Hui Zhong represented client in the dispute with a popular Chinese restaurant chain and its founder in CIETAC arbitration proceedings and the subsequent set-aside proceedings before China’s International Commercial Court (the “CICC”)[i]. In both proceedings Hui Zhong helped the client achieved a successful result.
Key Takeaways
On 13 March 2021, the CICC published on its official website the orders in Case 2019 Zui Gao Fa MinTe No. 4 (the “CICC No. 4 Order”) and Case 2019 Zui Gao Fa Min Te No. 5(the “CICC No. 5 Order”) (together, the “Orders”)[ii], rendered on 29 December 2020 and 31 December 2021, respectively. The two Orders are respectively the fourth and fifth decisions rendered by the CICC relating to judicial review of arbitration-related applications, since its establishment in June 2018.

The Orders ruled that where there is inconsistency between the arbitration agreement specially agreed by concerned parties and the applicable arbitration rules, the arbitration agreement shall prevail, unless it is inoperable or against mandatory rules of the law; furthermore, contractual clauses should be interpreted from the perspective of giving them effect, rather than to render them redundant or meaningless.
The CICC continues to reinforce China’s pro-arbitration and party autonomy approach when undertaking judicial reviews of arbitral awards. The Orders reflect China’s resolution to evolve towards an arbitration-friendly jurisdiction and should reasonably strengthen the confidence of Chinese and foreign parties conducting commercial arbitrationand resolving international commercial disputes in China.

Summary of the Cases
The CICC issued the CICCNo. 4 Order and the CICC No. 5 Order on 29 December 2020 and 31 December 2021. Both concerned the Respondents’ applications to set aside the arbitral awards rendered by the same arbitral tribunal under the auspices of the China International Economic and Trade Arbitration Commission (“CIETAC”). The set-aside applications were made on the basis that the compositions of the arbitral tribunal were inconsistent with the arbitration rules, i.e. the CIETACArbitration Rules (2012) (“Arbitration Rules”). 
Concerned Arbitration Agreements and Arbitration Rules
The relevant parties’ information, arbitration agreements and Arbitration Rules are listed below: 

Dispute over the Constitution of the Arbitral Tribunal

In both arbitrationcases, the Claimant appointed Mr. MOSER, Michael J. as an arbitrator. The Respondents failed to jointly appoint an arbitrator within the prescribed time limit. Instead,they requested CIETAC to appoint three arbitrators pursuant to Article 27.3 of the Arbitration Rules.
In response, CIETAC did not appoint three arbitrators as requested by the Respondents. Instead, it decided that, per the arbitration agreements, the Respondents should jointly nominate one arbitrator, failing which, the Chairman of CIETAC would appoint an arbitrator for the Respondents, and the presiding arbitrator should still be appointed pursuant to the procedure as agreed in the Arbitration Agreements.
After several rounds of communications, the Respondents, finally both appointed Mr. Zhou Hanmin as anarbitrator and reserved their rights to object to the composition of the ArbitralTribunal.
On 28 April 2019, the Arbitral Tribunal in both cases rendered arbitral awards. On 12 July 2019, the CICC accepted the Respondents’ applications to set aside the awards on the ground that the composition of the tribunal was inconsistent with the Arbitration Rules.
Concerned Parties’ Arguments
Inthe CICC set-aside proceedings, the Respondents (to the arbitrations) argued that: 1) the composition of the Arbitral Tribunal was inconsistent with Article 27.3 of the Arbitration Rules, which requires CIETAC to appoint all three arbitrators where the respondents fail to jointly nominate one arbitrator; 2) the composition of the Arbitral Tribunal deviated from the principle of equal treatment, undermined procedural fairness and was contrary to public interest; 3) Zhang Lan and other Respondents are not parties acting in concert; the other Respondents were independent entities, and Zhang Lan’s appointment of an arbitrator cannot be taken as an act jointly made by the Respondents.
In response, the Claimant submitted that: 1) the Arbitration Agreements,which are in specific terms and entitle both Claimant and Respondents the right to nominate an arbitrator, have effectively amended and excluded the applicationof Article 27.3 of the Arbitration Rules, and the following factors shall be taken into consideration by the court: (i) the shareholding structure andmanagement organization of the Respondents indicate that there were actuallyonly two sides, being the seller represented and controlled by Zhang Lan (on the Respondent side) and the buyer represented and controlled by CVC (on the Claimant side), (ii) there were no provisions in the arbitration agreement allowing CIETAC to designate an arbitrator for a party which has nominated an arbitrator; (iii) as all of the Respondents were controlled by Zhang Lan, there were noobjective reasons or facts which would made it impossible for the Respondentsto nominate an arbitrator jointly.; 2) CIETAC has given the Parties sufficient opportunities to express their views and to nominate arbitrators; 3) the fairness of the arbitration was not affected by the nomination process.
The CICC’s Reasonings
The CICC reached same conclusions in the Orders and dismissed the Respondents’ application to set-aside the awards. The key points in the CICC’s reasoning include the following:
First, the CICC decided to give effect to the special nomination procedure as agreed in the Arbitration Agreements. It held that, “contractual clauses should be interpreted from theperspective of giving them as much effect as possible and not to make them redundant or meaningless.” The CICC considered that the parties had expressly agreed on the procedure for the appointment of arbitrators and that each Party should have the right to choose an arbitrator. It would be contrary to the principle of party autonomy to deprive the Claimant of its right to nominate anarbitrator merely because the Respondents had failed to do so.
Second, the CICCconsidered factors including the factual background of the contracts to decide whether the Respondents could be seen as “parties of common interests”, andfurther, whether Zhang Lan could represent other Respondents and whether Zhang Lan’s nomination of an arbitrator could be taken as an act of all Respondents. Specifically,the CICC considered that since Zhang Lan was the sole shareholder and the soledirector of Grand Lan, and also the sole shareholder and one of the two directors of Qiao Jiang Lan, the Respondents did have common interests. Accordingly,there were no obstacles for the Respondents to jo intly nominate one arbitrator.The behavior of the Respondents in the arbitration, namely repeatedly refusing to jointly nominate an arbitrator based on the ground that they could not agree onone, was contrary to the principle of good faith and should not be encouraged.
Third, the CICC considered that the Parties had been given sufficient opportunities to express their viewson the appointment of arbitrators, as it took one year and four months tocomplete the composition of the Tribunal. The CICC found that there was no lackof fairness in the process, and it would be against good faith to allow  the Respondents to rely on this as a ground to set aside unfavorable arbitral awards.

Hui Zhong Comments
The Orders of the CICC, finding that contractual clauses should be interpreted from the perspective of giving them effect, and that arbitration agreements specially agreed by the parties should prevail over arbitration rules unless they are inoperable or against mandatory rules of the law, demonstrate Chinese judiciaries’ embracing of party autonomy and are the recent testament to the pro-arbitration approach promoted by the Chinese courts.
Asimilar notable case was Noble Resources Pte Ltd vs. Shanghai Xintai International Trade Ltd. Co (2017) (“Noble Resources”), where the Shanghai No. 1 Intermediate People’s Court also recognized that party autonomy should prevail over the provisions of arbitration rules. In Noble Resources, it was agreed between the arties that any dispute was to besubmitted to a panel of three arbitrators. The applicable arbitration rules were the Singapore International Arbitration Center Rules 2013 (the “SIACRules 2013”). Article 5.2 (Expedited Procedure) of those Rules provides that, “[w]hen a party has applied to the Registrar under Rule 5.1, and when the President determines,” the Expedited Procedure should apply, and “the caseshall be referred to a sole arbitrator, unless the President determinesotherwise.” The arbitration proceeded on an expedited basis with a solearbitrator. Shanghai Xintai, the Respondent, objected and requested to have athree-arbitrator panel as agreed in the arbitration agreement. SIAC disagreed, andthe sole arbitrator eventually rendered an arbitral award.
In the subsequent enforcement proceedings, the Shanghai No. 1 Intermediate People’s Court found that the SIACRules 2013 did not grant the President of SIAC the authority to override the arbitration agreement, and ruled that “party autonomy is the foundation ofarbitration. The composition of the tribunal is a fundamental procedural aspectof arbitration proceedings”. The court further held that the application of the Expedited Procedure should not preclude the parties’ procedural right to have athree-arbitrator panel as they had expressly agreed in their arbitration clause.The Shanghai No. 1 Intermediate People’s Court concluded that by having a sole arbitrator instead of a three-member tribunal, the tribunal’s composition was not in accordance with the parties’ agreement, hence constituted a ground under Article V.1(d) of the New York Convention to refuse enforcement. The result was that the arbitral award rendered by the sole arbitrator was not enforced.

The cases were handled by Ning FEI, Xueyu YANG and Shutao ZHANG.
The authors are grateful to Ziyu LI for her valuable contribution to this article.

 [i] China International Commercial Court (CICC) was established in 2018 by the Supreme People’s Courtof China (the “SPC”) to adjudicate international commercial cases. The CICC isan integral part of the SPC. For a more detailed introduction of the CICC,please write to the author Mariana Zhong (mariana.zhong@huizhonglaw.com) for anarticle published by the author (co-authored with Mr. Jingzhou TAO) on DisputeResolution International, the Journal of the Dispute Resolution Section of theInternational Bar Association, titled “The China International Commercial Court(CICC): A New Chapter for Resolving International Commercial Disputes inChina”, Vol 13 No 2 pp 153-171, October 2019.
[ii] The Chinese text ofCICC No. 4 Order is available at http://cicc.court.gov.cn/html/1/218/180/221/2050.html and CICC No. 5 Order at http://cicc.court.gov.cn/html/1/218/180/221/2052.html (last accessed 2 April2021).

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