The SHIAC Arbitration Rules for 2024 in a nutshell

Background of updating the SHIAC Arbitration Rules

The current SHIAC Arbitration Rules consist of the Shanghai International Economic and Trade Arbitration Commission (Shanghai International Arbitration Center) Arbitration Rules and the China (Shanghai) Pilot Free Trade Zone Arbitration Rules, both of which became effective on January 1, 2015. As a leading arbitration institution in Mainland China, SHIAC has stayed close to the forefront of practice and commenced the amendment of its 2015 version of arbitration rules in November 2021. In July 2021, the Ministry of Justices of P.R.C. released its draft amendment to the Chinese Arbitration Law (1994), thus the Chinese institutions were called upon to reconfigure their existing rules, and, in May 2022, the PRC government also announced a policy of promoting Beijing, Shanghai, Guangzhou, Shenzhen and Hai’nan into international commercial arbitration hubs. On December 1, 2023, the Shanghai local legislature on fostering the city as an international commercial arbitration center officially came into force. Following this and rounds of professional consultation, SHIAC now ushers in the SHIAC Arbitration Rules (2024).

The SHIAC Arbitration Rules (2024) contain the collective wisdom of 27 experts, including distinguished Professor Ding Wei, Vice- Chair of SHIAC, coming from prominent law firms, big corporations and experienced judges of commercial courts.

Structure of the SHIAC Arbitration Rules (2024)

The new SHIAC arbitration rules are designed as a group of instruments that include the SHIAC Arbitration Rules (2024), the SHIAC Arbitration Rules for Aviation, the SHIAC Arbitration Rules for Data, the SHIAC Guidance for Online Arbitration and the SHIAC Guidance for Services for Ad Hoc Arbitration.

To further strengthen the capacity of SHIAC and assist the Chinese companies going global with more accessible arbitration services, the SHIAC Arbitration Rules (2024) mandate in Article 2 that SHIAC establishes its first overseas branch, that is, the Shanghai International Arbitration (Hong Kong) Center. Accordingly, Chapter 9 of the SHIAC Arbitration Rules (2024) is dedicated to regulating the arbitration procedures in SHIAC’s new center in Hong Kong. At the same time, the SHIAC Arbitration Rules (2024) specifically amend the arbitration fee schedules, including to clarify the fee cap and the installation method of making the advancement.

Major changes in the SHIAC Arbitration Rules (2024)

In summary, 15 major changes across the provisions on the parties, the arbitrators and the institution have been made in the SHIAC Arbitration Rules (2024).

Further enriching the parties’ procedural options

The development of international arbitration in recent years has been driven by the user’s needs. In addition to the traditional demands of the parties for international arbitration, such as fairness, professionalism and convenience, “green,” “smart,” “pluralistic,” “economical,” “transparent” and “predictable” are becoming the new development concepts of international arbitration. The new rules respond in several ways:

(a) Enriching the options for consolidated arbitration. For reasons of efficiency or strategy, the parties may need to resolve disputes between multiple parties in a single case. Article 15 of the rules provides for consolidation of multiple contracts to one arbitration, allowing the parties to initiate an arbitration on the consolidation of disputes arising from the same transaction or the same series of transactions, or the existence of related contractual relationship, or the subject matter of arbitration is of the same type, subject to certain conditions. At the same time, Article 40 provides for the tribunal to decide upon consolidation of arbitrations where the subject matter of multiple arbitration is of the same type or is related.

(b) Improving the system for third parties to be joined. Article 41 provides for “joinder of third parties” and “joinder of other parties to the arbitration agreement” that were written in the FTZ Arbitration Rules and standardizes the constitution of arbitral tribunals in such circumstances. In order to effectively balance the procedural autonomy of the parties and the control of the arbitral tribunal over the efficiency of the arbitration, the rules also respond to the changes in the constitution of the arbitral tribunal that may arise due to the joinder of third parties and distinguishes between the situations of “joining before the constitution of the tribunal” and “joining after the constitution of the tribunal.” Article 41(3) provides that, after the Secretariat agrees to the joinder of third parties in the arbitration proceedings, if the multiple claimants or the respondents cannot jointly select the co-arbitrator, all the arbitrators in the case shall be appointed by the chairman of SHIAC, unless the parties have otherwise agreed on the constitution of the arbitral tribunal. Article 41(4) provides that, if the joined third parties and the original parties fail to reach an agreement on the constitution of the arbitral tribunal after the arbitral tribunal has been constituted, the arbitral tribunal has the right to disagree with the joinder of third parties in the arbitral proceedings.

(c) Providing interim measures and emergency arbitrator relief. The new rules incorporate the “interim measures” in the FTZ Arbitration Rules and further optimizes the “Emergency Arbitrator Procedure.” Article 25(2) shortens the time for the Chairman of SHIAC to appoint an emergency arbitrator from three days to two days. Article 26 further shortens the time limit for an emergency arbitrator to decide on interim measures to ten days for “unsecured” cases and five days for “secured” cases. The rules continue the “pre-arbitration interim measures” of the FTZ Arbitration Rules and shortens the time limit to two days for SHIAC to forward an application for pre-arbitration interim measures to a court of competent jurisdiction.

(d) Further opening the methods for selecting arbitrators. Article 30 allows the parties independently to agree on the constitution of the arbitral tribunal without violating the mandatory provisions of the law. Article 31 expands the scope of arbitrators from outside the panel that the parties may recommend to all members of the arbitral tribunal. Article 32 allows the parties to agree that the presiding arbitrator shall be jointly appointed by the two co-arbitrators and allows the parties to apply to SHIAC to use the “recommended short list” method to determine the presiding arbitrator. This responds to the need for party autonomy in the selection of arbitrators.

(e) Smooth online arbitration. Articles 10 and 39(2) provide that the parties may agree that all or part of the arbitration proceedings shall be conducted online through the SHIAC E-Platform or other internet or private networks and stipulate that the principles of technological neutrality, efficiency and convenience, equality of rights, safety and reliability shall be followed when using digital intelligence technology. Article 9 establishes the principle of encouraging green arbitration and stipulates that parties may give priority to electronic submission of materials and Article 20 and Article 85 also stipulate that documents and materials may be served electronically.

Further strengthening the procedural control of the arbitral tribunal

The rules provide robust procedural powers of the arbitral tribunal:

(a) The tribunal has the power to regulate party conduct. Article 8 stipulates that the parties shall participate in arbitration following the principles of good faith and conduct the procedures with goodwill and cooperation. The tribunal has the power to regulate bad behavior. In the case of the situation where the parties deliberately change their representatives that may create a conflict of interest between the representative and the arbitrator after being notified of the constitution of the arbitral tribunal, Article 21(3) provides that the parties shall submit a written application to the arbitral tribunal for a change of representation, and the arbitral tribunal shall have the discretion to decide on the matter.

If a party requests to withdraw its application for arbitration after the conclusion of the arbitration procedures to avoid an adverse award, Article 52(3) allows the tribunal to refuse to agree to withdraw and continue the arbitration proceedings or to allow the opposing party to file a counterclaim for the arbitration costs already incurred. If parties submit their documents, applications and/or evidentiary materials late or deliberately delay the proceeding of the case, Article 63(4) allows the tribunal to punish the party at fault when allocating the arbitration costs.

(b) The tribunal has the right to declare the procedures concluded. To encourage the arbitral tribunal to improve the quality and efficiency of the hearing, Article 51 provides that the tribunal may determine the deadline for the parties to submit documents and evidence and decide to conclude the procedure after such time limit. In exceptional circumstances, the tribunal may, at any time before the award is rendered, decide to resume the proceedings at the request of the parties or if the tribunal deems it necessary.

(c) The tribunal has the power to make procedural decisions. Article 6 adopts the principle of “competence-competence,” that is, after the arbitral tribunal is constituted, SHIAC authorizes the arbitral tribunal to make a jurisdictional decision, and the jurisdictional decision made by SHIAC on the basis of prima facie evidence shall not prevent the arbitral tribunal from making a new decision based on facts or evidence found in the course of the hearing. Article 6 also provides that the tribunal may determine the existence of a written arbitration agreement. Article 39 provides that the tribunal may decide to hold the hearing in whole or in part online, may issue procedural instructions, issue a list of issues, hold a pre-hearing conference, convene a preliminary hearing, prepare a statement of the scope of hearing, make an interim award or a partial award and may also make arrangements for the exchange and verification of evidentiary materials, witness testimonies and post-hearing submissions.

(d) The tribunal shall have the power to determine the rules of evidence, which do not have to be the same as those in domestic litigation; especially in the hearing of foreign-related arbitration cases, the cross-jurisdictional nature of the case makes it difficult for a single set of evidence rules of a fixed paradigm to meet the needs of the individual case and may also be inconsistent with the expectations of the parties in the arbitration agreement for the processing of evidence. Article 46(5) provides that the form of evidence submitted by the parties and the matters related to the submission of evidence shall be in accordance with the rules of evidence applicable to the case; and if the parties have not agreed on the rules of evidence or the agreement cannot be enforced, the arbitral tribunal may make a decision by reference to the relevant provisions applicable to the law in the arbitration proceedings.

(e) The tribunal shall have the power to determine the applicable law. Article 59 provides for the ascertainment and application of law in foreign-related cases. If the parties have not agreed on the applicable law, the tribunal has the right to determine the law and rules applicable to the arbitration agreement and the substantive dispute. The tribunal may decide on the method of ascertaining foreign laws and rules, including adopting the examined legal opinions of witness(es) retained by the parties. Where the parties agree, the tribunal may apply principle of fairness and reasonableness if it does not violate the mandatory provisions of the law of the seat of arbitration.

Further clarifying the institution’s procedural administration

The new rules introduce innovative powers and procedures to strengthen the case management function of the institution:

(a) Arbitrator disclosure. Article 35 improves the obligation of arbitrators (including emergency arbitrators and mediators) to disclose information from the acceptance of the appointment to the conclusion of arbitration proceedings. The IBA Guidelines on Conflicts of Interest in International Arbitration can be used as a reference for disclosure of arbitrators and the disclosure of third-party funding for arbitration. In addition, considering that the independence and impartiality of experts and appraisers in the arbitration process is also an important aspect affecting the procedural rights of the parties, Article 48(4) provides that the expert or appraiser shall also disclose in writing the circumstances that may give rise to doubts about his or her independence and impartiality before accepting the selection or appointment. To prevent the parties from abusing the right, Article 36(5) provides that, after being informed of the constitution of the tribunal, if a matter arises between a party and an arbitrator that the arbitrator should have disclosed as a result of the party’s conduct, that party is deemed to have waived its right to challenge the arbitrator on the same grounds.

(b) Improving the efficiency of arbitration procedures. The new rules unify the procedural time limits for foreign-related cases and non-foreign-related cases, except for the time limit for rendering awards. For example, the time limit for submitting the defense, presenting evidence and applying for counterclaims is no longer distinguished between foreign-related cases and domestic cases. The new rules also merge the original summary procedures and the small claims procedures under the FTZ Arbitration Rules into the new Summary Procedures.

(c) Optimizing the service of documents. Article 85 makes clear provisions regarding the service of documents, the method of service, the rules for service by mail, the rules for electronic service, the change of service address, the time of service and the handling of objections to service raised by the parties. Article 85(7) provides that if a party objects on the ground that it has not received the arbitration documents or notice, it shall state the reasonable reasons for not receiving the documents.

(d) Increasing the transparency of arbitration. The new rules address concerns on transparency in international arbitration and the principle of confidentiality. Article 11(4) provides that SHIAC may, with the written consent of the parties, publish the redacted award. The new rules omit a former provision that the chairperson of the SHIAC may not explain the reasons for the decision on the challenge of arbitrators.

(e) Upgrading mediation services. The SHIAC Arbitration Rules (2024) incorporate the mediation procedures prescribed in the FTZ Arbitration Rules and covers the mediation before the constitution of the arbitral tribunal to all types of cases without increasing the costs of the parties. The mediator will no longer be a member of the arbitral tribunal in the same case. To facilitate the parties to enforce settlement agreements in the country where the Convention on International Settlement Agreements Resulting from Mediation comes into force in the future, Paragraph (6) of Article 54 of the SHIAC Arbitration Rules (2024) adds a provision that the parties may request the mediator to endorse the settlement agreement or apply to SHIAC for certifying the mediation procedures.

Final remarks

The new SHIAC Arbitration Rules (2024) propel SHIAC into a world-class arbitral institution adopting international best practice with a firm commitment to parties on their procedural rights. At a time when the users perspective has become the voice of the international arbitration community, the SHIAC Arbitration Rules (2024) respond to the needs of the whole market. The SHIAC Arbitration Rules (2024) find a balance between party autonomy, the procedural management power of the arbitrators and the needed safeguard and support from the institution. Altogether, the SHIAC Arbitration Rules (2024) serve to resolve the disputes in a fair, professional and efficient manner.

Authors:

Wang Weijun
Secretary General of Shanghai International Arbitration Center and 
Vice President of Shanghai Arbitration Association

Li Tingwei
Senior Manager of Research Department of Shanghai
International Arbitration Center