on which the Arbitration Award was based was an illegal profit guarantee. According to Article 72 of the Civil Code of Taiwan, it should be objectively invalid from the beginning, and the "buyback clause" is also contrary to Article 35 of the Company Law of the People's Republic of China, which states that "Upon the incorporation of a company, the shareholders shall not withdraw their capital contribution." Therefore, the "buyback clause" should be objectively invalid from the beginning. The Arbitration Award exempted Dongguan Company from liability and determined that the Respondent should bear all joint and several liabilities for repurchasing equity, corresponding equity payment, and expenses, unreasonably increasing the burden on the Respondent, contrary to public order and good morals, and should not be recognized.

Court’s View：

The main dispute in this Arbitration Award involves the provisions in the capital increase agreement and supplementary agreement between the parties, requiring the Respondent and others to pay a certain amount of equity repurchase amounts. The Court pointed out that the content of the Arbitration Award is clear, requiring related parties, including the Respondent, to pay a certain amount of money to the Applicant for equity repurchase. The Court believed that the content of the Arbitration Award did not violate the constitutionally guaranteed basic rights of the people, nor did it violate other statutorily mandatory or prohibitive provisions. The Court further stated that the judgment of this Arbitration Award neither violated the general interests and moral concepts of Taiwanese society nor contravened public order and good morals. Although the relevant parties raised objections, they failed to specify how the Arbitration Award violated public order and good morals under the Civil Code of Taiwan or the Company Law. The Court emphasized that the supplementary agreement to the capital increase agreement was an agreement reached by both parties based on their respective business judgments. Unless there is an explicit legal prohibition, there is no legal reason for it to be deemed illegal. Finally, the Court considered that the recognition of the Arbitration Award is a matter of determining whether the substantive legal relationship in the Arbitration Award is correct, rather than a judgment procedure in litigation. Therefore, the Court should grant the Applicant's request and approve the recognition of the Arbitration Award.

In conclusion, the Taiwan's New Taipei District Court ruled to recognize the No. 0623 (2022) Shanghai Trade Arbitration Arbitration Award made by the Shanghai International Economic and Trade Arbitration Commission.