International arbitrations for Chinese parties on rise

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The Singapore International Arbitration Centre (SIAC) has witnessed a recent increase in the number of cases involving Chinese parties being filed at the centre.

In the past three years, the number of cases that have involved Chinese parties has grown dramatically, and according to the SIAC’ own statistics, the data can be tracked as follows:

International arbitrations for Chinese parties on rise 1 eng

In 2011, the total sum in dispute in cases involving Chinese parties was S$106.5 million (US$85.3 million), while in 2012 this amount grew to S$416 million. Similarly, the average sum in dispute for cases involving Chinese parties was S$4.63 million in 2011 and S$8 million in 2012. The highest sums in dispute were S$20 million and S$114 million, respectively, for 2011 and 2012.

Cases involving Chinese parties included disputes from varying sectors and industries including international trade, commercial agreements, corporate joint venture disputes and shipping. The pie chart demonstrates that the trade sector dominated in disputes involving Chinese parties in 2012.

DD_SIAC_Chart_EngSIAC retains a panel of accredited arbitrators made up of local and international experts, from which the majority of SIAC appointments of arbitrators are made. SIAC also appoints arbitrators for ad hoc arbitrations and is the statutory appointing authority for arbitrators under Singapore law.

The arbitrators on SIAC’s panel hail from over 32 jurisdictions and nationalities. Sixteen arbitrators on the panel are resident in China and another 21 are resident in Hong Kong, making SIAC fully capable of appointing appropriate persons from China to its cases, where necessary. Five Chinese arbitrators were appointed in SIAC cases in 2011 and 2012.

Experience suggests that an arbitration at SIAC with a sole arbitrator is likely to require between nine and 12 months, and up to 18 months for a three-member tribunal, from commencement of arbitration to the delivery of an award.

The SIAC has also introduced an expedited procedure which mandates that an award be delivered in six months from the constitution of the tribunal. Chinese parties have been major users of this procedure. The SIAC has handled more than 77 arbitrations under the expedited procedure, 25 of them involving Chinese parties.

The SIAC also introduced provisions for the appointment of an emergency arbitrator in its 2010 rules. An emergency arbitrator deals with requests for urgent interim relief where a tribunal has not been constituted. The centre has received and handled 27 such applications thus far. An emergency arbitrator is typically appointed within 24 hours and such applications are normally dealt with in a matter of days.

Out of the 52 cases involving Chinese parties in 2012, 18 cases saw Chinese parties as claimants and 34 cases saw Chinese parties as respondents. Further, among these 34 cases, 27 Chinese respondents retained lawyers to represent them in the arbitration; seven are either self-represented or did not participate in the arbitration; and two Chinese respondents filed counterclaims and are actively involved in the arbitrations.

Our experience indicates that arbitrations to be conducted in the Chinese language are on the rise. Language is a key factor in all contracts and arbitrations with Chinese parties, and all parties involved would be well advised to pay particular attention to the accuracy of translations rendered.

We notice that quite a lot of Chinese companies have offshore subsidiaries registered at British Virgin Islands, Cayman Islands, Hong Kong, etc. We have also therefore administered cases where both the claimant and the respondent are China-related companies.

For example, in a recent case, the claimant was an offshore company with its main business office in China and the respondent was a company registered in China. The parties referred their dispute to the SIAC pursuant to the arbitration agreement in a co-operation contract. The law of the contract is PRC law. Both parties were represented by Chinese law firms and the language of the arbitration was Chinese.

The SIAC has endeavored to establish strong relationships with the legal and business communities in China. To this end we organise seminars, for example a seminar for lawyers from the Tianjin Bar Association earlier this year, and a conference focused on the technology, media and telecoms sectors in Beijing shortly thereafter.

We have sought to closely interact with renowned legal experts on China to understand their experience with the jurisdiction. We have also worked closely with the judiciary there to exchange ideas and understand the necessary elements for arbitral awards to be enforceable in China. As a result, our processes for the scrutiny of awards have been tweaked accordingly in relation to China, and have consequently benefited.

The authors, N Vivekananda and Vicky Huili Zhao, are Deputy Registrar and Head (South Asia) and Associate Counsel, respectively, of Singapore International Arbitration Centre

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