Drafting an international arbitration agreement with Chinese suppliers is an important step to consider when entering into business contracts with them. This agreement helps establish a dispute resolution mechanism and can provide a level of assurance for both parties. Here are some key points that you should consider when drafting an effective international arbitration agreement.
- Choose the Arbitration Institution
The most widely recognized institution in China is the China International Economic and Trade Arbitration Commission (CIETAC). Alternatively, you may consider international institutions like the International Chamber of Commerce (ICC) or the Hong Kong International Arbitration Centre (HKIAC) if your supplier is willing to use them.
Please note that ad hoc arbitration with the seat of arbitration in China is currently not recognized.
- Arbitration Seat and Rules
The choice of location (seat) of the arbitration determines the governing law of the arbitration validity and procedure. This could be in China, a neutral third country, or a specific city.
Also, specify the arbitration rules that will govern the detailed procedure, such as CIETAC rules, ICC rules, or other recognized rules.
- The scope of an arbitration
Except in special circumstances, the scope of the arbitration clause should be broadly defined so as to include not only all disputes "arising from the contract" but also all disputes "in connection with" (such as intellectual property infringement).
Provisions that are not broadly defined in scope may easily lead to disputes over whether a particular dispute should be resolved through arbitration.
Please note that employment disputes and agricultural contract disputes under an agricultural collective economic organization in China are not arbitrable.
- Number of Arbitrators
Decide whether you want a single arbitrator or a panel of arbitrators. It's common to have three arbitrators for complex disputes. To save money, simple case may be handled by one arbitrator.
- Arbitral language
Language of Arbitration: Indicate the language(s) to be used in the arbitration proceedings. Often, agreements with Chinese suppliers include both Chinese and English as the languages for communication and document submission.
Generally, Chinese arbitrators are fluent in both Chinese and English, so there is no need to agree on a specific language.
We provide some MODEL CLAUSEs as follows from the arbitration institutions based in China for your reference:
China International Economic and Trade Arbitration Commission
Any dispute arising from or in connection with this Contract shall be submitted to China International Economic and Trade Arbitration Commission (CIETAC)___________Sub-Commission (Arbitration Center) for arbitration which shall be conducted in accordance with the CIETAC's arbitration rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.
China Maritime Arbitration Commission (CMAC） Model Arbitration Clause
Any dispute arising from or in connection with this contract shall be submitted to China Maritime Arbitration Commission (CMAC) for arbitration in accordance with CMAC Arbitration Rules for the time being in force at the time of applying for arbitration. The arbitral award is final and binding upon all parties.
Recommended additions: The arbitral tribunal shall be composed of […] arbitrator(s). The seat of arbitration shall be […]. The language of the arbitration shall be […]. This contract shall be governed by the substantive law of […].
Guangzhou Arbitration Commission
Any dispute, controversy, disagreement or claim arising from or in connection with this contract, including the existence, validity, interpretation, performance, breach or termination of this contract, or any non-contractual dispute arising from or in connection with this contract, shall be submitted to China’s Nansha International Arbitration Center for final resolution through arbitration in accordance with the General Arbitration Rules of China’s Nansha International Arbitration Center in effect at the time of submission and by applying these Guidelines on the Procedures of Guangzhou International Arbitration Model.
The tribunal shall be composed of (1 or 3) arbitrator(s). The arbitration shall be conducted in (the language to be selected).
Hong Kong International Arbitration Centre
"Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non- contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted.
The law of this arbitration clause shall be ... (Hong Kong law). *
The seat of arbitration shall be ... (Hong Kong).
The number of arbitrators shall be ... (one or three). The arbitration proceedings shall be conducted in ... (insert language)." **