WHERE TO TURN FOR CHINA -RELATED ARB ITRATION? CEAC ARB ITRATION AS A NEUTRALCOMP ROM ISE TAILORED FOR CHINESE -EUROP EAN D ISP UTES

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WHERE TO TURN FOR CHINA-RELATED ARBITRATION?

CEAC ARBITRATION AS A NEUTRAL COMPROMISE TAILORED FOR CHINESE-EUROPEAN DISPUTES

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

CONTENTS

1 Introduction........................................................................................................................ 11.1 Relevance of Arbitration for China related Business Contracts ......................................... 11.2 Options for China related Arbitration ................................................................................ 21.3 The Idea behind the Chinese European Arbitration Centre ............................................... 24 CEAC Arbitration – How Does it Work? – An UNCITRAL Plus Approach ...................... 45 Deviations from the UNCITRAL Rules .............................................................................. 55.1 CEAC Arbitration is Institutional Arbitration .................................................................... 55.2 Combination with Conciliation or Mediation ..................................................................... 55.3 CEAC Model Arbitration Clause ........................................................................................ 55.4 CEAC Model Choice of Law Clause................................................................................... 65.5 Time Limit For the Award .................................................................................................. 75.6 CEAC Arbitration with a Predetermined Default Seat of Arbitration ................................ 75.7 Efficient and Transparent Cost Schedule ........................................................................... 86 Conclusion.......................................................................................................................... 8

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

1.1 RELEVANCE OF ARBITRATION FOR CHINA RELATED BUSINESS CONTRACTSDue to a lack of reciprocity in the enforcement of ordinary court judgments from the People’s Republic ofChina in many countries in Europe as well as of court judgements from many countries in Europe in thePeople’s Republic of China,1 arbitral awards are the only possibility how to achieve an enforceable solutionin case of dispute between companies from both regions. For this reason, arbitration agreements are the

* Dr. Christine Heeg is Secretary General of the Chinese European Arbitration Centre and a full time practising attorney within thearbitration and litigation department of Bird & Bird LLP, Düsseldorf; Florence Brauch is an attorney within the arbitration andlitigation department of Bird & Bird LLP Düsseldorf and a member of Young CEAC.

1 Öhlberger, V., “China-related Contracts: What to Consider When Agreeing on CIETAC Arbitration”, Austrian Yearbook onInternational Arbitration 2009, Manz’sche Verlags- und Universitätsbuchhandlung GmbH, Vienna, 2009, p. 113; Jansen, J. &Heeg-Stelldinger, C., “Chinese European Arbitration Center (CEAC)”, Institutional Arbitration – Tasks and Powers of differentArbitration Institutions, Schulthess Juristische Medien AG, Zurich, 2009, pp. 81 – 97; Neelmeier, A., “Verbürgung derGegenseitigkeit zwischen Deutschland und China?” SchiedsVZ (2007), pp. 100-102; Chua, E., “Arbitration in China”, 1 AsianInternational Arbitration Journal (2005), pp. 82ff.

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backbone of such international contracts.2 International commercial arbitration is the way out of suchdilemma of non-enforcement of court judgements. This is due to the fact that most European countries andChina as well as many other countries all over the world are members to the 1958 New York Conventionon the Recognition and Enforcement of Foreign Arbitral Awards. The People’s Republic of China hasadopted 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 YorkConvention which currently counts 148 member states.3

1.2 OPTIONS FOR CHINA RELATED ARBITRATIONIn China, a whole variety of arbitration institutions already exists, including the China InternationalEconomic and Trade Arbitration Commission (CIETAC)4, the Beijing Arbitration Commission (BAC)5, theShanghai Arbitration Commission6, the Hong Kong Arbitration Centre (HKIAC)7, the China MaritimeArbitration Commission (CMAC)8. Various further local arbitration commissions approved by the regionalgovernments within the People’s Republic of China exist. In Europe, we also count various arbitrationinstitutions frequently used by the business community, such as the Arbitration Court at the InternationalChamber 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, theGerman Institution of Arbitration (DIS)13 and others. None of these institutions is however specialized ontrade and investments between China and Europe only. All of these institutions are arbitration institutionsfor international commercial arbitration in various countries, with more or less of a tradition of solvingdisputes related to China.

1.3 THE IDEA BEHIND THE CHINESE EUROPEAN ARBITRATION CENTRECEAC, the Chinese European Arbitration Centre, in turn, was created for and tailored to disputes betweenChinese and European companies:

In 2006, during a visit of the Hamburg Major to Shanghai with a business delegation, both majors, ofShanghai and of the Free and Hanseatic City of Hamburg, were approached by members of the businesscommunity demanding the foundation of an arbitration institution which is neutral for Chinese andEuropean companies and which can serve as a compromise when the parties to Sino-European businesscontracts can neither agree on a Chinese nor a traditional European arbitration institution.14 This idea wastaken up by the Hamburg Bar Organisation and the Hamburg Chamber of Commerce in 2006 whichinitiated research with respect to the foundation of such special arbitration institution tailored for ChineseEuropean trade and investment. They gathered more than 450 lawyers from all over the world includingChina and Europe discussing the foundation of such institution and tailoring arbitration rules for thispurpose. In 2008, after various discussions and meetings at International conferences, such as theInternational Bar Association (IBA) Annual Meeting and the Inter-Pacific Bar Association (IPBA) Annual

2 Brödermann, E. and Heeg-Stelldinger, C., “The Chinese-European Arbitration Centre – Hamburg”, Asia Arbitration Guide,Singapore, 2011, p. 41.

3 List of member states to the New York Convention, available at:<http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html>.

4 China International Economic and Trade Arbitration Commission (CIETAC), available at: <http://www.cietac.org/index.cms>.5 Beijing Arbitration Commission (BAC), available at: <http://www.bjac.org.cn/en/index.asp>.6 Shanghai Arbitration Commission, available at: <http://www.accsh.org/accsh/english/index.html>.7 Hong Kong Arbitration Centre (HKIAC), available at: <http://www.hkiac.org>.8 China Maritime Arbitration Commission (CMAC), available at: <http://www.cmac-sh.org/en/home.asp>.9 Arbitration Court at the International Chamber of Commerce (ICC), available at: <http://www.iccwbo.org/products-and-

services/arbitration-and-adr/>.10 Arbitration Institute of the Stockholm Chamber of Commerce (SCC), available at: <http://www.sccinstitute.com/>.11 London Court of International Arbitration (LCIA), available at: <http://www.lcia.org/Default.aspx>.12 Swiss Chambers' Arbitration Institution, available at: <https://www.swissarbitration.org/sa/en/>.13 German Institution of Arbitration (DIS), available at: <http://www.dis-arb.de/scho/>.14 Chinese European Arbitration Centre (CEAC), available at: <http://www.ceac-arbitration.com/index.php?id=28>.

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Meeting as well as the 75th anniversary of the International Commercial Arbitration Court in Russia in2007 in Moscow, the Chinese European Legal Association15 was founded as founding association for suchan arbitration institution. The Chinese European Legal Association is a non-profit organisation underGerman law founded in July 2008 which has the specific aim:

to support the interaction and exchange between China and Europe and the world regarding issuesof economics, law and legal culture (and to make a contribution to the avoidance, settlement andresolution 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 EuropeanArbitration Centre (CEAC) 17 , the promotion of education of young lawyers in cross-cultural andcomparative law, in particular in the fields of negotiation, dispute avoidance and dispute settlement byconciliation, mediation and arbitration.18

The Chinese European Legal Association today is the sole shareholder of the Chinese European ArbitrationCentre which is operated by a German limited liability company (Chinese European Arbitration CentreGmbH).

Members of the non-profit Chinese European Legal Association include inter alia the Hamburg BarOrganisation and the Hamburg Chamber of Commerce as institutional members 19 as well as severalinternational law firms including – but not limited to - Bird & Bird, Brödermann Jahn, Cerha HempelSpiegelfeld Hlawati, Clifford Chance, CMS Hasche Sigle, Dacheng, DLA Piper, Freshfields BruckhausDeringer, Graf von Westphalen, KL Gates Taipei, Zhong Yin Law Firm20 as well as more than 60 lawyersand inhouse counsel specialised in international arbitration as individual members21. Members come fromall over the world and especially from China and Europe as regions for which the Chinese EuropeanArbitration Centre is especially tailored.

2 FOUNDATION OF THE CHINESE EUROPEAN ARBITRATION CENTRE

In September 2008, the Chinese European Legal Association founded the Chinese European ArbitrationCentre GmbH which operates the Chinese European Arbitration Centre. The Chinese European ArbitrationCentre as an arbitration institution is unique insofar as in all its organs (General Assembly, Managementand Advisory Board) it follows a clear division of power between the Greater China Region, Europe andthe rest of the world.22 Such concept of tripartite division of power is unique within the group of arbitrationinstitutions existing and guarantees 360 degree neutrality for companies from the Greater China Region aswell as from Europe making use of the services of this arbitration institution. Experts from the rest of theworld in such disputes always serve as mutual factor whereas in contracts between Chinese and NorthernAmerican companies for example Europe and European experts active in the arbitration institutionguarantee 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 Westernworld, international investments from Greater China abroad, international investments in Greater China,cross-straight disputes as well as disputes between the People’s Republic of China companies and

15 Chinese European Legal Association (CELA), available at: <http://www.cela-hamburg.com>.16 See Art. 2 para. 1 CELA Statutes.17 Chinese European Arbitration Centre (CEAC), available at: <www.ceac-arbitration.com>.18 See Preamble lit. H and Art. 2 para. 1 lit. b sent. 2 subpara. ii CELA Statutes.19 Members of the Chinese European Legal Association, available at: <http://www.cela-hamburg.com/index.php?id=71>.20 Members of the Chinese European Legal Association, available at: <http://www.cela-hamburg.com/index.php?id=72>.21 Members of the Chinese European Legal Association, available at: <http://www.cela-hamburg.com/index.php?id=73>.22 Brödermann, 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 andPowers 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 allkinds of international disputes if the parties wish to solve their disputes by CEAC arbitration and agree onthe CEAC arbitration clause in their contracts.

3 CEAC STANDS FOR 360 DEGREE NEUTRALITY

The Chinese European Arbitration Centre stands for 360 degree neutrality as it is an internationalmulticultural project tailor-made for arbitration for Sino-European disputes. Its rules are based on theinternational broadly accepted UNCITRAL Arbitration Rules. For this, the UNCITRAL Rules have beenadapted to institutional arbitration and specifics of Chinese arbitration law to be taken into account withrespect to enforcement of arbitral awards in the People’s Republic of China.23

The Chinese European Arbitration Centre has an international Management and Advisory Board and – atthe very heart of the institution – an international Appointing Authority with chambers always consisting ofthree 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 ifeither the parties cannot agree on a sole arbitrator or the two party appointed arbitrators cannot agree on thepresiding arbitrator (Article 9 para. 3 CEAC Rules). It further comes into play with respect to challenge ofarbitrators. These experts from three parts of the world may also decide about costs issues like additionalfees for the arbitrators in case of extreme workload. 25

CEAC´s modern rules, the CEAC Arbitration Rules 2012, which are based on the UNCITRAL ArbitrationRules 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 ofuniform law. 26

As the Chinese European Arbitration Centre is seated outside of China in Hamburg, Germany, the seat ofarbitration usually will be Hamburg, Germany, unless the parties opt out. As a consequence, CEACArbitration is backed by German arbitration law which in turn is based on the UNCITRAL Model Law onInternational Commercial Arbitration serving as an internationally recognised basis for solving disputes byarbitration.

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-Europeanarbitration. The CEAC Arbitration Rules are based on the UNCITRAL Arbitration Rules 2010 which serveas a modern, international and efficient basis. In order to tailor the Chinese European Arbitration Centre toChina 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 meetthe specific needs of China trade and Chinese arbitration law.27 The amendments further touch institutionalarbitration which is a prerequisite for recognition and enforcement of arbitral awards in China under Article16 PRC arbitration law.

The CEAC Arbitration Rules exist in two versions: the so called “Core Rules” only showing deviationsfrom the UNCITRAL Rules as well as a “Consolidated Version” in English and Mandarin highlightingdeviations from the UNCITRAL Rules 2010 in bold print.28 Thus, the CEAC Arbitration Rules can beeasily used by legal practitioners from all over the world familiar with the UNCITRAL Arbitration Rulesas these can easily assess deviations within the CEAC Rules from the text in the consolidated version of theCEAC Arbitration Rules.

23 Weimann, T., Heeg, C. and Hasenstab, S., “CEAC Arbitration –Bridging the Gap between China and Europe – ArbitrationTailored for Sino-European Disputes Administered by the Chinese European Arbitration Centre”, Austrian Yearbook onInternational Arbitration 2013, Manz’sche Verlags- und Universitätsbuchhandlung GmbH, Vienna, 2013, p. 138.

24 Brödermann, E. and Weimann, T, supra note 21, p. 17; Brödermann, E. and Heeg-Stelldinger, C., supra note 3, p. 44.25 CEAC Schedule of Costs, para. 4.26 See Art. 35 para. 1 lit. a CEAC Arbitration Rules.27 Weimann, T., Heeg, C. and Hasenstab, S., supra note 22, p. 138.28 CEAC Arbitration Rules, available at: <www.ceac-arbitration.com> at CEAC Download Centre.

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5 DEVIATIONS FROM THE UNCITRAL RULES

5.1 CEAC ARBITRATION IS INSTITUTIONAL ARBITRATION

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

where the parties agree to refer or submit their disputes to arbitration under the "CEAC HamburgArbitration Rules", the “CEAC Arbitration Rules”, the "CEAC Rules" or the “Rules of the ChineseEuropean Arbitration Centre” or if the parties agree on “CEAC”, they shall be deemed to haveagreed to refer the dispute to institutional arbitration administered by the Chinese EuropeanArbitration Centre in Hamburg (Germany). Any reference to another city in combination with areference 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 anyother set of arbitration rules shall be deemed to be a reference to the CEAC Arbitration Rules.29

By including this provision, the arbitration experts drafting the CEAC Arbitration Rules wanted to ensurethat the parties choose CEAC arbitration as institutional arbitration even if they only refer to the CEACRules in whatever way. This is due to the fact that under Chinese arbitration law it is a prerequisite forrecognition and enforcement of foreign arbitral awards that disputes are submitted to an arbitrationinstitution. Article 16 PRC Arbitration Law requires an “arbitration commission” to administer thearbitration in order to solve the dispute and obtain an arbitral award enforceable in the People’s Republic ofChina. 30

This deviation from the UNCITRAL Arbitration Rules in Art. 1 para. 1a CEAC Arbitration Rules is thebasis for most amendments to the UNCITRAL Arbitration Rules and leads to the fact that CEACArbitration is always institutional arbitration administered by the neutral Chinese European ArbitrationCentre. From this, it follows that the Notice of Arbitration initiating the proceedings must be sent to theChinese-European Arbitration Centre (usually in 7 copies31) and that all cases are administered by CEACManagement.

Another consequence of this concept of institutional arbitration is furthermore that the AppointingAuthority steps in if the two parties cannot agree on a sole arbitrator or if the two party appointedarbitrators cannot agree on a presiding arbitrator (Article 9 para. 3 CEAC Arbitration Rules). The ChineseEuropean Arbitration Centre, however, accepts party autonomy to the fairest extent possible by lettingparties to an arbitration choose arbitrators as they prefer. Parties are not bound to choose arbitrators fromthe CEAC List of Arbitrators which only the CEAC Appointing Authority turns to in case it nominates andappoints arbitrators for a case. The parties may, however, use the CEAC List of Arbitrators with CVspublished on the CEAC website as inspiration when seeking to find arbitrators or even counsel withsufficient 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 outconciliation proceedings under the Rules of the Beijing-Hamburg Conciliation Centre or any other type ofmediation or conciliation in an early stage of the arbitration if they wish so. In this case, arbitrationproceedings are suspended. This provision within the CEAC Arbitration Rules enables the parties to choosethe combination of arbitration with prior conciliation or mediation which is commonly used in disputeresolution by Chinese parties. This feature of the CEAC Arbitration Rules for this reason is tailored toSino-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. Themodel clause expressly refers to “institutional arbitration administered by the Chinese European

29 See Art. 1 para. 1a of the CEAC Arbitration Rules30 Weimann, T., Heeg, C. and Hasenstab, S., supra note 22, p. 140.31 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 thePeople’s Republic of China. The CEAC Model Arbitration Clause is readily available in English, Mandarinand 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 theChinese European Arbitration Centre (CEAC) in Hamburg (Germany) in accordance with theCEAC Hamburg Arbitration Rules.

CEAC provides several options that can be added to this arbitration clause.33 These options shall remindthe parties (in particular those who are not represented by a lawyer) about important decisions to be takenat the time of contract conclusion in order to agree on an arbitration clause which enables them toefficiently solve their dispute.

The following options can be added and are foreseen in the Annex to the CEAC Rules which contains themodel clause:

a. The number of arbitrators shall be _______ ((i) one or (ii) three or unless the amount indispute is less than € _______ [e.g. 100.000 €] in which case the matter shall be decided bya sole arbitrator ;

b. Regardless of the seat of arbitration, the arbitral tribunal is free to hold hearings in___________ (town and country);

c. The language(s) to be used in the arbitral proceedings shall be __________;

d. Documents also may be submitted in _________________ (language).

e. The arbitration shall be confidential.

f. The parties agree that also the mere existence of an arbitral proceeding shall be keptconfidential except to the extent disclosure is required by law, regulation or an order of acompetent court.

g. The arbitral tribunal shall apply the CEAC Hamburg Arbitration Rules as in force at themoment of the commencement of the arbitration unless one of the parties requests thetribunal, within 4 weeks as of the constitution of the arbitral tribunal, to operate accordingto the CEAC Hamburg Arbitration Rules as in force at the conclusion of this contract.

5.4 CEAC MODEL CHOICE OF LAW CLAUSE

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

32 CEAC Model Arbitration Clause, available at: <www.ceac-arbitration.com> at CEAC Download Centre .33 Options to be added to the CEAC Model Arbitration Clause, available at: <www.ceac-arbitration.com> at CEAC Download

Centre.34 Schröder-Frerkes, A. and Heeg, C., “Auch Mitternachtsklauseln wollen überlegt sein… Goldene Regeln für

Streitbeilegungsklauseln in Unternehmenskaufverträgen“, Unternehmensrelevantes Recht Jahrbuch 2013, F.A.Z.- Institut fürManagement-, 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 afuture CEAC dispute of opening such a proverbial legal “Pandora’s box”.35

Instead of the law of the jurisdiction of a certain country, the parties can also agree on the United NationsConvention on Contracts for the International Sale of Goods of 1980 (CISG) or on the UNIDROITPrinciples of International Commercial Contracts. Both, the CISG and the UNIDROIT Principles, haveinspired many laws including Chinese contract law and therefore again offer a compromise familiar toparties 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 tothe substance of the dispute. The parties may wish to consider the use of this model clause with thefollowing 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 notgoverned by the CISG, by the UNIDROIT Principles of International Commercial Contracts andthese supplemented by the otherwise applicable national law, or

c) the UNIDROIT Principles of International Commercial Contracts supplemented by theotherwise applicable law.

In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which itdetermines 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 withrespect to China’s reservation to the CISG in accordance with Articles 11 and 96 CISG. This reservationconcerns a requirement of a written form for amendments to the contract that is now outdated because itwas abolished in the reform of Chinese contract law in 1998. 37 By drafting this clause, the ChineseEuropean Arbitration Centre wanted to avoid any confusion with respect to this outdated requirement andprevent 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 Rulesprovides 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 mustrender 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 thearbitral 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 theChinese European Arbitration Centre. It is longer than the six months time limit in the CIETAC ArbitrationRules but usually shorter than the six months limit of the ICC which only runs after signing of the terms ofreference38.

5.6 CEAC ARBITRATION WITH A PREDETERMINED DEFAULT SEAT OF ARBITRATION

35 Weimann, T., Heeg, C. and Hasenstab, S., supra note 22, p. 143.36 See Art. 35 CEAC Arbitration Rules, available at: <www.ceac-arbitration.com> at CEAC Download Centre.37 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).38 Art. 30 para. 1 ICC Arbitration Rules 2012; Grierson, J. and van Hooft, A., Arbitration under the 2012 ICC Rules - An

Introductory User’s 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 asfollows:

If the parties have not explicitly agreed on another seat, the seat of the arbitration will beHamburg, Germany. Regardless of the seat of the arbitration, the parties are free to determine anyappropriate place for hearings or other proceedings.

The clause concerning the default seat of arbitration was drafted by the Chinese European ArbitrationCentre in order to avoid that the parties agree on a seat of arbitration within the People’s Republic of Chinabecause this would possibly hinder enforcement of the arbitral award in China. This default seat is notmandatory with the consequence that the parties can agree on any other seat of arbitration. In any case, theChinese European Arbitration Centre advises the parties not to choose places in Mainland China as seat ofarbitration. A choice of the special administrative regions (SARs) Hong Kong and Macao should incontrast to that not put enforcement at risk due to the existence of arrangements concerning mutualenforcement 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 whereoral 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 theChinese European Arbitration Centre arbitral proceedings are set out in the Schedule of Costs. The costsfor the proceedings are based on the amount in dispute. The costs are reasonable and in the same range asof other European arbitral organisations. Although the costs are higher than the costs of CIETAC and otherChina-based arbitration institutions they are considerable lower than costs for ICC arbitration and range atabout in the middle of the HKIAC frame.

Furthermore, Hamburg as a place where oral hearings in the arbitration shall take place – if chosen – ismuch more cost-efficient than for example Hong Kong and Singapore with respect to costs for e.g. hotelrooms and conference rooms. The Chinese European Arbitration Centre further requests loweradministrative 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. Thisresults from the fact that the CEAC Rules are based on the UNCITRAL Arbitration Rules initially designedfor ad hoc arbitrations41 and that party autonomy is one of the most important principles upheld in CEACarbitration. CEAC arbitration furthermore and is not based in a common law background therefore savingcosts again, e.g. avoiding the necessity of barristers as additional counsel in the arbitration as it is commonpractice in Singapore and other common law venues.

According to the Schedule of Costs, the procedural costs are divided in steps based on the amount indispute. The Chinese European Arbitration Centre has a special rule for cases with extreme workload forthe arbitrators.42

6 CONCLUSION

The young Chinese European Arbitration Centre is still growing. Since the inauguration in 2008, manycompanies 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 SpecialAdministrative Region”, available at <http://www.legislation.gov.hk/intracountry/eng/pdf/mainlandmutual2e.pdf> and “theArrangement Concerning Reciprocal Recognition and Enforcement of Arbitral Awards between the Hong Kong SpecialAdministrative 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>.

40 See CEAC Model Arbitration Clause, option b, available at: <www.ceac-arbitration.com> at CEAC Download Centre.41 Beneyto, J., Brödermann, E., Meyer, B. and Zhao, H., „Neue Wege in der Schiedsgerichtsbarkeit: das Chinese European

Arbitration Centre (CEAC) für China-Verträge“, (2011) Recht der internationalen Wirtschaft, pp. 12, 14.42 CEAC Schedule of Costs, para. 4.

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contracts. The Chinese European Arbitration Centre is administering its first cases since early 2012. Up tonow, CEAC received 8 cases with a total amount in dispute of approximately EUR 60 million. Due tobeing tailored for all kind of China-related commercial disputes the Chinese European Arbitration Centreattracts 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 CEACRules on which the current Vis Moot problem is based. By doing so the young practitioners familiarisethemselves not only with the CEAC Rules 2012 but also the basics of Chinese Arbitration Law and choiceof law issues. This is in the very sense of CEAC´s slogan and within the purpose of its founding associationCELA – connecting people, building bridges and backing business.