CIETAC’s guidelines sign of a new spring for arbitral evidentiary rules?

In resolving foreign-related commercial disputes, arbitral institutions in China have always relied on the relevant evidentiary rules in China’s Arbitration Law and Civil Procedure Law. This has given arbitration procedures serious litigation-esque leanings.

In response to the ever-rising cry in arbitration and legal circles for independent evidentiary rules to be formulated, the China International Economic and Trade Arbitration Commission (CIETAC) issued the CIETAC Guidelines on Evidence on 5 February, and they took effect on 1 March.

In contrast to prior rules of evidence characterized by their strong litigation flavour, the guidelines contain several breakthrough features.

Greater discretion

Based on the special nature of arbitration autonomy, the guidelines bestow on tribunals greater discretion in arbitration procedures in a number of areas.

Form of evidence. Documentary evidence not only includes documents in hard copy – it also includes readable soft copy evidence, such as data messages (e.g. electronic documents, e-mail), among others.

Time limit for adducing evidence. The tribunal may specify a reasonable period of time for the parties to submit evidence, or it may set a series of deadlines for the submission of evidence on separate occasions.

Exchange of evidence. Following consultations with the parties, the tribunal may opt for a different method of evidence exchange than forwarding the evidence via the CIETAC Secretariat.

Cross-examination procedure. The tribunal may decide whether to broadcast audio-visual materials and whether to broadcast audio-visual materials in whole or in part during the hearings depending on the circumstances.

The tribunal may also institute a time limit on which witnesses, experts, examiners and forensic expert witnesses can be questioned or cross-examined. It may decide to treat the written testimony or opinions of the witnesses as their responses to questioning as well, and then proceed directly to the cross-examination stage.

Admission of evidence. The tribunal may decide not to admit as evidence a certain exhibit submitted by a party, per the relevant rules governing obligations that exempts persons from disclosure, e.g. communications between lawyers and clients subject to confidentiality or evidence that involves settlement discussions between the parties.

Greater initiative

The guidelines bestow upon the tribunal the right to directly gather evidence at its own initiative. Furthermore, where a party requests that the tribunal order the other party to disclose a certain piece of documentary evidence or a specific piece of documentary evidence of limited scope, the tribunal may reject the specific request for disclosure.

Alternatively, if the relevant party refuses to make the disclosure without just cause after it has approved that specific disclosure, the tribunal may make a presumption that is adverse to the party that refused the disclosure.

Given that the essential attribute of arbitration is its contractual nature, the guidelines inject the will of the parties into the dispute resolution process to a great extent, as permitted by the laws applicable, in an effort to achieve a satisfactory resolution.

For example, to cut down on time and economic costs, the parties may specify that documentary evidence generated outside of China does not need to undergo notarization and authentication to evidence its validity; at the same time, they may consult with the tribunal about dispensing with the translation of evidence written in a language other than the language of arbitration.

The process of arbitration is, in essence, the presentation, explanation, questioning and judging of evidence in a fair procedure. Accordingly, the issue of evidence is, without a doubt, one of the core issues of commercial arbitration.

Notwithstanding the fact that the provisions of the guidelines, as compared with the past litigation-esque rules of evidence, are undoubtedly more user friendly and better reflect the autonomy of the parties, the parties should nonetheless pay particular attention to several issues when applying the guidelines.

Firstly, the guidelines are not an integral part of CIETAC’s Arbitration Rules so they are not automatically applicable where a relevant dispute is submitted to CIETAC and it has been agreed that its Arbitration Rules will apply. If the parties propose to have the guidelines or relevant provisions thereof applied in the event of dispute, they should expressly provide for the same in their arbitral agreement. If they fail to do so, the relevant evidentiary rules in the Arbitration Law and the Civil Procedure Law will continue to apply.

Secondly, the guidelines were formulated and issued by CIETAC. If the parties submit a dispute to an arbitral institution other than CIETAC and have agreed to apply the guidelines, their application may prove problematic if that arbitral institution does not recognize the guidelines.

As an alternative, the parties could reach a consensus and decide not to directly invoke the guidelines, but instead apply certain provisions of the guidelines partially or in a modified manner and directly incorporate the relevant provisions in their arbitral agreement, or they could agree to have them used solely for reference purposes without being bound by them.

Lastly, because implementation of the guidelines has only just begun, the attitude toward their application in judicial practice remains unclear. In a situation such as in China, where arbitration is subject to judicial scrutiny, it is, on the one hand, inevitable that tribunals will be somewhat wary of the application of the guidelines, greatly diminishing their practical effect. On the other hand, even if tribunals are willing to apply the guidelines in dispute resolution, the arbitral awards secured by parties could face uncertainty in enforcement due to evidence issues, as they could trigger the vacation of arbitral awards.

In cases where arbitration awards may be required to be submitted to Chinese courts for assistance in enforcement, parties need to carefully consider how to apply the guidelines before they proceed with arbitration.

Sara Sun is an associate at Martin Hu & Partners