Recent changes to CIETAC arbitration rules may prove ineffective as top arbitrators continue to deny work due to low remuneration and high administrative charges of China’s largest arbitral institution

The increasingly international nature of commercial disputes in Asia, and an attempt to make China a major international dispute resolution centre, has been the major driving force behind the recent amendments to arbitration rules of China International Economic and Trade Arbitration Commission (CIETAC).  Under the new rules, CIETAC, unless otherwise agreed by the parties, may now designate the language for the arbitration (previously this was Mandarin by default).  Additionally, in the absence of an agreement, CIETAC can choose the most suitable arbitration seat, including seats outside China.

Notwithstanding these recent changes, CIETAC’s high administrative charges leave the arbitrators, in many cases, with as little as $2,000 for a simple case and $10,000 for a complex case, compared with tens or even hundreds of thousands of dollars that the arbitrators could receive in Hong Kong or Singapore.  This, in turn, forces top lawyers to either reject work or spend less time than that is usually necessary for a case.  This could result in awards of sub-standard quality.

The insufficient remuneration of CIETAC arbitrators deters reputable clients, who are looking for quality proceedings, from arbitrating their disputes under CIETAC rules.  This likely renders the recent changes obsolete and creates an international dispute resolution environment where the quality of awards is uneven.

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