Editor’s Note: The Fourth Seminar of the International Commercial Expert Committee of the Supreme People’s Court and Reappointment (New appointment) Ceremony of Expert Members was held successfully on September 25, 2024. Over 40 experts from more than 20 countries and regions focused on the theme of the “Collaborative Dialogue, Diverse Integration, Peaceful Development” during the seminar. Extensive and in-depth discussions were held within the framework of four specific issues. The texts of speeches delivered by the members of expert committee and distinguished guests during the discussion session on Topic One International Experience and Chinese Practice of International Commercial Courts: Procedural Rules, Case Management, and Building Judicial Credibility Building would be posted on the CICC’s website.

Considerations on China’s International Commercial Ad Hoc Arbitration

ZHOU Hanmin

Standing Member of the National Committee of the Chinese People’s Political Consultative Conference，Chairman of the Shanghai Public Diplomacy Association

In the field of international commercial arbitration, institutional arbitration and ad hoc arbitration are two fundamental forms, complementing each other and playing their respective roles in dispute resolution. Compared with institutional arbitration, ad hoc arbitration emerged earlier and has a longer history, having a more profound impact on the autonomous resolution of disputes among individuals. Therefore, as China’s arbitration legal system develops and judicial protection advances, discussing China’s international commercial ad hoc arbitration system is particularly necessary and timely.

1. Advantages of Ad Hoc Arbitration

With China’s increasing involvement in international commercial arbitration, ad hoc arbitration is gaining widespread attention domestically. Also known as special arbitration, it allows parties to arbitrate based on rules they agree on or those set by the tribunal. It features flexible procedures, cost-efficiency, a strong focus on individual cases, and high efficiency.

Globally, the advantages of ad hoc arbitration are evident. It maximizes the protection of parties’ legal rights, significantly enhances the efficiency of dispute resolution, develops diversified dispute resolution mechanisms, and helps businesses adapt to economic globalization.

2. Practice of Ad Hoc Arbitration in China

With the deepening of Reform and Opening-up, especially following the Third Plenary Session of the 20th Central Committee’s commitment to further high-standard opening-up, China’s international commercial arbitration system, closely tied to foreign-related legal construction, is highly anticipated. It gives greater attention to our country’s international commercial arbitration system, which is closely related to the construction of China’s foreign-related rule of law. The development of the ad hoc arbitration system, a key rule within this framework, is pressing and has been significantly promoted by various stakeholders.

To date, various regions and departments in China have issued normative documents concerning ad hoc arbitration rules, such as the Opinions of the SPC on Providing Judicial Guarantee for the Building of Pilot Free Trade Zones, Hengqin Free Trade Zone Ad Hoc Arbitration Rules, Regulations of Shanghai Municipality on Promoting the Initiative for an International Commercial Arbitration Center, and Several Provisions of the Hainan Free Trade Port on the Development of International Commercial Arbitration. These are all normative documents that we need to studay.

Notably, the Measures of Shanghai Municipality for Promoting Foreign-related Commercial and Maritime Ad Hoc Arbitration (Trial) (“Shanghai Measures”) issued by the Shanghai Judicial Bureau on June 13, 2024, is the first local regulation clearly defining and recognizing the “ad hoc arbitration” system. The Shanghai Measures contains 19 articles, covering acceptance, selection of arbitrators, arbitration rules, services provided by arbitration institutions, and guarantees for advancing arbitration procedures. It emphasizes the scope of ad hoc arbitration, “three specific criteria” of ad hoc arbitration, encouraging arbitration institutions to provide services, strengthening procedural guarantees, and highlighting the role of arbitration associations. The Shanghai Measures is a vital local provision, that aims to align with high international trade standards, actively develop foreign-related legal services, and create a market-oriented, rule-of-law, and international business environment to support Shanghai’s development as a “five centers” city.

Coinciding with the Shanghai Measures, on August 15, 2024, the first-ever ad hoc arbitration case filed by a foreign party in China was signed in Pudong, Shanghai. The British industry association and a Pudong company initially agreed to use the London Court of International Arbitration Rules, applying UK law in London. However, considering factors like the amount involved and time costs, they agreed to use the Shanghai Arbitration Association’s ad hoc arbitration rules published on August 1, 2024, applying Chinese law with Shanghai as the arbitration seat and Pudong New Area as the hearing location, appointing a maritime expert as the sole arbitrator. This case, the first of its kind in China, reflects Pudong’s institutional openness and the growing international credibility and competitiveness of Shanghai arbitration.

3. Personal Suggestions on China’s Ad Hoc Arbitration System

China faces significant pressure and challenges in implementing ad hoc arbitration, including unclear legal validity, difficulties in forming arbitral tribunals, slow procedural advancement, lack of arbitrator supervision, unclear judicial oversight, and so on.

Under such circumstances, we can continuously promote the institutional construction of the ad hoc arbitration system by improving relevant laws and regulations, drawing on international successful experiences, and satisfying market demands. To address these issues, my suggestions are as follows:

Amend Current Arbitration Laws: Revise the Arbitration Law or issue relevant judicial interpretations, drawing on international experiences like the UNCITRAL Arbitration Rules and the New York Convention to establish a domestic ad hoc arbitration system, providing legal support for its implementation. By discussing national uniformity here, it means that when many arbitration institutions attempt to conduct ad hoc arbitration, we must have relatively unified domestic rules for ad hoc arbitration to enforce.

Carefully Draft Ad Hoc Arbitration Clauses: Pay attention to the seat of arbitration, arbitral language, applicable law, tribunal composition, support services, and rules to avoid procedural challenges such as the deadlock in composing a tribunal or obstacle in advancing the proceedings. We should promote the provisional arbitration clauses that have been carefully considered and deliberated upon, ensuring they contain all necessary elements. These include model contract clauses or corresponding recommended clauses related to ad hoc arbitration, for enterprises to select and use.

Enhance Arbitrator Training and Management: Industry associations should establish a robust supervision mechanism for ad hoc arbitrators as soon as possible, including a recommended list of arbitrators, qualification reviews, regular evaluations, and transparent complaint procedures.

Boost Technical and Management Support: Use technology like online document submission and remote video conferencing to facilitate quick formation and execution of ad hoc arbitration, avoiding traditional complexities.

In conclusion, with China’s evolving foreign-related legal system, as the origin of the arbitration system, ad hoc arbitration will play a vital role in improving commercial arbitration rules, optimizing the foreign investment environment, and promoting the development of international commercial arbitration centers with its tenacious vitality and vigorous development trend.

*The original text is Chinese and has been translated into English for reference only. If there is any inconsistency or ambiguity between the Chinese version and the English version, the Chinese version shall prevail.