Islip FTZ Authority

Modern Arbitration Rules Implemented in Shanghai Foreign Trade Zone

In September 2013, the Shanghai Free Trade Zone (FTZ) was launched with the high hopes of relaxing the controls of foreign trade and investments in the Shanghai markets. 


Following the launch, initiatives such as cross-border investment and non-committal transactions were registered with the FTZ as issues. As it can only be assumed, disputes of how to handle these would follow. The China International Economic and Trade Arbitration Commission (CIETAC) implemented some rules to help with these disputes related to the FTZ. 

The rules can apply for two reasons. If both parties within an issue agree to refer the dispute to the SHIAC or if either party has decided to use the FTZ rules. FTZ rules states that conservatory measures under the law will be referred to local court if they are "property preservation measures, evidence preservation measures, or measures requiring a party to perform certain acts or prohibiting a party from performing certain acts." If there is a measure that requires immediate action, the parties can suggest an emergency tribunal. A benefit of the FTZ rules that are not included in the CIETAC rules, is that parties have more leeway to agree in advance. 

This means that issues can be respectfully resolved sooner than before. The FTZ rules include a summary procedure that is determined by a single arbitrator within three months. An even faster procedure may be done if it is under the RMB100,000 value, in which case an award will be rendered within 45 days before the tribunal. The rules are made to work in a modern market where time is limited and demand is high. 

One underlying, unclear statement is how high of a court the FTZ rules will hold in relation to the CIETAC rules, and how often they will be implemented and exercized under the CIETAC rules. The FTZ rules are more than accepted to help to develop and move forward with trade in Shanghai.