Measures for the Promotion of Ad Hoc Arbitration in Shanghai for Foreign-related Matters in Commercial and Maritime Fields

The Shanghai Municipal Bureau of Justice issued these trial measures which came into force on 1 August 2024.

Ad hoc arbitration is an internationally accepted arbitration model and used in the international maritime and commercial fields for rapid handling of international disputes. The difference with regular arbitration is that parties have more freedom of choice to choose arbitrators and agree on applicable rules and trial methods. The present PRC Arbitration Law does not give the model of Ad hoc arbitration legal ground but in recent years, China’s free trade zones started to apply this ad hoc arbitration system. Shanghai has become the first place in China to provide relevant regulations and official recognition of ad hoc arbitration.

A brief introduction to some important provisions:

a)??? “Ad hoc arbitration” refers to arbitration activities conducted under specific arbitration rules by specific persons, with Shanghai as the seat of arbitration, in commercial and maritime fields with foreign-related factors.

b)??? For eligible applicants, ad hoc arbitration may be agreed

(1) between enterprises registered in Shanghai;

(2) between enterprises registered in Pudong New Area for both domestic or foreign parties; or

(3) between enterprises registered in domestic pilot free trade zones. The Measures will also be applicable to disputes between enterprises in foreign countries or enterprises in Hong Kong, Macao, or Taiwan, if parties agree on ad hoc arbitration in Shanghai,.

c)??? For selecting arbitrators, the parties may select (1) from the name list of recommended arbitrators for ad hoc arbitration publicized by the Shanghai Arbitration Association; or (2) from the name list of arbitrators of arbitration agencies registered in Shanghai or established by well-known overseas arbitration and dispute resolution agencies; or (3) request the Shanghai Arbitration Association to suggest arbitrators.

d)??? For the applicable rules, parties can agree to apply for ad hoc arbitration rules from the Shanghai Arbitration Association, national level or Shanghai registered trade associations, chambers of commerce or internationally accepted arbitration rules or specific arbitration procedures if enforceable.

e)??? The current arbitration institutions that provide ad hoc arbitration services in Shanghai include the Shanghai Arbitration Commission, the Shanghai International Economic and Trade Arbitration Commission, the China Maritime Arbitration Commission Shanghai Headquarters, the World Intellectual Property Organization Arbitration and Mediation Shanghai Service, and the Korean Commercial Arbitration Board Shanghai Center.

Some ad hoc arbitration cases after 1 August 2024:

-?????? A foreign-related ad hoc maritime arbitration case took place on 3 August 2024 between 2 Shanghai companies which agreed to conduct ad hoc arbitration in Shanghai to resolve an international shipping crew management service contract dispute.

-?????? A well-known industry association in the UK and a shipping company in the Pudong New Area agreed on an ad hoc arbitration agreement. It is the first case in China with a foreign party applying for ad hoc arbitration. The parties originally agreed to arbitrate in London using the London Court of International Arbitration rules, but later changed to ad hoc arbitration in Pudong. Relevant factor were costs and time. Parties jointly selected a maritime expert as the sole arbitrator for the case.

These measures will help to resolve more international disputes! For more information, please contact Tanja W. ([email protected]).