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China’s arbitration practice has its own development track, but how should it assimilate with international norms? Richard Li reports

Shanghai, the jewel in the crown of China’s financial landscape, has recently made a name for itself with another professional service – arbitration. The city has greeted the arrival of three world-leading arbitral institutions from outside the mainland. Inspired by a supportive policy of the State Council, the Hong Kong International Arbitration Centre (HKIAC), the Singapore International Arbitration Centre (SIAC), and the International Chamber of Commerce (ICC) have all established a representative office in Shanghai’s Free Trade Zone.

The landing of international arbitral bodies has two implications: tougher competition, but also further collaboration with their leading mainland peers; both will pump new vigour into the development of arbitration in China. The development is also heating up discussion about the future of China’s arbitration market. How, and to what extent, should mainland China’s arbitration practices be internationalized?

Learning from international arbitration experience will certainly benefit China, as the increasing integration of the country into the global market means more disputes may occur between Chinese and foreign parties. Despite a gradual convergence in arbitration practices between mainland Chinese and international outfits, there remain significant differences, and room for improvement.

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Competition or collaboration?

Top-Tier international arbitral centres have set up offices in Mainland China.
How will this change the Dynamics in the Mainland arbitration market?
We asked some of the major players for their views


“The total number of arbitrations arising out of Asia has been increasing steadily in various institutions. Experience has proven that the opening of a new office has a positive effect on the number of new cases filed at arbitral institutions.

Fan Mingchao
Fan Mingchao

“Establishing a representative office in mainland China would allow the ICC [International Chamber of Commerce] to establish stronger ties with the Chinese authorities, allowing us to more effectively advocate for a liberalization of Chinese law to allow the international arbitral institutions like ICC to administer arbitrations in mainland China, and to increase its visibility in mainland China and establish closer connections with potential users in mainland China.”

FAN MINGCHAO
North Asia Director,
ICC Arbitration & ADR


Kevin Nash
Kevin Nash

“The establishment of the SIAC’s Shanghai office is another indication of a shift of the axis of arbitration to Asia. In the past, disputing parties in cross-border transactions would typically go to London, Paris or Stockholm. As the bargaining power of Asian parties has increased, it is now much more common, and often advantageous, for Asian parties and Chinese parties to instead go to the SIAC or other arbitral institutions located in the Asia-Pacific region.

“In terms of what Chinese arbitral commissions could learn from the SIAC, one point may be its appeal to international users. The SIAC has positioned itself as a global arbitral institution located in Asia, and this is reflected in the balance between civil law and common law in the rules and procedures, the SIAC’s international panel of arbitrators, and the SIAC Court of Arbitration, which is comprised of 18 eminent arbitrators and arbitration practitioners from around the world.”

KEVIN NASH
Deputy Registrar & Centre Director,
Singapore International Arbitration Centre


“Arbitration, as an important means of resolving international economic and trade disputes, has not yet really become popular and common in the international market. Despite the high volume of international economic and trade dealings, the percentage of disputes resolved through arbitration is tiny compared to litigation.

Wang Chengjie
Wang Chengjie

“Arbitration, as a dispute resolution method, requires joint efforts by the arbitration community to promote and publicize it. From this perspective, although it would seem that international arbitral institutions are in competition with their mainland peers, in fact our relationship is more collaborative. Mainland and international institutions can together create a good arbitration environment, promote improvement in the arbitration system, and truly procure the understanding and use of this system by companies and relevant parties.

“The arbitration system still [requires] continuous improvement. Providing arrangements demanded by parties requires joint study in the arbitration community, and is not something that any single institution can accomplish on its own. It requires joint study by mainland and international arbitral institutions.”

WANG CHENGJIE
Secretary General,
China International Economic and Trade Arbitration Commission


“China is one of the largest arbitration markets in the world. Since the launch of the One Belt, One Road initiative and the pilot free trade zones, the scale of both ‘going global’ and ‘attracting to China’ has consistently expanded. It is anticipated that the number of cross-border commercial disputes involving Chinese parties will grow
quite markedly.

Chen Fuyong
Chen Fuyong

“With changes to economic policies, the mainland arbitration market is also showing an internationalization trend. The entry of the HKIAC, the SIAC and the ICC International Court of Arbitration into the Shanghai Free Trade Zone is just a further extension and expansion of this trend, bringing the international competition within mainland borders. For mainland arbitral institutions this means that the window when the mainland was closed to permit self-development has in fact quietly ended.

“Of course, this also has its advantages. For us it presents more opportunities to do exchanges with, and learn from, international arbitral institutions from a short distance. We can observe their different means of operation and rules, giving rise to a fairly clear reference system in the mainland. This will have a direct and profound impact on the mindset of mainland arbitral institutions in respect of their own development.”

CHEN FUYONG
Deputy Secretary-General,
Beijing Arbitration Commission/Beijing International Arbitration Centre


Lim Seok Hui
Lim Seok Hui

“In the past five years, Chinese parties have consistently ranked among Singapore International Arbitration Centre’s [SIAC] top five foreign users, and were in fact the top foreign user in 2012 and 2014. Hong Kong parties also figure prominently as one of the SIAC’s top five foreign users. While cases will continue to be run out of Singapore, the Shanghai office will increase the SIAC’s engagement with Chinese users and help to promote and develop best practices.

“The SIAC has become a preferred arbitral institution for Chinese parties on account of its neutrality, speed, competitive cost structure and enforceability of awards.”

LIM SEOK HUI
Chief Executive Officer
Singapore International Arbitration Centre


HKIAC, SIAC and ICC’s opening of their offices in mainland China represents a significant step for international arbitral institutions to connect mainland China with international arbitration practice and to foster further developments of arbitration in mainland China.

Joe Liu
Joe Liu

“With an onshore office, the HKIAC is now in a better position to bring its world-class service to its mainland users, which includes support for HKIAC hearings on the mainland. Through the office, the HKIAC can seek closer co-operation with Chinese arbitral institutions, and provide more regular arbitration training in mainland China. We will also be able to monitor China’s arbitration developments more closely and explore the possibility of providing other appropriate services as may be permitted under Chinese law.”

JOE LIU
Managing Counsel,
Hong Kong International
Arbitration Centre

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