CIETAC Construction Dispute Review Rules come into force | Practical Law

CIETAC Construction Dispute Review Rules come into force | Practical Law

John Choong (Senior Associate) and Yu Bing (Associate), Freshfields Bruckhaus Deringer LLP

CIETAC Construction Dispute Review Rules come into force

Practical Law Legal Update 6-502-6718 (Approx. 2 pages)

CIETAC Construction Dispute Review Rules come into force

Published on 30 Jun 2010China, International
John Choong (Senior Associate) and Yu Bing (Associate), Freshfields Bruckhaus Deringer LLP
The China International Economic and Trade Arbitration Commission (CIETAC) Construction Dispute Review Rules (Trial) (the Rules), which were issued earlier this year, have been implemented on a trial basis with effect from 1 May 2010.
Under the Rules, parties to a construction project may set up a permanent or ad hoc review board that consists of one or three technical and/or legal experts to evaluate and encourage settlement of disputes arising from a project. In effect, the rules set out a procedure that is broadly akin to that applied by dispute resolution boards, and in adjudications.
The final opinion rendered by the review board may be challenged within 14 days of receipt. Such a challenge may be made by way of arbitration (or litigation) proceedings, and any resulting award (or judgment) that differs from the opinion will be binding.
In addition, unless the parties agree otherwise, the opinion may be used as evidence in a subsequent arbitration (or litigation) involving the same disputes between the parties. However, it is unclear what weight should (and will) be given to the opinion in such circumstances.
The Rules also provide that, upon the parties' agreement, the draft opinion may be submitted to CIETAC for comment. Without affecting the independence of the board, CIETAC may raise issues to the board's attention. On the face of it, this approach appears similar to the "scrutiny" process that currently exists under the CIETAC Arbitration Rules.
Lastly, the Rules envisage that the parties may reach a settlement in the course of the review board process. If so, they may request CIETAC to issue an arbitral award based on an arbitration clause contained in the "settlement agreement". Although this may appear analogous to the situation under the CIETAC Arbitration Rules where a settlement occurs outside an arbitration, in the present case, on a literal reading, the provision in question suggests that it is CIETAC (and not the arbitral tribunal) which renders such an award. This may lead to unintended results, although it is understood that this particular provision may be under reconsideration.
It will be interesting to see how successful the Rules will be, and how often the resulting opinions are challenged in subsequent arbitration (or litigation) proceedings.