Chinese standards

A. Who has the power to order interim measures in aid of arbitration?

a. Principal role of the state court

Under the current legal regime, the Chinese court plays the major role in the area of interim measures in aid of arbitration, and not the tribunal – as envisioned by the Model Law and as implemented by model jurisdictions. Articles 28 and 46 of the CAL provide for the relevant powers of the court. Article 28 deals with property preservation, and it stipulates that if due to acts of the other party or for any other reasons, an arbitral award can be hard or impossible to be executed, a party concerned can apply for placing a property under custody. Further, it is stipulated that in case of errors in the application, the applicant is obliged to compensate the other party for the losses resulting from the measure that was granted. Article 46 of the CAL addresses evidence preservation. It prescribes that in cases where evidence is vulnerable to being destroyed or missing, and it would be hard to recover it, the party concerned can apply to place this evidence under custody.

Notably, until 2012 and the most recent amendment of the CCPL, the measures of property and evidence preservation in aid of arbitration were only available after the commencement of the arbitration proceeding. After 2012, however, the access has been significantly improved and as a result of the amendment, preservative measures can be now also granted before the arbitration proceeding starts. This matter is regulated by Art. 81 and Art. 101 of the CCPL, as amended in 2012. Further, in case of both property and evidence preservation, depending on whether a particular case is domestic or foreign-related,⁴¹⁸ different levels of courts will have the jurisdiction. In domestic proceedings – basic people’s courts, and in proceedings with a foreign element – intermediate people’s courts will

416 See Kaplan and Morgan, in ICCA International Handbook on Commercial Arbitration, ii.

417 See Joseph and Foxton, 235.

418 The distinction between “domestic” and “foreign-related” arbitration cases, as well as its relevance are discussed in Chapter 2 p. 36-38.

116 assume the jurisdiction.⁴¹⁹

The provisions of the CAL and CCPL are silent on the power of the arbitral tribunal in the given context.

Interestingly, in 1956, CIETAC in its arbitration rule no. 45 provided for the possibility of the CIETAC chairman (but not the tribunal) to order interim measures (the exact wording referring to interim measures used in this provision is: 临时办法 lín shí bàn fǎ).⁴²⁰ This solution was endorsed by the Central People's Government Administration Council (later “the State Council”) in its decision on the Establishment of the Foreign Trade Arbitration Commission within the China Council for the Promotion of International Trade.⁴²¹ Nonetheless, the rule was subsequently modified in 1988, and as a consequence, CIETAC receives the application for an interim measures from a party and transfers it to the court that will then decide the issue. The arbitration institution will not make any decision itself.⁴²² Xing, when addressing why the wording taken by CIETAC in the arbitration rules from 1956 was abandoned later on, points to Art. 194 of the 1982 version of the Chinese Civil Procedural Law. Article 194 provided that if the arbitration institution, upon the application of a party, finds it necessary to take preservative measures, it needs to request an order from a relevant intermediate people’s court.⁴²³

b. Limited role of the arbitral tribunal

Despite the principal role of the state court in ordering interim measures in aid of arbitration, two

419 Regulation of the Supreme People’s Court on the Issues of Enforcement, Fa Shi [1998] No. 15, issued on 8 July 1998, effective from 18 July 1998; [最高人民法院关于人民法院执行工作若干问题的规定（试行）, 法 释〔1998〕15号, 颁布时间: 1998年7月8日, 实施时间: 1998年7月18日].

420 See Zhang, "Towards the UNCITRAL Model Law - A Chinese Perspective", 112.; see the original rule from 1956, Art. 45 of the Interim Rules on Arbitration Proceeding; 《仲裁程序暂行规则》第十五条规定：“仲裁 委员会主席依一方当事人的声请，对同当事人有关的物资、产权等可以规定临时办法，以保全当事人的 权利。”[translation by the author of this thesis: “In order to preserve the rights of the parties, the chairman of the arbitration commission on the application of a party can order interim measure directed against the relevant property.”]

421 Art. 8 of the Decision on the Establishment of the Foreign Trade Arbitration Commission within the China Council for the Promotion of International Trade by the Central People's Government Administration Council

from 1956; [1956中央人民政府政务院《关于在中国国际贸易促进委员会内设立对外贸易仲裁委员会的决

定》, 第八条：“仲裁委员会审理争议案件时，为保全当事人之权利，对与当事人有关的物资、产权等 得规定临时办法。”]; [translation by the author of this thesis: “In order to protect the rights of the parties, arbitration commission in deciding the dispute will order interim measure directed against the relevant property.”]

422 See Art. 13 of the CIETAC Arbitration Rules (1988 edition), effective from 1 January 1989; [中国国际经济贸 易仲裁委员会仲裁规则 (1988年版), 实施时间：1989年1月1日].

423 Xiusong Xing, "Revision of CIETAC Arbitration Rules: Interim Measures in the Arbitration Proceeding [Original Title: 贸仲仲裁规则的修改：仲裁程序中的临时措施]," (1 December 2011),

http://blog.sina.com.cn/s/blog_8c0346950100vtn2.html. (last accessed: 20 November 2018).

117

issues are worth noting when investigating the arbitral tribunal’s power to order interim measures in China. One of the issues pertains to developments of the leading Chinese arbitration institutions through which the power was given to the tribunal by the arbitration rules. The other one relates to particular types of interim measures that can be potentially ordered by the tribunal.

i. Developments of the Chinese arbitration institutions

Similar to the distribution of power in the area of jurisdictional objections (as discussed in Chapter 4),⁴²⁴ also in the area of interim measures in aid of arbitration, the leading Chinese arbitration institutions have gradually taken steps to introduce into China solutions commonly accepted elsewhere in international commercial arbitration. More specifically, the power to order interim measures was given to the arbitral tribunal by institutional rules. By way of example, Art. 23(3) of the 2015 CIETAC Rules stipulates that at the request of a party, the tribunal can decide to order any interim measure it deems necessary or proper (emphasis added). Article 62(1) of the 2015 BAC Rules, which is applicable to international commercial arbitration proceedings, provides for a similar solution.⁴²⁵ As discussed in Chapter 4, there is a question of the compatibility of such institutional provisions with the CAL.⁴²⁶ Nonetheless, it seems that the use of this conferral of power is limited in practice. Case in point is the findings of the China Arbitration Survey, wherein a large majority of the respondents reported that they have never experienced a scenario where the tribunal would order property or evidence preservation.⁴²⁷

Another recent innovation introduced by the leading arbitration institutions in China is to permit the actions of an emergency arbitrator. Both Art. 23(2) of the 2015 CIETAC Rules and Art. 63 of the 2015 BAC Rules applicable to international proceedings offer this possibility. Yet, again, although the option of recourse to the emergency arbitrator is prescribed in the arbitration rules, in fact, it seems to be of limited use in practice.⁴²⁸ It is rather suggested that the introduction of the emergency arbitrator

424 See Chapter 4 p. 81-84.

425 Art. 62(1) of the 2015 BAC Rules: “At the request of the parties, the Arbitral Tribunal may order any interim measures it deems appropriate in accordance with the applicable law. An order for interim measures may take the form of a decision of the Arbitral Tribunal, an interim award [Article 49], or any other form permitted by the applicable law. Where necessary, the Arbitral Tribunal may require the requesting parties to provide appropriate security.”

426 See Chapter 4 p. 83-84.

427 See Chapter 9 on the China Arbitration Survey p. 198, as well as Appendix 1 p. 288.

428 On 1 September 2018, Sun reported about the first emergency arbitration case requested by a claimant in China. See Wei Sun, "First Emergency Arbitrator Proceeding in Mainland China: Reflections on How to Conduct an EA Proceeding from Procedural and Substantive Perspectives," Kluwer Arbitration Blog (1 September 2018),

118

mechanism was aimed at targeting the proceedings using these institutional rules, but taking place outside of mainland China, in the jurisdictions endorsing the actions of emergency arbitrators, such as Hong Kong or Singapore.⁴²⁹ Yu Jianlong, the past vice-chairman and secretary-general of CIETAC, when explaining the importance of having the emergency arbitrator mechanism in the CIETAC Rules, pointed to the fact that it not only helps to protect the parties’ lawful rights, but also resembles a cornerstone of arbitration – the party autonomy and, thus, is an essential supplement to court-ordered interim measures.⁴³⁰ Interestingly, three out of 58 respondents to the China Arbitration Survey reported to witness the interim measure granted by an emergency arbitrator in China, which is more than expected in light of the above discussion.⁴³¹

ii. Limited types of interim measures that can be ordered by the arbitral tribunal

Despite the fact that various types of interim measures that can be granted in aid of arbitration are not the main issue dealt with in this Chapter, this aspect has some relevance to the distribution of power in China. Namely, although the property and evidence preservation are, indeed, beyond the reach of the arbitral tribunal in China, the tribunal should be able to order other types of interim measures.

Xing separates the measures of property and evidence preservation from other activities in the nature of interim measures, such as requiring the parties to a joint venture company in dispute not to distribute profits.⁴³² Xing argues that the term "preservation measure" (保全措施 bǎo quán cuò shī), used in the CAL in reference with property preservation (财产保全 cái chǎn bǎo quán) and evidence preservation (证据保全 zhèng jù bǎo quán), does not equal a more general term of "interim measure"

(临时措施 lín shí cuò shī). Therefore, in light of the current legal framework, deciding on property preservation and evidence preservation is, indeed, in the exclusive competence of the Chinese court.

Yet, any measure that is not property or evidence preservation should be then available for the tribunal

http://arbitrationblog.kluwerarbitration.com/2018/09/01/first-ea-proceeding-mainland-china-reflections-conduct-ea-proceeding-procedural-substantive-perspectives/. (last accessed: 20 November 2018).

429 Arthur Dong, "Interim Measures in Support of Commercial Arbitration in China," Lexis®PSL Arbitration (2015), https://www.lexisnexis.com/uk/lexispsl/arbitration/document/407801/5F5W-TWC1-DXSN-650F-00000-00/Interim_measures_in_support_of_arbitration_in_China. (last accessed: 20 November 2018)

430 See Sun and Willems, 435-436.

431 See Chapter 9 on the China Arbitration Survey p. 198, as well as Appendix 1 p. 289.

432 See, for example, the CIETAC’s practice in Xing. (last accessed: 20 November 2018).

119 to decide on.⁴³³

Lu comes to a similar conclusion when analyzing the introduction of the power of the arbitral tribunal to order interim measures in the 2012 CIETAC Rules. In a similar spirit, Lu argues that Art. 21 of the 2012 CIETAC Rules⁴³⁴ does not contradict the CAL, because the CAL explicitly addresses only two types of interim measures – property and evidence preservation – as being assigned to the competence of the court. Hence, other types of interim measures⁴³⁵ should be in the reach of the tribunal, when the tribunal deems it is necessary or proper to use them.

In addition, Cao points to Art. 43 and Art. 44 of the CAL, which provide for the possibility to investigate the facts of a dispute by the tribunal as the justification for some of measures that should be in the reach of the tribunal. Cao suggests also that in the practice of CIETAC, some investigative measures (such as an appraisal or inspection of the quality of disputed contractual goods) are frequently ordered by the tribunals in China.⁴³⁶

Nonetheless, it is important to stress that preservation measures, including property and evidence preservation, lie at the heart of interim measures in arbitration and can play an important role in the arbitration proceeding. This is because these measures are aimed at preserving property for the subsequent realization of the arbitral award, or at preserving evidence that is important for proving the case facts – if there is a risk that these can be lost or difficult to obtain in the future. However, as seen, these measures cannot be effectively ordered by the tribunal in China, and as of today, only the state court can do that.

433 Ibid.

434 Art. 21 of the 2012 CIETAC Rules (which is similar to Art. 23(1)(3) of the 2015 CIETAC Rules):

“1. Where a party applies for conservatory measures pursuant to the laws of the People’s Republic of China, the secretariat of CIETAC shall forward the party’s application to the competent court designated by that party in accordance with the law.

2. At the request of a party, the arbitral tribunal may order any interim measure it deems necessary or proper in accordance with the applicable law, and may require the requesting party to provide appropriate security in connection with the measure. The order of an interim measure by the arbitral tribunal may take the form of a procedural order or an interlocutory award.”

435 Lu refers to, among others, maintaining or restoring the status quo pending the determination of dispute as provided by Art. 17 of UNCITRAL Model Law. See Song Lu, "The New CIETAC Arbitration Rules of 2012," Journal of International Arbitration 29, no. 3 (2012), 306-308.

436 Lijun Cao, "Interim Measures of Protection in the Context of Arbitration in China," International Arbitration Law Review 8, no. 3 (2005), 109.

120 c. Participation of the arbitration institution

According to the provisions of the CCPL, if a party seeks to apply for evidence preservation before the arbitration proceeding starts, it has to go directly to a people’s court that has jurisdiction. However, after the arbitration proceeding commences, the party needs to submit its request for an interim measure to the arbitration institution (but not the arbitral tribunal). The arbitration institution itself does not decide on the fate of the measure. Its role is merely reduced to being a “postman” forwarding the party’s application to the court. The practice is that the arbitration institution does not consider the appropriateness of the application, but attaches to the party’s application a letter that explains the matter, entrusts the decision to the court, and informs the court that in case any further information is needed, it can be obtained directly from the parties.⁴³⁷ Subsequently, the court makes a decision as to whether or not it should grant an interim measure.⁴³⁸