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By , Visiting Research Associate of The University of Hong Kong, Partner of Anjie Broad Law Firm; Mr. Wang Zheng, Case Secretary of Xiamen Arbitration Commission; , Paralegal of Anjie Broad Law Firm 

On 01 May 2024, the inaugural version of Maritime Dispute Arbitration Rules (MDAR Rules) promulgated by a Chinese leading arbitration institution, the Xiamen Arbitration Commission (XMAC) locates in Xiamen City, Fujian Province, P. R. China, will officially come effective. Unless the parties agree otherwise, the MDAR Rules, as an independent but also supplementary rules with the Arbitration Rules of Xiamen Arbitration Commission (XMAC 2020 Rules) would apply to the arbitration cases pertaining to the maritime disputes commenced on or after this date.

The promulgation of the MDAR Rules marks the XMAC as one of the select arbitration institutions in mainland China which possess dedicated arbitration rules for the resolution of maritime disputes. In order to ensure the practicality of the provisions contained in the MDAR rules, the XMAC engaged in multiple rounds of consultations with  practitioners, experts and local government authorities throughout the drafting process. Furthermore, to enhance the alignment of the MDAR Rules with international practices, XMAC has also taken into account the maritime dispute arbitration rules formulated by prominent arbitration centers and associations, including SCMA, LMAA, and HKMAG. These established rules have been carefully studied and utilized in a way of integrating with Chinese practice.

This article will place the spotlight on key features and provisions of the MDAR Rules.

Maximizing the Utilization of the Existing Rules

When it comes to the composition of the maritime dispute arbitration rules, two available options lie in front of the XMAC. It has the option to pursue either the drafting of a comprehensive set of maritime dispute arbitration rules that govern all procedures throughout the arbitral proceedings or to develop specialized rules that specifically address unique procedures within maritime dispute resolution, while relying on existing arbitration rules to govern the majority of common procedures.

From the relevant provisions outlined in the MDAR Rules, XMAC adopts the latter option. According to Article 2(2) of the Rules, Unless the parties agree otherwise,  maritime disputes would be governed by the MDAR Rules and XMAC 2020 Rules. In the event of any discrepancies or conflicts, the MDAR Rules, as lex specialis, would prevail over the XMAC 2020 Rules.

This approach allows for the optimal utilization of the well-established XMAC 2020 Rules, which provide general guidelines for the common procedures within arbitral proceedings. Simultaneously, it ensures that the parties can refer to the specific and detailed provisions contained in the MDAR Rules concerning procedures specific to maritime disputes. By incorporating both sets of rules, parties could benefit from the comprehensive framework provided by the XMAC 2020 Rules while also having access to the specialized provisions of the MDAR Rules, tailored to address the unique aspects of maritime dispute resolution.

Emphasizing the Timely Forwarding of Parties’ Preservation Application

Due to the provisions contained in the Arbitration Law of Mainland China, a tribunal seated in Mainland China is not empowered to decide the parties’ preservation application but has to forward such an application to the competent court’s consideration. In this regard, the tribunal and the arbitration commission’s efficiency in forwarding the parties’ application directly influence the applicant’s interests.

However, most arbitration rules fail to set out a time-limit for the arbitration commission on forwarding the parties’ preservation application which hinders the applicant. To address this issue and ensuring the efficiency on dealing with the parties’ application on the preservation of property, evidence and maritime injunction in maritime disputes, the MDAR Rules specifies that the arbitration commission is obligated to forward parties’ application within two days upon the receipt of the relevant documents and in case of emergency, the time-limit is further shortened to within one day.

It is noteworthy that with the promulgation of the MDAR Rules, a substantial amendment of the Chinese Arbitration Law is also taking place. After the amendment of the Arbitration Law, it is anticipated the tribunal may be granted the power to decide and issue preservation orders. Under such context, how would the MDAR Rules also echo with such transformation in the future is also worth expecting.

Introducing and Improving Hearing Methods and Measures

In the practice of maritime disputes resolution, the majority of the arbitrations are conducted in the form of ad hoc and governed by common law in merits. However, it is important to note that in mainland China, ad hoc arbitration is forbidden under the current arbitration law, and parties involved are also not familiar with the common law system. Therefore, how to utilize the international leading maritime disputes resolution practice whilste taking into account  Chinese practice becomes a challenging issue that lies in front of the XMAC.

The XMAC gives its response regarding such issues in Article 7 and Appendix I and II. According to Article 7, on the basis of adhering to the Arbitration Law in the seat of the arbitration, the tribunal is granted with ample flexibility to determine the hearing method including but not limited to offline hearing, online hearing, documents only hearing and other hearing methods. In relation to the hearing measures, three available measures are provided in the Appendix for the parties’ reference.

Out of the three available measures, the Questionnaire contained in the Appendix II marks a significant innovation of the MDAR Rules. The widely recognized questionnaire commonly utilized in maritime arbitration is generally referred to as the one outlined in the Third Schedule of the LMAA Terms. This document is regarded as an important document in the arbitration process which provides an opportunity to consider the issues that have been raised in the submissions, and the most appropriate way of progressing an arbitration. Based on the reference to the questionnaire provided by LMAA，XMAC drafted a questionnaire which incorporates the unique characteristics of Chinese practice through multiple internal discussions with legal secretaries. The introduction of the questionnaire also marks the XMAC as the first Chinese arbitration commission equipped with a specialized questionnaire to be used in the resolution of maritime disputes. The practical application of such a questionnaire and its potential in facilitating dispute resolution is highly anticipated.

Introducing the Terms Expedited Arbitral Determination of Collision Claims

When it comes to collision claims, the general practice in mainland China is referring such disputes to the competent court. However, maritime collision disputes, in essence, do not differ much from other maritime disputes described under the MDAR Rules. In this regard, including the maritime collision disputes under the MADR Rules and referring the collision claims to arbitration become a feasible option. To further ensure the practicability of resolving the maritime collision disputes by way of arbitration, XMAC conducts intensive negotiation with the Xiamen Maritime Safety Administration and other relevant regulatory authorities which eventually lead to the introducing of the terms of expedited arbitral determination of collision claims (EADOCC Terms) in Appendix IV of the XMAC Rules.

Under the EADOCC Terms, the default number of arbitrators is considered to be one, aiming to ensure the prompt and cost-effective resolution of collision claims. Throughout the process of resolving the collision claims, the Maritime Accident Investigation Report issued by the local maritime authority often serves as a valuable and significant evidence for reference. In this regard, the EADOCC Terms incorporate the term that ‘Based on the requirements of the case proceedings, the arbitration tribunal can collaborate with the local maritime authority to conduct a joint maritime accident investigation’. Such term provides a systematic guarantee for the swift involvement of the tribunal in maritime investigations following the occurrence of the accidents.

Moreover, unlike other maritime disputes where a single final award typically addresses both liability and cost issues simultaneously, the resolution of collision disputes often involves a two-step process. The arbitrator would generally first issue a liability award, with reasons on the apportionment of liability for the collision. Following the liability award, the arbitrator would then further issue a cost award on the basis of the liability award and other documents and evidences submitted by parties. To assist the parties and arbitrator on familiarizing with such practice, certain terms have been incorporated within the EDOCC Terms.

Conclusion

After years of consultation with arbitrators, practitioners, legal counsel and relevant regulatory authorities, with input and significant support from the internal working group, the XMAC has eventually presented the inaugural version of MDAR Rules, aiming for providing a more specific, efficient, practical and international rules and guidelines for resolving maritime disputes.

Concurrently with the promulgation of the MDAR Rules, an ongoing substantial revision of the Arbitration Law is also taking place in China. Given China’s ambitious in building up an international arbitration hub, there is much anticipation for the future arbitration practice within this jurisdiction. Without doubt, among various areas, the future practice of maritime disputes arbitration is expected to emerge as a significant focal point and XMAC, at this time, stands at the cutting edge of this area.