China: arbitration round-up 2012/2013

Practical Law UK Articles 6-523-8046 (Approx. 4 pages)

China: arbitration round-up 2012/2013

by PLC Arbitration in association with Freshfields Bruckhaus Deringer

CIETAC

The China International Economic and Trade Arbitration Commission's (CIETAC's) revised arbitration rules came into force on 1 May 2012 (see Legal update, CIETAC Arbitration Rules 2012 come into force). The introduction of the new CIETAC Rules caused quite a stir when they resulted in an open dispute, and then a split, between the CIETAC Beijing headquarters and the Shanghai and South China sub-commissions. In an announcement dated 31 December 2012, CIETAC Beijing issued some advice to parties who had already agreed to arbitrate their disputes with the Shanghai or South China sub-commissions (see Legal update, CIETAC announcement regarding sub-commissions). However, the uncertainty surrounding certain CIETAC clauses that fail to specify Beijing as the seat of the arbitration looks set to continue into 2013.

On 24 September 2012, CIETAC also launched a new office in Hong Kong (see Legal update, CIETAC opens Hong Kong centre). The new centre, the first CIETAC centre outside the mainland, is intended to provide a platform for co-operation between the arbitration practitioners in Hong Kong and Mainland China.

Investment treaties and free trade agreements

China has continued to demonstrate interest in bilateral investment treaties (BITs) and Free Trade Agreements (FTAs) with the three recent developments:

On 13 May 2012, China, Japan and South Korea signed a trilateral agreement for the promotion, facilitation and protection of investments, complementing the existing bilateral investment treaties between these three states, which remain in force. Article 25 states that the agreement will not affect the rights and obligations of a contracting party (including those relating to treatment accorded to investors of another contracting party) under any existing bilateral investment agreement which is in force.
China, Japan and South Korea have also issued a joint statement setting out their intention to establish a free trade agreement. This would provide "a comprehensive and institutional framework in which a wide range of trilateral cooperation would evolve". The first formal negotiation meeting is expected to be held in the first half of 2013, with a target date of 2015 for bringing the agreement into force.
Finally, the publication of the new model US BIT earlier in the year (see Legal update, 2012 US Model BIT released) enabled negotiations for a China-US investment treaty to resume in October 2012, although the timing and outcome of these negotiations remains uncertain.

(For further discussion of all these developments, please see Article, China: Strengthening investment and free trade protections.)

China: arbitration round-up 2012/2013 | Practical Law