Intermediate Court Set Aside Defense Mechanics under Chinese Law
Intermediate court set aside defenses require strict enforcement of arbitral waiver rules and immediate parallel asset preservation in enforcement courts.
CIETAC Institutional Review Rules
Meaning
Administrative protocols of the China International Economic and Trade Arbitration Commission govern the internal scrutiny of jurisdictional disputes and draft awards before their release. The CIETAC institutional review rules embody this pre-emptive quality control system. Under these rules, the commission’s secretariat reviews the procedural aspects of every case to ensure that the eventual award is enforceable and complies with Chinese law.
This internal review process does not interfere with the independent decision-making of the tribunal on the merits of the case. Instead, it serves to identify potential procedural errors, formatting issues, or inconsistencies that could be used by a losing party to challenge the award in court. This dual-layer review is a defining feature of Chinese arbitral administration and applies to all cases administered by the commission.
Internal Scrutiny
The review process begins after the tribunal has drafted the award but before it is signed and issued to the parties. The CIETAC institutional review rules require the secretariat to analyze the draft award for compliance with procedural requirements. This includes verifying that all claims have been addressed, that the calculation of damages and costs is correct, and that the language is clear.
If the secretariat identifies any issues, it brings them to the attention of the tribunal. The tribunal is not obligated to accept the secretariat’s suggestions regarding substantive issues, but it must address any procedural concerns. This collaboration ensures that the award is robust and unlikely to be set aside by a court.
It also maintains the high reputation of the commission as a reliable and professional institution.
Judicial Interaction
The efficacy of this internal review is demonstrated by the low rate of set-aside decisions for awards issued by the commission. When an award is challenged in court, the judges often give weight to the fact that it has undergone institutional review. This is because the commission’s secretariat is composed of experienced legal experts who are well-versed in Chinese arbitration law and judicial practice.
The review rules also require the secretariat to keep abreast of the latest judicial interpretations from the Supreme People’s Court. This ensures that the institutional review is always aligned with the current standards of judicial supervision. For foreign parties, this alignment provides an extra layer of security, as it reduces the risk of their award being invalidated due to a technical error.
Corporate Strategy
For international businesses, the existence of these review rules is a significant factor in choosing an arbitral institution. By opting for a commission with a strong institutional review mechanism, companies can reduce the risk of costly and time-consuming court battles after the arbitration has concluded. This is particularly important in China, where the enforcement of arbitral awards can sometimes be challenging due to local protectionism or procedural complexities.
The institutional review helps to ensure that the award is drafted in a way that is clear and easy for local courts to enforce. Therefore, incorporating the commission’s rules into contracts is a prudent strategy for managing the risks of doing business in China.