Regulation & Law

Li Hu (CIETAC): "Last year CIETAC accepted 2,298 new cases, 476 of them international"

Leaders League had the privilege of sitting down with Li Hu, Deputy
Secretary of Beijing-based arbitration center CIETAC. He provided a
Chinese perspective on the state of alternative dispute resolution.

Leaders League had the privilege of sitting down with Li Hu, Deputy Secretary of Beijing-based arbitration center CIETAC. He provided a Chinese perspective on the state of alternative dispute resolution.


LEADERS LEAGUE. Some American and European clients are uncomfortable participating in an arbitration with a Chinese company in China as they doubt the objectivity of local seats, what are your thoughts on this?


Li Hu. Actually, China-seated arbitration involving foreign parties has developed rapidly in recent years. As far as CIETAC arbitration is concerned, we have witnessed steady growth in terms of both caseload and disputed amount. Last year, CIETAC accepted 2,298 new cases, including 476 international ones totaling $10.5 billion. As regards these international cases, the foreign parties come from 60 countries and there have been over 40 cases where neither party was Chinese. This fact demonstrates the confidence foreign parties have in Chinese arbitration, especially CIETAC arbitration.


The concern of the foreign party about Chinese arbitration is understandable, due to the different practices implemented in a Chinese arbitration. Enhancing the understanding of Chinese arbitration practice may, to a large degree, dispel the doubts surrounding arbitration in China. The pool of arbitrators and ADR lawyers still needs time to be built. By doing so, we may strengthen the credibility of arbitration while promoting the creeping growth of the arbitration community. The key point is that the arbitration institution by itself does not resolve the disputes, it just provides the administration services for their resolution. The case manager of the institution may be appointed as the tribunal secretary and perform the functions of that secretary.Such a practice is a salient feature of Chinese arbitration.


Can you tell us a bit more about CIETAC arbitration?


By combining arbitration with conciliation, we make use of the advantages of both arbitration and conciliation and save time and money for the parties so they maintain a good commercial relationship. What’s important is that the consent award based on the settlement agreement can be performed by the parties automatically, which means there is generally no subsequent setting aside or enforcement procedure at court.

 

During a CIETAC arbitration, it is possible for the tribunal to adopt an inquisitorial or adversarial approach and conduct oral hearings. By invoking CIETAC Guidelines on Evidence 2015, a cross-examination may also be conducted in a CIETAC arbitration. Compared with UNCITRAL Model Law and the usual practice of international commercial arbitration, there is also a lot of room for improvement for Chinese arbitration. For example ad hoc arbitration may be appropriately clarified and regulated by Chinese arbitration law. There are more than 250 arbitration institutions in China, most established since the Chinese Arbitration Law of 1994. They mainly deal with domestic arbitration. When choosing to arbitrate in China, the foreign parties may first choose institutions such as CIETAC and the China Maritime Arbitration Commission (CMAC), which have experience of conducting foreign-related arbitration since the1950s.

 

What does the future hold for mediation in China, and in Asia more generally?


Mediation or conciliation is very popular in China. The difference between a mediator and a conciliator is that a mediator encourages the parties to reach a settlement agreement, but a conciliator may also actively put forward proposals for the consideration of the parties. Mainland China is currently implementing the approach of conciliation. Traditionally, influenced by Confucianism, Chinese people do not like to adopt the adversarial way, i.e. court litigation, to resolve their disputes. The general principle is that harmony is most precious. They do not want to lose face. Instead, conciliation is welcome and popularly adopted. In practice, a large quantity of disputes are resolved through conciliation. In China, besides the above-mentioned conciliation in arbitration, we have also independent conciliation. Under the Chinese arbitration law, once the parties have reached the settlement agreement via conciliation in arbitration, except for the consent award, they may request the tribunal make the conciliation statement in accordance with the settlement agreement. The conciliation statement is legally binding upon the parties once it has been sent to and accepted by the parties. As for independent conciliation, a successful one ends with a settlement agreement between both parties. The parties may request the competent court to confirm and transfer the settlement agreement into conciliation statement, which is legally binding.

 

 

Interview by Camille Guével

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The growth story of China’s legal and financial industries is both a product and a testimony of this country’s continuous economic transformation: nascent but fast-growing, vastly different from a decade ago and still rapidly changing. The game has started, and faced with various issues, both international and domestic firms are constantly responding, rethinking, reshaping, readjusting… To survive and thrive, they need to master the fine art of balance between growth and profitability, expansion and quality control, opportunities and risks.
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