Legal: Chinese Arbitration Institututions

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By Arthur Dong and Darren Mayberry

When a foreign company receives a Notice of Arbitration from a Chinese arbitration institution, notifying them they are listed as a respondent in a case, they should not feel surprised that the Notice is not sent by the claimant. It is common practice in China for arbitration institutions to conduct the service of process. This rule contrasts with most other noted international arbitration institutions, such as the London Court of International Arbitration (LCIA), the Singapore International Arbitration Centre (SIAC), the Hong Kong International Arbitration Centre (HKIAC) and perhaps other common law seated arbitral institutions, where claimants must serve their own documents to respondents.

For instance, Article 20.1 of the China International Economic and Trade Arbitration Commission (“CIETAC”) Arbitration Rules (2015) on the ‘Submission and Exchange of Arbitration Documents’ states, “All arbitration documents from the parties shall be submitted to the Arbitration Court.” In practice, this form of service of process is fairly straightforward. Claimants submit their Requests for Arbitration (or Applications for Arbitration) directly to the arbitration institution accompanied with the addresses and other contact information of the respondents. Once the arbitration institution receives a Request (or Application) together with the arbitration fees, the institution forwards it along to the respondents.

Institutional-managed service of process is even more convenient than service processed by parties themselves. Indeed, Chinese arbitration institutions are already known for their lower fees when compared to regional and global competitors, and institutional administration in this area lends Chinese institutions a competitive service advantage.

Respondents should bear in mind the significance of the date of service (the date when the party gets delivered with the legal document). Several important deadlines run from this date.  Under CIETAC Arbitration Rules, the time limitation to appoint an arbitrator runs 15 days from service, whereas the time limitation to submit a statement of defense and counterclaim runs 45 days from service of process whenever a foreign party may be involved. We advise respondents to consult their attorney as soon as possible to discuss strategies for managing these critical procedural deadlines.

Even when arbitration rules declare it will be the arbitration institution who will deliver service, the burden nonetheless falls on claimant to provide the correct information for that service. The institution resembles a postman who will not bear responsibility for delay caused by incorrect service information. The party must be very careful to provide full and correct information to the institution. To avoid the difficulty of making service when arbitration begins, it is advisable to stipulate a specific clause in the contract of service information.     

Notice is a key procedural right guaranteed under the New York Convention, and thus a ground for challenge of an award according to Article V1(b) of the 1958 New York Convention.  Typically, respondents become extremely focused on procedural irregularities, at least when faced with impending enforcement of a high-value award. Chinese arbitration institutions are always cautious to avoid creating situations where the award may be successfully challenged for improper service of the notice of arbitration. Leading arbitration institutions almost unanimously adhere to a definition of service of process which might cover a wide category of circumstances under which service could be deemed a valid.

Service by institution is well accepted in China. Non-Chinese users may appreciate the utility and simplicity of this service. Certainly, institutionally guided service customarily saves claimant companies considerable sums in legal fees, especially over the course of several separate cases. Only very rarely do issues arise pertaining particularly to the institutional nature of the service. And every year institutions are serving better. As a result, institutional service has emerged as a defining advantage for China-based commercial arbitration.

Arthur Dong is a Partner at AnJie Law Firm. Darren Mayberry is a Senior Associate at AnJie Law Firm. The authors contributed this article on behalf of Lexis Nexis, an AmCham China member company.