W H E R E T O T U R N FO R C H I N A -R E L A T E D A R B I T R A T I O N ?

CEAC A R B I T R A T I O N A S A N E U T R A L C O M P R O M I SE T A I L O R E D F O R C H I N E SE -E U R O P E A N D I SP U T E S

WHERE TO TURN FOR CHINA-RELATED ARBITRATION? CEAC ARBITRATION AS A NEUTRAL COMPROMISE TAILORED FOR CHINESEEUROPEAN DISPUTES

Dr. Christine Heeg, LL.M. (Sydney) and Florence Brauch * CONTENTS

1 1.1 1.2 1.3 4 5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 6

Introduction........................................................................................................................ 1 Relevance of Arbitration for China related Business Contracts ......................................... 1 Options for China related Arbitration ................................................................................ 2 The Idea behind the Chinese European Arbitration Centre ............................................... 2 CEAC Arbitration How Does it Work? An UNCITRAL Plus Approach ...................... 4 Deviations from the UNCITRAL Rules .............................................................................. 5 CEAC Arbitration is Institutional Arbitration .................................................................... 5 Combination with Conciliation or Mediation ..................................................................... 5 CEAC Model Arbitration Clause ........................................................................................ 5 CEAC Model Choice of Law Clause................................................................................... 6 Time Limit For the Award .................................................................................................. 7 CEAC Arbitration with a Predetermined Default Seat of Arbitration ................................ 7 Efficient and Transparent Cost Schedule ........................................................................... 8 Conclusion.......................................................................................................................... 8

INTRODUCTION

Trade and investment between China and companies from many countries in Europe are on the rise in the last decade. Where there is trade and investment, companies do joint business, they conclude business contracts in various fields and sometimes even decide to cooperate within a joint venture. Sometimes, in such forms of cooperation and within global trade and investment it is inevitable that disputes arise. For this reason, companies in the Greater China region as well as in Europe have to agree on dispute resolution mechanisms backing their contractual agreements and leading to a basis on which agreements reached in the contractual cooperation between such international companies can be enforced.

1.1 RELEVANCE OF ARBITRATION FOR CHINA RELATED BUSINESS CONTRACTS

Due to a lack of reciprocity in the enforcement of ordinary court judgments from the Peoples Republic of China in many countries in Europe as well as of court judgements from many countries in Europe in the Peoples Republic of China,1 arbitral awards are the only possibility how to achieve an enforceable solution in case of dispute between companies from both regions. For this reason, arbitration agreements are the

*
1

Dr. Christine Heeg is Secretary General of the Chinese European Arbitration Centre and a full time practising attorney within the arbitration and litigation department of Bird & Bird LLP, Dsseldorf; Florence Brauch is an attorney within the arbitration and litigation department of Bird & Bird LLP Dsseldorf and a member of Young CEAC. hlberger, V., China-related Contracts: What to Consider When Agreeing on CIETAC Arbitration, Austrian Yearbook on International Arbitration 2009, Manzsche Verlags- und Universittsbuchhandlung GmbH, Vienna, 2009, p. 113; Jansen, J. & Heeg-Stelldinger, C., Chinese European Arbitration Center (CEAC), Institutional Arbitration Tasks and Powers of different Arbitration Institutions, Schulthess Juristische Medien AG, Zurich, 2009, pp. 81 97; Neelmeier, A., Verbrgung der Gegenseitigkeit zwischen Deutschland und China? SchiedsVZ (2007), pp. 100-102; Chua, E., Arbitration in China, 1 Asian International Arbitration Journal (2005), pp. 82ff.

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backbone of such international contracts. 2 International commercial arbitration is the way out of such dilemma of non-enforcement of court judgements. This is due to the fact that most European countries and China as well as many other countries all over the world are members to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Peoples Republic of China has adopted the New York Convention on 22 January 1987. Most European countries including Germany, France, the United Kingdom, Italy, Spain, Sweden and Switzerland are members to the New York Convention which currently counts 148 member states. 3

1.2 OPTIONS FOR CHINA RELATED ARBITRATION

In China, a whole variety of arbitration institutions already exists, including the China International Economic and Trade Arbitration Commission (CIETAC) 4, the Beijing Arbitration Commission (BAC) 5, the Shanghai Arbitration Commission 6, the Hong Kong Arbitration Centre (HKIAC) 7 , the China Maritime Arbitration Commission (CMAC)8. Various further local arbitration commissions approved by the regional governments within the Peoples Republic of China exist. In Europe, we also count various arbitration institutions frequently used by the business community, such as the Arbitration Court at the International Chamber of Commerce (ICC)9, the Arbitration Institute of the Stockholm Chamber of Commerce (SCC)10, the London Court of International Arbitration (LCIA) 11, the Swiss Chambers' Arbitration Institution12, the German Institution of Arbitration (DIS) 13 and others. None of these institutions is however specialized on trade and investments between China and Europe only. All of these institutions are arbitration institutions for international commercial arbitration in various countries, with more or less of a tradition of solving disputes related to China.

1.3 THE IDEA BEHIND THE CHINESE EUROPEAN ARBITRATION CENTRE

CEAC, the Chinese European Arbitration Centre, in turn, was created for and tailored to disputes between Chinese and European companies: In 2006, during a visit of the Hamburg Major to Shanghai with a business delegation, both majors, of Shanghai and of the Free and Hanseatic City of Hamburg, were approached by members of the business community demanding the foundation of an arbitration institution which is neutral for Chinese and European companies and which can serve as a compromise when the parties to Sino-European business contracts can neither agree on a Chinese nor a traditional European arbitration institution. 14 This idea was taken up by the Hamburg Bar Organisation and the Hamburg Chamber of Commerce in 2006 which initiated research with respect to the foundation of such special arbitration institution tailored for Chinese European trade and investment. They gathered more than 450 lawyers from all over the world including China and Europe discussing the foundation of such institution and tailoring arbitration rules for this purpose. In 2008, after various discussions and meetings at International conferences, such as the International Bar Association (IBA) Annual Meeting and the Inter-Pacific Bar Association (IPBA) Annual
2

Brdermann, E. and Heeg-Stelldinger, C., The Chinese-European Arbitration Centre Hamburg, Asia Arbitration Guide, Singapore, 2011, p. 41. List of member states to the New York Convention, available at: <http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html>. China International Economic and Trade Arbitration Commission (CIETAC), available at: <http://www.cietac.org/index.cms>. Beijing Arbitration Commission (BAC), available at: <http://www.bjac.org.cn/en/index.asp>. Shanghai Arbitration Commission, available at: <http://www.accsh.org/accsh/english/index.html>. Hong Kong Arbitration Centre (HKIAC), available at: <http://www.hkiac.org>. China Maritime Arbitration Commission (CMAC), available at: <http://www.cmac-sh.org/en/home.asp>. Arbitration Court at the International Chamber of Commerce (ICC), available at: <http://www.iccwbo.org/products-andservices/arbitration-and-adr/>. Arbitration Institute of the Stockholm Chamber of Commerce (SCC), available at: <http://www.sccinstitute.com/>. London Court of International Arbitration (LCIA), available at: <http://www.lcia.org/Default.aspx>. Swiss Chambers' Arbitration Institution, available at: <https://www.swissarbitration.org/sa/en/>. German Institution of Arbitration (DIS), available at: <http://www.dis-arb.de/scho/>. Chinese European Arbitration Centre (CEAC), available at: <http://www.ceac-arbitration.com/index.php?id=28>.

4 5 6 7 8 9

10 11 12 13 14

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Meeting as well as the 75th anniversary of the International Commercial Arbitration Court in Russia in 2007 in Moscow, the Chinese European Legal Association 15 was founded as founding association for such an arbitration institution. The Chinese European Legal Association is a non-profit organisation under German law founded in July 2008 which has the specific aim: to support the interaction and exchange between China and Europe and the world regarding issues of economics, law and legal culture (and to make a contribution to the avoidance, settlement and resolution of disputes related to international trade from and to China. 16 The objectives of this non-profit association include inter alia the creation of the Chinese European Arbitration Centre (CEAC) 17 , the promotion of education of young lawyers in cross-cultural and comparative law, in particular in the fields of negotiation, dispute avoidance and dispute settlement by conciliation, mediation and arbitration.18 The Chinese European Legal Association today is the sole shareholder of the Chinese European Arbitration Centre which is operated by a German limited liability company (Chinese European Arbitration Centre GmbH). Members of the non-profit Chinese European Legal Association include inter alia the Hamburg Bar Organisation and the Hamburg Chamber of Commerce as institutional members 19 as well as several international law firms including but not limited to - Bird & Bird, Brdermann Jahn, Cerha Hempel Spiegelfeld Hlawati, Clifford Chance, CMS Hasche Sigle, Dacheng, DLA Piper, Freshfields Bruckhaus Deringer, Graf von Westphalen, KL Gates Taipei, Zhong Yin Law Firm 20 as well as more than 60 lawyers and inhouse counsel specialised in international arbitration as individual members 21. Members come from all over the world and especially from China and Europe as regions for which the Chinese European Arbitration Centre is especially tailored.

FOUNDATION OF THE CHINESE EUROPEAN ARBITRATION CENTRE

In September 2008, the Chinese European Legal Association founded the Chinese European Arbitration Centre GmbH which operates the Chinese European Arbitration Centre. The Chinese European Arbitration Centre as an arbitration institution is unique insofar as in all its organs (General Assembly, Management and Advisory Board) it follows a clear division of power between the Greater China Region, Europe and the rest of the world.22 Such concept of tripartite division of power is unique within the group of arbitration institutions existing and guarantees 360 degree neutrality for companies from the Greater China Region as well as from Europe making use of the services of this arbitration institution. Experts from the rest of the world in such disputes always serve as mutual factor whereas in contracts between Chinese and Northern American companies for example Europe and European experts active in the arbitration institution guarantee neutrality of the institution itself. The Chinese European Arbitration Centre has its seat at the Hamburg Chamber of Commerce, Adolphsplatz 1, 20457 Hamburg, Germany. As an arbitration institution it aims at disputes related to trade between Greater China and the Western world, international investments from Greater China abroad, international investments in Greater China, cross-straight disputes as well as disputes between the Peoples Republic of China companies and
15 16 17 18 19 20 21 22

Chinese European Legal Association (CELA), available at: <http://www.cela-hamburg.com>. See Art. 2 para. 1 CELA Statutes. Chinese European Arbitration Centre (CEAC), available at: <www.ceac-arbitration.com>. See Preamble lit. H and Art. 2 para. 1 lit. b sent. 2 subpara. ii CELA Statutes. Members of the Chinese European Legal Association, available at: <http://www.cela-hamburg.com/index.php?id=71>. Members of the Chinese European Legal Association, available at: <http://www.cela-hamburg.com/index.php?id=72>. Members of the Chinese European Legal Association, available at: <http://www.cela-hamburg.com/index.php?id=73>. Brdermann, E. and Weimann, T, CEAC, Arbitration in 57 jurisdictions worldwide, Law Business Research Ltd, London, 2012, p. 15; Jansen, J. and Heeg-Stelldinger, C., Chinese European Arbitration Center (CEAC), Institutional Arbitration Tasks and Powers of different Arbitration Institutions , Schulthess Juristische Medien AG, Zurich, 2009, pp. 81 97.

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companies from the special administrative regions Hong Kong and Macao. CEAC, however, is open to all kinds of international disputes if the parties wish to solve their disputes by CEAC arbitration and agree on the CEAC arbitration clause in their contracts.

CEAC STANDS FOR 360 DEGREE NEUTRALITY

The Chinese European Arbitration Centre stands for 360 degree neutrality as it is an international multicultural project tailor-made for arbitration for Sino-European disputes. Its rules are based on the international broadly accepted UNCITRAL Arbitration Rules. For this, the UNCITRAL Rules have been adapted to institutional arbitration and specifics of Chinese arbitration law to be taken into account with respect to enforcement of arbitral awards in the Peoples Republic of China. 23 The Chinese European Arbitration Centre has an international Management and Advisory Board and at the very heart of the institution an international Appointing Authority with chambers always consisting of three members, one from the Greater China Region, one from Europe and one from the rest of the world. 24 These chambers with their clear division of power are responsible for the appointment of arbitrators if either the parties cannot agree on a sole arbitrator or the two party appointed arbitrators cannot agree on the presiding arbitrator (Article 9 para. 3 CEAC Rules). It further comes into play with respect to challenge of arbitrators. These experts from three parts of the world may also decide about costs issues like additional fees for the arbitrators in case of extreme workload. 25 CEACs modern rules, the CEAC Arbitration Rules 2012, which are based on the UNCITRAL Arbitration Rules 2010, its statutes and fee schedule, contribute to this concept of neutrality combined with efficiency. This is supported by the fact that the CEAC Rules with respect to choice of law promote the application of uniform law. 26 As the Chinese European Arbitration Centre is seated outside of China in Hamburg, Germany, the seat of arbitration usually will be Hamburg, Germany, unless the parties opt out. As a consequence, CEAC Arbitration is backed by German arbitration law which in turn is based on the UNCITRAL Model Law on International Commercial Arbitration serving as an internationally recognised basis for solving disputes by arbitration. 4 CEAC ARBITRATION HOW DOES IT WORK? AN UNCITRAL PLUS APPROACH The Chinese European Arbitration Centre has its own set of arbitration rules tailored to Sino-European arbitration. The CEAC Arbitration Rules are based on the UNCITRAL Arbitration Rules 2010 which serve as a modern, international and efficient basis. In order to tailor the Chinese European Arbitration Centre to China trade and investment, the founders of the institution chose to apply an UNCITRAL Plus Approach which means that certain deviations to the UNCITRAL Arbitration Rules were integrated in order to meet the specific needs of China trade and Chinese arbitration law.27 The amendments further touch institutional arbitration which is a prerequisite for recognition and enforcement of arbitral awards in China under Article 16 PRC arbitration law. The CEAC Arbitration Rules exist in two versions: the so called Core Rules only showing deviations from the UNCITRAL Rules as well as a Consolidated Version in English and Mandarin highlighting deviations from the UNCITRAL Rules 2010 in bold print. 28 Thus, the CEAC Arbitration Rules can be easily used by legal practitioners from all over the world familiar with the UNCITRAL Arbitration Rules as these can easily assess deviations within the CEAC Rules from the text in the consolidated version of the CEAC Arbitration Rules.
23

24 25 26 27 28

Weimann, T., Heeg, C. and Hasenstab, S., CEAC Arbitration Bridging the Gap between China and Europe Arbitration Tailored for Sino-European Disputes Administered by the Chinese European Arbitration Centre, Austrian Yearbook on International Arbitration 2013, Manzsche Verlags- und Universittsbuchhandlung GmbH, Vienna, 2013, p. 138. Brdermann, E. and Weimann, T, supra note 21, p. 17; Brdermann, E. and Heeg-Stelldinger, C., supra note 3, p. 44. CEAC Schedule of Costs, para. 4. See Art. 35 para. 1 lit. a CEAC Arbitration Rules. Weimann, T., Heeg, C. and Hasenstab, S., supra note 22, p. 138. CEAC Arbitration Rules, available at: <www.ceac-arbitration.com> at CEAC Download Centre.

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5 5.1

DEVIATIONS FROM THE UNCITRAL RULES CEAC ARBITRATION IS INSTITUTIONAL ARBITRATION where the parties agree to refer or submit their disputes to arbitration under the "CEAC Hamburg Arbitration Rules", the CEAC Arbitration Rules, the "CEAC Rules" or the Rules of the Chinese European Arbitration Centre or if the parties agree on CEAC, they shall be deemed to have agreed to refer the dispute to institutional arbitration administered by the Chinese European Arbitration Centre in Hamburg (Germany). Any reference to another city in combination with a reference to CEAC shall be deemed to be a choice of the place where oral hearings shall be held. Any reference to CEAC in combination with a reference to the UNCITRAL Arbitration Rules or any other set of arbitration rules shall be deemed to be a reference to the CEAC Arbitration Rules. 29

CEAC arbitration is institutional arbitration. Article 1 para. 1a of the CEAC Arbitration Rules provides that

By including this provision, the arbitration experts drafting the CEAC Arbitration Rules wanted to ensure that the parties choose CEAC arbitration as institutional arbitration even if they only refer to the CEAC Rules in whatever way. This is due to the fact that under Chinese arbitration law it is a prerequisite for recognition and enforcement of foreign arbitral awards that disputes are submitted to an arbitration institution. Article 16 PRC Arbitration Law requires an arbitration commission to administer the arbitration in order to solve the dispute and obtain an arbitral award enforceable in the Peoples Republic of China. 30 This deviation from the UNCITRAL Arbitration Rules in Art. 1 para. 1a CEAC Arbitration Rules is the basis for most amendments to the UNCITRAL Arbitration Rules and leads to the fact that CEAC Arbitration is always institutional arbitration administered by the neutral Chinese European Arbitration Centre. From this, it follows that the Notice of Arbitration initiating the proceedings must be sent to the Chinese-European Arbitration Centre (usually in 7 copies31) and that all cases are administered by CEAC Management. Another consequence of this concept of institutional arbitration is furthermore that the Appointing Authority steps in if the two parties cannot agree on a sole arbitrator or if the two party appointed arbitrators cannot agree on a presiding arbitrator (Article 9 para. 3 CEAC Arbitration Rules). The Chinese European Arbitration Centre, however, accepts party autonomy to the fairest extent possible by letting parties to an arbitration choose arbitrators as they prefer. Parties are not bound to choose arbitrators from the CEAC List of Arbitrators which only the CEAC Appointing Authority turns to in case it nominates and appoints arbitrators for a case. The parties may, however, use the CEAC List of Arbitrators with CVs published on the CEAC website as inspiration when seeking to find arbitrators or even counsel with sufficient China and China arbitration expertise. 5.2 COMBINATION WITH CONCILIATION OR MEDIATION Further, according to Article 1 para. 4 CEAC Arbitration Rules, the parties have the possibility to carry out conciliation proceedings under the Rules of the Beijing-Hamburg Conciliation Centre or any other type of mediation or conciliation in an early stage of the arbitration if they wish so. In this case, arbitration proceedings are suspended. This provision within the CEAC Arbitration Rules enables the parties to choose the combination of arbitration with prior conciliation or mediation which is commonly used in dispute resolution by Chinese parties. This feature of the CEAC Arbitration Rules for this reason is tailored to Sino-European trade and investment relationships as well. 5.3 CEAC MODEL ARBITRATION CLAUSE CEAC further provides a Model Arbitration Clause especially tailored to Sino-European disputes. The model clause expressly refers to institutional arbitration administered by the Chinese European

29 30 31

See Art. 1 para. 1a of the CEAC Arbitration Rules Weimann, T., Heeg, C. and Hasenstab, S., supra note 22, p. 140. Art. 3 para. 1 CEAC Arbitration Rules

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Arbitration Centre (CEAC) in order to avoid difficulties in enforcing foreign arbitral awards in the Peoples Republic of China. The CEAC Model Arbitration Clause is readily available in English, Mandarin and German language.32 Further languages will follow. The clause reads: Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by institutional arbitration administered by the Chinese European Arbitration Centre (CEAC) in Hamburg (Germany) in accordance with the CEAC Hamburg Arbitration Rules. CEAC provides several options that can be added to this arbitration clause. 33 These options shall remind the parties (in particular those who are not represented by a lawyer) about important decisions to be taken at the time of contract conclusion in order to agree on an arbitration clause which enables them to efficiently solve their dispute. The following options can be added and are foreseen in the Annex to the CEAC Rules which contains the model clause: a. The number of arbitrators shall be _______ ((i) one or (ii) three or unless the amount in dispute is less than _______ [e.g. 100.000 ] in which case the matter shall be decided by a sole arbitrator ; Regardless of the seat of arbitration, the arbitral tribunal is free to hold hearings in ___________ (town and country); The language(s) to be used in the arbitral proceedings shall be __________; Documents also may be submitted in _________________ (language). The arbitration shall be confidential. The parties agree that also the mere existence of an arbitral proceeding shall be kept confidential except to the extent disclosure is required by law, regulation or an order of a competent court. The arbitral tribunal shall apply the CEAC Hamburg Arbitration Rules as in force at the moment of the commencement of the arbitration unless one of the parties requests the tribunal, within 4 weeks as of the constitution of the arbitral tribunal, to operate according to the CEAC Hamburg Arbitration Rules as in force at the conclusion of this contract.

b. c. d. e. f.

g.

5.4

CEAC MODEL CHOICE OF LAW CLAUSE

As during contract negotiations, the arbitration clause and the choice of law clause are often negotiated at the same time, the Chinese European Arbitration Centre further provides a model choice of law clause as service to potential parties (Article 35 CEAC Rules). This Model Choice of Law Clause is based on input from UNIDROIT and UNCITRAL. The clause was drafted by CEAC in order to remind the parties of the importance of agreeing on the law governing the contract. Choice of law clauses are regularly the last clauses to be agreed on after long contract negotiations, so called midnight clauses.34 The parties quite often do not prepare this clause and therefore try to agree on a neutral law by either choosing any law of a jurisdiction none of the parties is domiciled in, in order to avoid further negotiations and discussions, or by often simply agreeing on Swiss law. But the parties are in many cases not aware of the particularities of the neutral law agreed upon. By drafting the model choice of law clause with options to choose in a kind of

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CEAC Model Arbitration Clause, available at: <www.ceac-arbitration.com> at CEAC Download Centre . Options to be added to the CEAC Model Arbitration Clause, available at: <www.ceac-arbitration.com> at CEAC Download Centre. Schrder-Frerkes, A. and Heeg, C., Auch Mitternachtsklauseln wollen berlegt sein Goldene Regeln fr Streitbeilegungsklauseln in Unternehmenskaufvertrgen, Unternehmensrelevantes Recht Jahrbuch 2013, F.A.Z.- Institut fr Management-, Markt- und Medieninformationen GmbH, Frankfurt am Main, German Law Publishers, Stuttgart, 2013; Blackaby, N., Partasides, C., Redfern, A. and Hunter, M., Redfern and Hunter on International Arbitration, 2009, pp. 85ff.

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check the box template, the Chinese European Arbitration Centre wanted to prevent the parties to a future CEAC dispute of opening such a proverbial legal Pandoras box.35 Instead of the law of the jurisdiction of a certain country, the parties can also agree on the United Nations Convention on Contracts for the International Sale of Goods of 1980 (CISG) or on the UNIDROIT Principles of International Commercial Contracts. Both, the CISG and the UNIDROIT Principles, have inspired many laws including Chinese contract law and therefore again offer a compromise familiar to parties and counsel from many jurisdictions. The CEAC Model Choice of Law Clause and the provision containing it reads as follows: The arbitral tribunal shall apply the law or rules of law designated by the parties as applicable to the substance of the dispute. The parties may wish to consider the use of this model clause with the following option by marking one of the following boxes: This contract shall be governed by a) the law of the jurisdiction of _______________ [country to be supplemented], or b) the United Nations Convention on Contracts for the International Sale of Goods of 1980 (CISG) without regard to any national reservation, supplemented for matters which are not governed by the CISG, by the UNIDROIT Principles of International Commercial Contracts and these supplemented by the otherwise applicable national law, or c) the UNIDROIT Principles of International Commercial Contracts supplemented by the otherwise applicable law. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate.36 In order to give consideration to the specifics of Sino-European contracts, the reference to the CISG is without regard to any national reservation . This wording of the clause was chosen deliberately with respect to Chinas reservation to the CISG in accordance with Articles 11 and 96 CISG. This reservation concerns a requirement of a written form for amendments to the contract that is now outdated because it was abolished in the reform of Chinese contract law in 1998. 37 By drafting this clause, the Chinese European Arbitration Centre wanted to avoid any confusion with respect to this outdated requirement and prevent the parties from extensive discussions of such issue which increase time needed and costs. 5.5 TIME LIMIT FOR THE AWARD In order to accelerate the arbitral proceedings administered by CEAC, Article 31a of the CEAC Rules provides a time limit for the award to be rendered. Article 31a of the CEAC Rules reads as follows: 1. Unless otherwise agreed by the parties, the time limit within which the arbitral tribunal must render its final award is nine months as of the constitution of the arbitral tribunal. 2. The management of CEAC may extend this time limit pursuant to a reasoned request from the arbitral tribunal or on its own initiative if it decides this to be necessary. This provision was included in order to promote the efficiency of arbitral proceedings administered by the Chinese European Arbitration Centre. It is longer than the six months time limit in the CIETAC Arbitration Rules but usually shorter than the six months limit of the ICC which only runs after signing of the terms of reference38. 5.6
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CEAC ARBITRATION WITH A PREDETERMINED DEFAULT SEAT OF ARBITRATION

Weimann, T., Heeg, C. and Hasenstab, S., supra note 22, p. 143. See Art. 35 CEAC Arbitration Rules, available at: <www.ceac-arbitration.com> at CEAC Download Centre. Wang, X. and Baasch Andersen, C., The Chinese Declaration against Oral Contracts under the CISG (2004), 8 Vindobona Journal of International Commercial Law & Arbitration, pp. 145 - 164 (with further references). Art. 30 para. 1 ICC Arbitration Rules 2012; Grierson, J. and van Hooft, A., Arbitration under the 2012 ICC Rules - An Introductory Users Guide, 2012, Wolters Kluwer, Alphen aan den Rijn, Chapter 23, at p. 209.

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According to Article 18 of the CEAC Rules, Hamburg is the default seat of arbitration. Article 18 reads as follows: If the parties have not explicitly agreed on another seat, the seat of the arbitration will be Hamburg, Germany. Regardless of the seat of the arbitration, the parties are free to determine any appropriate place for hearings or other proceedings. The clause concerning the default seat of arbitration was drafted by the Chinese European Arbitration Centre in order to avoid that the parties agree on a seat of arbitration within the Peoples Republic of China because this would possibly hinder enforcement of the arbitral award in China. This default seat is not mandatory with the consequence that the parties can agree on any other seat of arbitration. In any case, the Chinese European Arbitration Centre advises the parties not to choose places in Mainland China as seat of arbitration. A choice of the special administrative regions (SARs) Hong Kong and Macao should in contrast to that not put enforcement at risk due to the existence of arrangements concerning mutual enforcement between Mainland China and its SARs. 39 The parties may, however, differ from the seat of arbitration chosen in a separate choice for a place where oral hearings shall be held.40 For this, they should consider questions like the accessibility of the city (e.g. important airports) and the prices for hotel and conference rooms and the like. 5.7 EFFICIENT AND TRANSPARENT COST SCHEDULE The Chinese European Arbitration Centre offers an efficient and transparent cost schedule. The costs of the Chinese European Arbitration Centre arbitral proceedings are set out in the Schedule of Costs. The costs for the proceedings are based on the amount in dispute. The costs are reasonable and in the same range as of other European arbitral organisations. Although the costs are higher than the costs of CIETAC and other China-based arbitration institutions they are considerable lower than costs for ICC arbitration and range at about in the middle of the HKIAC frame. Furthermore, Hamburg as a place where oral hearings in the arbitration shall take place if chosen is much more cost-efficient than for example Hong Kong and Singapore with respect to costs for e.g. hotel rooms and conference rooms. The Chinese European Arbitration Centre further requests lower administrative fees and fees for the arbitrators than the frequently used Asian arbitral institutions HKIAC, ICC Asia and SIAC. It follows a concept of light touch arbitration with less administrative burdens. This results from the fact that the CEAC Rules are based on the UNCITRAL Arbitration Rules initially designed for ad hoc arbitrations41 and that party autonomy is one of the most important principles upheld in CEAC arbitration. CEAC arbitration furthermore and is not based in a common law background therefore saving costs again, e.g. avoiding the necessity of barristers as additional counsel in the arbitration as it is common practice in Singapore and other common law venues. According to the Schedule of Costs, the procedural costs are divided in steps based on the amount in dispute. The Chinese European Arbitration Centre has a special rule for cases with extreme workload for the arbitrators.42 6 CONCLUSION The young Chinese European Arbitration Centre is still growing. Since the inauguration in 2008, many companies started using arbitration clauses referring to the Chinese European Arbitration Centre in their

39

See the Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and Hong Kong Special Administrative Region, available at <http://www.legislation.gov.hk/intracountry/eng/pdf/mainlandmutual2e.pdf> and the Arrangement Concerning Reciprocal Recognition and Enforcement of Arbitral Awards between the Hong Kong Special Administrative Region and the Macao Special Administrative Region, signed on 7 January 2013, available at: <http://www.doj.gov.hk/eng/public/pr/20130104_pr.html>. See CEAC Model Arbitration Clause, option b, available at: <www.ceac-arbitration.com> at CEAC Download Centre. Beneyto, J., Brdermann, E., Meyer, B. and Zhao, H., Neue Wege in der Schiedsgerichtsbarkeit: das Chinese European Arbitration Centre (CEAC) fr China-Vertrge, (2011) Recht der internationalen Wirtschaft, pp. 12, 14. CEAC Schedule of Costs, para. 4.

40 41

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contracts. The Chinese European Arbitration Centre is administering its first cases since early 2012. Up to now, CEAC received 8 cases with a total amount in dispute of approximately EUR 60 million. Due to being tailored for all kind of China-related commercial disputes the Chinese European Arbitration Centre attracts experts from all over the world as arbitrators, members of its founding association and otherwise. In 2012/1013 thousands of international students participating in the Vis Moot are working with the CEAC Rules on which the current Vis Moot problem is based. By doing so the young practitioners familiarise themselves not only with the CEAC Rules 2012 but also the basics of Chinese Arbitration Law and choice of law issues. This is in the very sense of CEACs slogan and within the purpose of its founding association CELA connecting people, building bridges and backing business.

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