16 October 2015

CIETAC issues optional Guidelines on Evidence

Need for introduction of CIETAC Guidelines on Evidence

Prior to the China International Economic and Trade Arbitration Commission (CIETAC) Guidelines on Evidence (Guidelines) coming into effect on 1 March 2015, CIETAC tribunals relied on a combination of the Arbitration Law of the People’s Republic of China (Arbitration Law), the CIETAC Arbitration Rules 2015 (Arbitration Rules), the IBA Rules on the Taking of Evidence in International Arbitration (IBA Rules) and “the Chinese principles of evidence in civil litigation that are suitable for use in arbitration” when determining evidentiary matters.[1]

In recognition of the need to provide parties with a more arbitration and less litigation-focused, single alternative to the suite of possible evidentiary laws and rules that may be held to apply to a CIETAC arbitration, these new Guidelines have been issued by CIETAC. The stated objective of the Guidelines is to assist the parties, their counsel and arbitral tribunals in dealing with issues of evidence more efficiently in arbitration proceedings.[2]

Our view is that the Guidelines will further this objective. Contained within 26 Articles, the Guidelines are comprehensive and sensibly seek to address many of the common evidentiary issues that may be expected to arise in arbitration. The Guidelines also bring CIETAC arbitration practice more in line with that of international arbitral institutions, at the same time as elevating certain unique features of PRC law into the Guidelines.

The success of the Guidelines will ultimately depend on how commonly they are adopted by parties. After all, they do not form part of the Arbitration Rules and their application is subject to the consent of the parties who may agree to adopt the Guidelines in whole, in part, in a varied form or in a non-binding capacity.

Change to existing CIETAC evidentiary practices

Documentary evidence

Documentary evidence plays a vital role in Chinese arbitration. While a tribunal may sometimes rely on oral testimony, this is a relatively recent shift in the Chinese arbitration and litigation landscape.

The Guidelines provide for greater efficiency in how parties and the tribunal may deal with documentary evidence. In Chinese litigation practice, which can influence Chinese arbitration practice, parties are generally required to produce original documents. If the document originates from outside Mainland China, it must be notarised and legalised in the originating jurisdiction, which can be time consuming and costly. Failure to notarise a document, while not rendering a document inadmissible, may be a factor in determining the credibility or authenticity of the document.

The Guidelines provide a default position that documents originating from a jurisdiction outside of Mainland China do not require notarisation and certification unless otherwise agreed. The Guidelines also remove any mandatory obligation for documents to be translated into the language of the arbitration proceedings.

Parties before CIETAC are now permitted to submit documentary evidence to the tribunal in electronic form rather than filing hard copy submissions, which is the current prevailing practice. This is consistent with the modern practices more recently adopted by other arbitral institutions whereby parties have a more direct mode of communication between the tribunal and the parties to the arbitration.  

Production of documents

Typically in a Chinese arbitration, parties are required to submit documentary evidence in support of their claim. However, this generally does not include evidence adverse to their case.

Consistent with rules of other arbitral institutions, parties may now request the tribunal order the other party to produce a specific document.  A party may challenge such a request on grounds including that that it lacks relevance, or the production may impose an unreasonable burden on the party. The tribunal may also exclude evidence on the basis that the evidence is privileged.

Reflections of PRC law in the Guidelines 

Liquidated damages

Under the Guidelines, a party alleging that the actual loss suffered is lower or higher than the liquidated damages provided for in a contract now expressly bears the burden of proving this claim, directly reflecting Article 114 of the PRC Contract Law.

Preservation of evidence

The preservation of evidence provisions within the Guidelines are consistent with PRC law and CIETAC Rules. However, in contrast with foreign arbitral institutions, under PRC law only PRC courts have the power to order evidence and asset preservation.

Evidence lists

Reflecting a unique feature of Chinese arbitration practice, the Guidelines enable parties to examine the evidence of the opposing party. In this process, parties submit evidence lists which are later the subject of an oral hearing at which the Tribunal will consider each party's evidence bundle and hear any challenge to the legality, authenticity and relevance of the evidence mounted by the opposing parties. 

Impact of the Guidelines on CIETAC arbitration practice

While we expect that not all parties to a CIETAC arbitration will rush to agree that the Guidelines will apply, over time parties may wish to adopt the Guidelines as a way of bedding down how these important matters will be addressed by a tribunal.

Parties may wish to draft or amend their arbitral agreements such that in the event of a dispute, the Guidelines will apply, noting that the application of the Guidelines is presumed to be more appropriate where the seat of arbitration is in Mainland China and where the Arbitration Law is the law applicable to the arbitration procedure. 

We will observe with interest how the Guidelines are applied by tribunals, in particular the application of the provisions relating to document production given the departure this represents from current PRC arbitration practice. We will also observe with interest how any awards rendered after the Guidelines have been followed are addressed upon enforcement by a PRC court.

[1] Statement released by CIETAC on 5 February 2015. The Guidelines were introduced followed a meeting of Chairmen of CIETAC on 26 September 2014 at which the Guidelines were passed.

[2] Preamble to the Guidelines.

[3] Preamble to the Guidelines.

[4] Article 68 of the Civil Procedure Law of People’s Republic of China (Civil Procedure Law).

[5] See Article 11 of the Several Provisions of the Supreme People's Court on Evidence in Civil Proceedings.

[6] Article 6.3. The Guidelines are silent on what is required in terms of notarisation of documents that originate from within Mainland China. In our view, we cannot see a reason why the Guidelines would have sought to impose an added burden on parties with respect to documents originating from within Mainland China and the default position will be the same, namely that such documents will not require notarisation unless otherwise agreed by the parties.

[7] Article 14; see Article 68 of the Civil Procedure Law.

[8] Article 6.

[9] See, for example, Article 2.1 and Article 4.1 of the Hong Kong International Arbitration Centre Administered Arbitration Rules 2013 and Rule 2.1 of SIAC Rules 2013; Article 13.

[10] Article 12 of the Arbitration Rules.

[11] Article 7; see, for example, Article 3 of the IBA Rules.

[12] Article 19.

[13] Article 1.4.

[14] Article 12.

[15] See for example, Rule 26 of SIAC Rules 2013 and Article 23 of Hong Kong International Arbitration Centre Administered Arbitration Rules 2013;  Articles 81 and 100 of the Civil Procedure Law; Articles 28, 46 and 68 of the Arbitration Law.

[16] Article 15.

[17] Preamble to the Guidelines.

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