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Watson& Band China Law Salon: Features and Latest Development of Arbitration Procedure
Mon Nov 30 15:08:00 CST 2020 Published by:Editor

On the afternoon of November 27, Watson & Band China Law Salon continued to present our new lecture through online broadcasting. We specially invited our Partner, Mr. Hairong Tao, to present this lecture entitled “Features and Latest Development of Arbitration Procedure. Mr. Tao is also an arbitrator at the Shanghai Arbitration Commission and the Shanghai International Arbitration Center. Mr. Tao is skilled in dispute resolution through litigation or arbitration. Throughout the years he has accumulated rich experience in the area of dispute resolution, and in particular in complicated commercial, corporate governance, intellectual property and real estate disputes.

 

The lecture covered the following six topics: overview; arbitration institutions; arbitrators; arbitration procedure; new developments in international arbitration centers; and selection and preparatory work in arbitration.


Section 1 provides an overview of arbitration. Mr. Tao first briefly introduced several concepts related to arbitration. It is due to the cost concern in the community’s dispute resolution process that arbitration – a reasonably structured mechanism for dispute resolution, came into existence. One significant reason for selecting arbitration is that an arbitral award has its legal validity and is subject to compulsory enforcement by the People’s Courts; in other words, its legal validity equals to that of an effective judgment issued by the court, and therefore arbitration becomes an alternative dispute resolution means that is often selected by the parties in dispute.


Secondly Mr. Tao clarified the scope of disputes acceptable at arbitration institutions: contractual or other types of property right disputes between equal subjects, including citizens, legal entities and other organizations. Meanwhile, Mr. Tao also informed that in practice such scope is gradually broadening – as long as the parties in dispute agree upon an arbitration agreement or clause, the arbitration institutions generally will accept their request for arbitration, except for the following types of cases that by nature cannot be resolved through arbitration: disputes involving personal relationships such as marriage, adoption, guardianship, maintenance and inheritance; administrative disputes that should be dealt with by administrative authorities in accordance with the law; and labor disputes and disputes over agriculture contracts within agricultural collective economic organizations.                                            


Talking about the features of the arbitration procedure (i.e. the procedure being confidential; the arbitral award being final and binding upon the parties; the jurisdiction being free and the procedure being determined at the parties’ discretion), Mr. Tao said that in connection with these features, there is actually much to be discussed with the audience. Taking the feature of confidentiality for example, such confidentiality lies in that apart from the arbitrators and staff of the arbitration institution (e.g. clerks), only the parties in dispute and their respective lawyers or entrusted agents, and witnesses or evaluators under particular circumstances, are allowed to participate the arbitration procedure. In principle no public hearing will  be allowed in an arbitration case and the number of lawyers or entrusted agents in an arbitration case is generally controlled at no more than 5. Consequently, compared with the judicial practice in People’s Courts that a public hearing will be held for a case unless there is an exceptional circumstance, the arbitration procedure has an obvious feature of confidentiality. Such confidentiality is of great value for many commercial entities, as the arbitration procedure can help them avoid unwanted adverse influences on their business reputation or protection for their technologies.


Section 2 relates to arbitration institutions. Mr. Tao mainly introduced the two arbitration institutions in Shanghai – Shanghai Arbitration Commission (the “SAC”) and Shanghai International Arbitration Center (the “SHIAC”), along with their respective cases accepted in the past years and their organization structuring. First of all, Mr. Tao cited some statistical data to show the current increase in arbitration in China. The 253 arbitration commissions across the nation accepted a total of 486,955 cases in 2019, reaching a total value in dispute at 759.8 billion RMB. An increase of 64.8 billion RMB was accomplished in the total value with respect to the preceding year 2018, reaching the annual growth rate of 9.3%. Similarly, the SAC and the SHIAC also welcomed continuous increases in both the number of cases accepted and the amounts of value in dispute, showing a pleasing and healthy development trend.


Section 3 relates to arbitrators. Mr. Tao first listed the conditions that must be met for being a qualified arbitrator, and explained the in-depth meanings behind some of the provisions. Then Mr. Tao introduced the current arbitrator compositions at the SAC and the SHIAC, including the total numbers of arbitrators, the numbers of arbitrators from Hong Kong and Macau Special Administrative Regions and Taiwan Region, and the numbers of foreign arbitrators. After that Mr. Tao analyzed the potential influences of the arbitrator’s backgrounds upon the result of a case from the following three perspectives: the arbitrator’s specialty background, work background and legal system background, based on which Mr. Tao also provided some tips for the audience when selecting appropriate arbitrator(s) in a specific case.


Section 4 relates to arbitration procedure and arbitration rules. After introducing the overall positioning of arbitration rules, Mr. Tao further focused on the reforms in the arbitration rules. Taking the SHIAC’s 1995 Free Trade Zone Arbitration Rules as an example, the provisions therein involved selection of non-listed arbitrators, participation in the arbitration procedure by a party not subject to the arbitration agreement, and amicable arbitration, all of which further revealed the feature of autonomy and self-determination of the arbitration procedure.


Section 5 relates to the latest developments in the construction of the international arbitration centers. In October 2019, Shanghai Arbitration Association (the “SHAA”) was officially registered. Being the first local arbitration association prepared and established by the provincial judicial and administrative authority in China, SHAA has 65 founding members and incorporates institutions including the SAC, the SHIAC and the Shanghai Sub-commission of the CMAC (China Maritime Arbitration Commission). We are proud to inform that Mr. Tao is among the said 65 founding members of the SHAA.


One significant step forward in 2020 should be the permitted establishment of the WIPO Arbitration and Mediation Center in Shanghai, the arbitral award issued by which will be deemed as a domestic award that will be subject to the court’s enforcement without the need for acknowledgement. The establishment of the Center is regarded as a qualitative breakthrough within the industry.


Meanwhile, Mr. Tao also mentioned the overall plan for in-depth reform that was issued by the SAC on November 20 a week ago. The plan was also currently in heated discussion within the industry: headed by the overall plan of the SAC this time, the SAC and the SHIAC were both driving into a motorway on the path to overall and in-depth reforms. Witnessing these pleasant developments, Mr. Tao also expressed his positive outlook into the future of arbitration services in Shanghai.


The last Section 6 relates to selection and preparatory work in arbitration, which has attracted great attention from various fields. Mr. Tao provided pertinent and practicable opinions and suggestions for the audience in terms of the selection of the arbitration commission, the selection of arbitrators, the preparatory work for arbitration and its overall requirements, and the selection of lawyers or entrusted agents. In particular he advised that suggestions from professionals in the arbitration area should be solicited when necessary, so that detailed issued would be neither overlooked nor amplified and the enterprise operation would be carried out with better planning, order and efficiency and at lower costs and risks.

 

For details for the lecture, you may enter our Broadcast Room and enjoy a playback of the lecture free of charge.


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