Ningbo court ruling supports ‘hybrid’ arbitration clause

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In March this year, Ningbo Intermediate People’s Court, in Zhejiang province, ruled in a case where the validity of a “hybrid” arbitration clause was challenged. The clause provided for arbitration at the China International Economic and Trade Arbitration Commission (CIETAC) under the United Nations Commission on International Trade Law (UNCITRAL) rules.

ddpicDuring the course of the arbitration proceedings, the respondent applied for invalidating the arbitration clause to Ningbo Intermediate People’s Court based on two main grounds: 1) “Arbitration shall take place at CIETAC”, as designated in the clause, is an agreement on the place of arbitration rather than the arbitration institution, which does not satisfy the element of “the chosen arbitration institution” under China’s Arbitration Law; and 2) an arbitration clause applying the UNCITRAL rules amounts to an agreement on ad hoc arbitration. Ningbo Intermediate People’s Court made its final decision that the arbitration clause in the above case does not violate the stipulations of the Arbitration Law and the request to declare the clause invalid by the respondent would be denied.

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The author, Meng Shi, is a case manager at the China International Economic and Trade Arbitration Commission