Best practice in China

Good news: by the end of 2016, HKIAC, SIAC and the ICC will all have opened offices in the Shanghai Free-Trade Zone. This signals a new era of closer cooperation with China’s arbitration commissions and a higher profile for best practice training.

Timeline

November 2015—HKIAC representative office opens in China (Shanghai) Pilot Free-Trade Zone.

February 2016—Shanghai Municipal Commission of Commerce approves ICC application to open an office.

March 2016—SIAC representative office opens in China (Shanghai) Pilot Free-Trade Zone.

Three prominent international arbitration institutions are establishing a presence of the People’s Republic of China, a reflection of the importance of the Chinese economy and the growing number of China-related arbitrations.

HKIAC in Shanghai

In 2015, the Hong Kong International Arbitration Centre became the first offshore arbitration institution to establish a presence in the PRC, heralding a new era of closer cooperation with local arbitration commissions. Through its Shanghai office, HKIAC intends to assist in promoting best practice, training Chinese arbitrators and practitioners and facilitating the development of a pro-arbitration policy across China.

Now one of the world’s most important international arbitration institutions – particularly for the resolution of China-related disputes – HKIAC’s record for enforcement in the PRC is impressive: in the period 2010 to 2014, PRC courts did not refuse to enforce any HKIAC awards.

SIAC in Shanghai

The aims of the Singapore International Arbitration Centre, when it opened its own office in Shanghai in March this year, were similar to HKIAC’s: to work with China’s arbitration commissions to encourage best practice through networking events and training workshops for practitioners.

ICC in Shanghai

The International Court of Arbitration of the International Chamber of Commerce will open its own office in China in 2016. The ICC is currently completing its registration with the Chinese State Administration for Industry and Commerce.

China-seated arbitrations

None of the three institutions will, at least initially, administer China-seated arbitrations. This is not surprising. Readers will recall that it was once commonly held that arbitration agreements providing for disputes to be arbitrated in the PRC before a foreign arbitration institution are invalid, as a matter of PRC law. This position shifted in 2014, when the Anhui court in the Longlide case – supported by the Supreme People’s Court – upheld the validity of an arbitration agreement that provided for an ICC arbitration seated in Shanghai (Longlide Packaging Co Ltd v BP Agnati SRL).

Whether any award rendered by a foreign arbitration institution in the PRC jurisdiction will be regarded as a domestic or non-domestic award – and whether it can therefore be enforced in the PRC – is still not absolutely clear.

Our view is that parties should always think carefully before agreeing to a foreign arbitration institution administering arbitration proceedings seated in the PRC.

James Rogers is a partner in our London office and Kevin Hong is an associate in our Hong Kong office.