Shenzhen launches rules to assist negotiation

Shenzhen launches rules to assist negotiation

By Douglas Thomson

Alongside its new arbitration rules, the Shenzhen Court of International Arbitration (SCIA) has unveiled new rules aimed at facilitating negotiations to settle disputes – to be applied immediately in a dispute over the renovation of a shantytown worth billions of Chinese renminbi. 

The court – which used to be the Shenzhen sub-commission of CIETAC before declaring its independence in 2012 – launched the rules as part of itsnegotiation facilitation service, offered alongside arbitration and mediation.They are available here in Mandarin Chinese but are yet to be translated into English. 

The secretary of the SCIA council Chen Rui tells GAR the rules are particularly helpful for settling disputes that have a public interest element, such as the dispute over the local shantytown of which he can unfortunately reveal no further details.

The secretary-general of SCIA's Negotiation Facilitation Centre Yang Tao says he recommends their use in disputes over for corporate governance, debt restructuring and intellectual property, among other matters. Like arbitration, the negotiation process is confidential,and the rules stipulate that statements, opinions and admissions made during theprocess will be inadmissible as evidence in subsequent arbitral or judicial proceedings. 

Professionals appointed by the centre to oversee negotiation proceedings are barred from subsequently acting as arbitrators in the dispute, or as witnesses or counsel for one of theparties. 

The SCIA has also introduced mechanisms used to settle disputes at the World Trade Organization. These include having apanel of experts, which may be tasked with “advancing the negotiation procedure” where the parties have failed to reachagreement, through designing question lists, providing legal opinions and inviting witnesses to participatein negotiations.

Agreements arising out of the process can be consolidated into consent awards that will be legally enforceable in the same way as SCIA arbitral awards. 

The rules also provide for negotiations to be “facilitated by a third party”, including third party funders. 

The negotiation rules came into force on 1December, the same day as the Shenzhen centre introduced updated arbitration rules that make it the first institution in mainland China that will hearinvestor-state disputes. The rules also allow for the hear ing of ad hoc commercial cases at the centre under UNCITRAL rules.