STATE COUNCIL’S OFFICIAL REPLY CONCERNING THE RENAMING OF THE FOREIGN ECONOMIC AND TRADE ARBITRATION COMMISSION AS THE CHINA INTERNATIONAL ECONOMIC AND TRADE ARBITRATION COMMISSION AND THE AMENDMENT OF ITS ARBITRATION RULES

    Section 1  Jurisdiction

    Article 1  The China international Economic and Trade Arbitration
Commission (hereinafter referred to as the Arbitration Commission)
independently and impartially settles disputes arising from international
economic and trade transactions by means of arbitration so as to protect the
justified rights and interests of the parties and promote international
economic and trade development.

    Article 2  The Arbitration Commission takes cognizance of cases of
disputes arising from international economic and trade transactions in
accordance with arbitration agreements concluded between the parties, prior to
or after the occurrence of disputes, to refer their disputes to the
Arbitration Commission for arbitration and upon a written application by one
of the parties.

    An arbitration agreement means the arbitration clause stipulated by the
parties in their contract, or an agreement in writing concluded in other forms
to submit disputes for arbitration.

    The Arbitration Commission has power to decide on the validity of
arbitration agreements and the jurisdiction over arbitration cases.

    Section 2  Organization

    Article 3  The Arbitration Commission is composed of Chairman,
Vice-Chairmen and Commission Members.

    The Chairman performs functions and duties given by these Rules and any
Vice-Chairman, if authorized by the Chairman, may perform the functions and
duties of the Chairman.

    Under the Arbitration Commission, a Secretariat is established to handle
the day-to-day work of the Arbitration Commission.

    Article 4  The Arbitration Commission maintains a panel of arbitrators.
The arbitrators are selected and appointed by the China Council for the
Promotion of International Trade (China Chamber of International Commerce)
from among Chinese and foreign persons with expertise and practical experience
in international economics and trade, science and technology, law and other
fields.

    Section 1  Application for Arbitration, Defence and Counterclaim

    Article 6  The Claimant must submit his Application for Arbitration to the
Arbitration Commission in accordance with the following requirements:

    (1) an Application for Arbitration in writing must be submitted to the
Arbitration Commission. The following must be specified in the Application for
Arbitration:

    (a) the name and address of the Claimant and those of the Respondent;

    (b) the arbitration agreement relied upon by the Claimant;

    (c) the Claimant’s claim and the facts and evidence on which his claim is
based.

    The Application for Arbitration shall be signed by the Claimant and/or the
attorney authorized by the Claimant.

    (2) when submitting an Application for Arbitration to the Arbitration
Cornmission, relevant documentary evidence on which the Claimant’s claim is
based shall accompany the Application for Arbitration.

    (3) the Claimant shall appoint an arbitrator from among the Panel of
Arbitrators of the Arbitration Commission or authorize the Chairman of the
Arbitration Commission to make an appointment on his behalf.

    (4) the Claimant shall pay an arbitration fee in advance to the
Arbitration Commission according to the Arbitration Fee Schedule attached to
these Rules.

    Article 7  After receipt of the Application for Arbitration and its
attachments and when the Arbitration Commission, after examination, deems that
the Claimant has completed the formalities required for arbitration, the
Arbitration Commission shall immediately mail to the Respondent one copy each
of the Claimant’s Application for Arbitration and its attachments as well as
the Arbitration Rules and the Panel of Arbitrators of the Arbitration
Commission.

    Article 8  The Respondent shall, within 20 days after receipt of the
Application for Arbitration, appoint an arbitrator from among the Panel of
Arbitrators of the Arbitration or authorize the Chairman of the Arbitration
Commission to make an appointment on his behalf, and shall, within 45 days
after receipt of the Application for Arbitration, submit his defence and
relevant documentary evidence to the Arbitration Commission.

    Article 9  The Respondent shall file with the Arbitration Commission his
counter-claim, if any, in connection with the case taken cognizance of by the
Arbitration Commission, within the time limit as specified in Article 8 for
the submission of his defence. The Respondent must state, in his
counter-claim, his claim and the facts and evidence on which his claim based
and attach relevant documentary evidence to his counter-claim.

    When filing a counter-claim, the Respondent must pay an arbitration fee in
advance according to the Arbitration Fee Schedule attached to these
Arbitration Rules.

    Article 10  The Arbitration Commission has discretion to ask the
Respondent to pay in advance a part of arbitration fees when it deems it
necessary.

    Article 11  When submitting an Application for Arbitration, defence,
counter-claim, relevant documentary evidence and other documents to the
Arbitration Commission, the parties shall provide duplicate copies as many as
the number of the other party/parties and the arbitrators, of whom the
arbitration tribunal is composed.

    Article 12  The parties may authorize attorneys to confer with the
Arbitration Commission on matters relating to arbitration. Such attorneys may
be citizens of China or foreign citizens. The authorized attorney must produce
a Power of Attorney to the Arbitration Commmission.

    Article 13  The Arbitration Commission may, pursuant to the request of the
parties and in accordance with the Chinese law, apply to the Chinese court in
the place where the property of the Respondent is or in the place where the
arbitration institution is located for a decision in respect of taking
preservative measures.

    Section 2  Composition of Arbitration Tribunal

    Article 14  After each of the two parties has chosen one arbitrator from
among the Panel of Arbitrators of the Arbitration Commission or the Chairman
of the Arbitration Commission has such an appointment under the authorization
by the party/parties, the Chairman of the Arbitration Commission shall appoint
a third arbitrator from among the Panel of Arbitrators of the Arbitration
Commission as the presiding arbitrator to form an arbitration tribunal to hear
the case.

    Article 15  Both parties may jointly appoint or authorize the Chairman of
the Arbitration Commission to appoint one arbitrator from among the Panel of
Arbitrators of the Arbitration Commission as a sole arbitrator to form an
arbitration tribunal to hear the case alone. If both parties have agreed on
the appointment of a sole arbitrator to hear their case alone but failed to
agree on the choice of such a sole arbitrator within 20 days as from the date
on which the Respondent receives the Application for Arbitration or as from
the date on which both parties reach an agreement to have their case heard by
a sole arbitrator, the Chairman of the Arbitration Commission shall appoint
the sole arbitrator.

    Article 16  If the Respondent fails to appoint and fails to authorize the
Chairman of the Arbitration Commission to appoint an arbitrator according to
Article 8 of these Rules, the Chairman of the Arbitration Commission has the
power to appoint an arbitrator for the Respondent.

    Article 17  When there are two or more Claimants and/or Respondents in an
arbitration case, the Claimant’s side and/or the Respondents’ side each shall,
through consultation, appoint one arbitrator from among the Panel of
Arbitrators of the Arbitration Commission. If the Claimants’ side fails to
make such appointment at the time when the Claimants submit their Application
for Arbitration and/or Respondents’ side is unable to appoint one arbitrator
within 20 days as from the date on which the last Respondent receives the
Application for Arbitration, the appointment shall be made by the Chairman of
the Arbitration Commission.

    Article 18  Any appointed arbitrator having personal interest in the case
shall himself request the Arbitration Commission for withdrawing from his
office and the parties have the right to make a request in writing to the
Arbitration Commission for a withdrawal of the arbitrator from his office.

    Article 19  A party who intends to challenge an arbitrator must put
forward his challenge before the first oral hearing of the case. If the
grounds for challenge come out or become aware of after the first oral
hearing, the challenge may be raised before the conclusion of the last hearing.

    Article 20  The Chairman of the Arbitration Commission shall decide on the
challenge.

    Article 21  If an arbitrator cannot perform his duty due to withdrawal or
other reasons, a substitute arbitrator shall be appointed in accordance with
the procedure pursuant to which the original arbitrator was appointed.

    Section 3  Hearing

    Article 22  The arbitration tribunal shall hold oral hearings to hear the
case. However, at the request of the parties or with their consent, oral
hearings may be omitted and the arbitration tribunal may examine the case and
make an award on the basis of documents only.

    Article 23  The date of oral hearing shall be decided by the arbitration
tribunal in consultation with the Secretariat of the Arbitration Commission
and the notice of hearing shall be communicated to the parties 30 days before
the date of hearing. A party having justified reasons may request for
postponement of the date of hearing. But his request must be communicated to
the Secretariat of the Arbitration Commission 12 days before the date of
hearing unless unforeseeable special circumstances occur. The Secretariat
shall inform the arbitration tribunal of his request and the arbitration
tribunal shall decide thereon, in consultation with the Secretariat.

    Article 24  The cases taken cognizance of by the Arbitration Commission
shall be heard in the place where the Arbitration Commission is located and
may, with the approval of the Chairman of the Commission, be heard in other
places.

    Article 25  The arbitration tribunal shall not hear cases in open
sessions. If both parties request hearings in open sessions, the arbitration
tribunal shall decide thereon.

    Article 26  The parties shall give evidence for the facts on which their
claim or defence is based. The arbitration tribunal may, if it deems it
necessary, make investigation and collect evidence on its own initiative.

    Article 27  The evidence shall be examined and approved by the arbitration
tribunal.

    Article 28  The arbitration tribunal may consult experts or appoint
appraisers for the clarification of special questions relating to the case.
Such experts and appraisers may be Chinese or foreign organizations or
citizens.

    Article 29  Should one of the parties or his attortey fail to appear at
the hearing, the arbitration tribunal may proceed with the hearing and make an
award by default.

    Article 30  During hearings, the Secretariat of the Arbitration Commission
shall take records in writing and/or tape-recordings and the arbitration
tribunal may, if it deems it necessary, order the parties and/or their
attorneys, witnesses and/or other persons involved to sign the records taken.

    Article 31  If both parties reach a settlement by themselves of a case
under the cognizance of the Arbitration Commission, the Claimant shall timely
request for withdrawal of the case. Dismissal of the case shall be decided by
the Chairman of the Arbitration Commission before an arbitration tribunal is
formed and by the arbitration tribunal after the arbitration tribunal is set
up.

    If the party or the parties refer the dismissed case again to the
Arbitration Commission for arbitration, the Chairman of the Arbitration
Commission shall decide whether to accept the reference or not.

    Section 4  Award

    Article 32  The arbitration tribunal shall render an arbitral award within
45 days after the closing of examination and hearing.

    Article 33  Where a case is heard by an arbitration tribunal composed of
three arbitrators, the arbitral award shall be decided by the majority of the
arbitrators and the minority opinion can be written down in the record and
docketed into the file.

    Article 34  The arbitration tribunal shall state the reasons upon which
the arbitral award is based unless the award is made in accordance with the
Article 37. The arbitral award shall be signed by all or majority of the
arbitrators sitting in the arbitration tribunal and shall contain the date and
place on and in which the arbitral award is made.

    Article 35  The arbitration tribunal may, if it deems it necessary or the
parties so request and it agrees, make an interlocutary or partial award on
any issue of the case at any time in the process of arbitration.

    Article 36  The arbitral award is final and neither party may bring a suit
before a law-court or make a request to any other organization for revising
the arbitral award.

    Article 37  The Arbitration Commission and the arbitration tribunal may
conciliate cases under their cognizance. In case a settlement agreement is
reached through conciliation, the arbitration tribunal shall make an award in
accordance with the contents of the settlement agreement reached by and
between both parties.

    Article 38  The parties must automatically execute the arbitral award
within the time limit specified in the award. lf no time limit is specified in
the award, the parties shall carry out the award immediately.

    Article 39  The Chinese language is the official language of the
Arbitration Commission. At the hearing, if the parties or their attorneys or
witnesses are not familiar with the Chinese language, the Secretariat of the
Arbitration Commission may provide an interpreter for them or the parties may
bring with them their interpreters.

    The Secretariat of the Arbitration Commission may, if it deems it
necessary, ask the parties to hand in corresponding translation copies in
Chinese or other languages of the various documents and evidential materials
submitted by the parties.

    Article 40  Any written communication from the Arbitration Commission to
the parties is deemed to have been received if it is delivered to the
addressee personally or if it is delivered at his place of business, habitual
residence or mailing address; or if none of these can be found after making a
reasonable inquiry, a written communication is deemed to have been received if
it is sent to the addressee’s last known place of business, habitual residence
or mailing address by registered letter or by any other means which provide a
record of the attempt to deliver it.

    Article 41  Apart from charging arbitration fees from the parties
acccording to the Arbitration Fee Schedule attached to these Rules, the
Arbitration Commission may collect from the parties other actual expenses
including arbitrators’ remuneration and their travel and boarding expenses for
dealing with the case and the fees and expenses for experts, appraisers and
interpreters appointed by the arbitration tribunal, etc.

    Certain fees and actual expenses incurred may be collected by the
Arbitration Commission if a case is withdrawn after the parties have reached
by themselves a settlement agreement.

    Article 42  These Rules shall also apply to the cases of dispute taken
cognizance of by the Sub-Commissions of the Arbitration Commission. In the
arbitration proceedings conducted by the Sub-Commissions of the Arbitration
Commission, the functions and duties of the Chairman and the Secretariat of
the Arbitration Commission under these Rules shall be performed by the
Chairmen and the Secretariats of the Sub-Commissions.

    Article 43  These Rules shall come into force as of January 1, 1989.

    Arbitration Fee Schedule

      Amount of Claim (RMB)            Amount
of Fee (RMB)

    100,000 Yuan or less              4%
of the Claiming Amount, minimum 2,000

                                      Yuan

    100,000 Yuan to 500,000 Yuan      4,000 Yuan plus 3% of the excess over

                                      100,000
Yuan

    500,000 Yuan to 1,000,000 Yuan    16,000 Yuan plus 2% of the excess over

                                      500,000
Yuan

    1,000,000 Yuan to 5,000,000 Yuan  26,000 Yuan plus 1% of the excess over

                                      1,000,000
Yuan

    5,000,000 Yuan or more            66,000 Yuan
plus O.5% of the excess over

                                      5,000,000
Yuan

    If no amount of claim is stated when applying for arbitration, the amount
of arbitration fees shall be determined by the Secretariat of the Arbitration
Commission.

    Section 1  Jurisdiction

    Article 1  These Rules are formulated in accordance with the relevant
provisions in the laws of the People’s Republic of China, the Decision of the
former Government Administration Council of the Central People’s Government,
and the Circular and Official Reply of the State Council.

    Article 2  The China international Economic and Trade Arbitration
Commission (originally named the Foreign Trade Arbitration Commission of the
China Council for the Promotion of International Trade, then renamed as the
Foreign Economic and Trade Arbitration Commission of the China Council for the
Promotion of International Trade, and now known as the China International
Economic and Trade Arbitration Commission, hereinafter referred to as the
Arbitration Commission), by means of arbitration, independently and
impartially settles disputes arising from international or foreign economic
and trade transactions, either contractual or non-contractual, including
disputes between foreign corporations and/or individuals and Chinese
corporation and/or individuals, between foreign corporations and/or
individuals themselves, and as well as between Chinese corporations and/or
individuals themselves, so as to protect the justified rights and interests of
the parties and promote economic and trade development at home and abroad.

    Article 3  The Arbitration Commission takes cognizance of cases in
accordance with arbitration agreements concluded between the parties, prior to
or after the occurrence of disputes, to refer their disputes to the
Arbitration Commission for arbitration and upon a written application by one
of the parties.

    An arbitration agreement means the arbitration clause stipulated by the
parties in their contract, or an agreement in writing concluded in other forms
to submit disputes for arbitration.

    Article 4  The Arbitration Commission has power to decide on the existence
and validity of arbitration agreements and the jurisdiction over arbitration
cases.

    Article 5  An arbitration clause in a contract should be deemed as a
clause separate and independent from other clauses of the contract, and an
arbitration agreement attached to a contract also be deemed as one part
separate and independent from other clauses of the contract. The
modification, rescission, termination, annulment or invalidity of such a
contract cannot prejudice the effect of the arbitration clause or arbitration
agreement.

    Article 6  Defence to the arbitration agreement and/or the jurisdiction
over an arbitration case may be put forward unless the Respondent makes his
first substantial defence; defence to the jurisdiction over a counter-claim
shall be put forward unless the Counterclaimant makes his first substantial
defence.

    Article 7  If any party agrees to refer his dispute to the Arbitration
Commission, he is deemed to accept the arbitration under these Rules.

    Section 2  Organization

    Article 8  The Arbitration Commission has one Honorary Chairman and
Consultants.

    Article 9  The Arbitration Commission is composed of Chairman,
Vice-Chairmen, General Secretary and Commission Members. The Chairman performs
functions and duties given by these Rules and any Vice-Chairman, if authorized
by the Chairman, may perform the functions and duties of the Chairman.

    Under the Arbitration Commission, a Secretariat is established to handle
the day-to-day work of the Arbitration Commission.

    Article 10  The Arbitration Commission maintains a panel of arbitrators.
The arbitrators are selected and appointed by the China Council for the
Promotion of International Trade (China Chamber of International Commerce)
from among Chinese and foreign persons with expertise and practical experience
in law, economics and trade, science and technology and other fields.

    Article 11  The Arbitration Commission is located in Beijing. The
Arbitration Commission establishes the Shenzhen Sub-Commission in the Shenzhen
Special Economic Zone and the Shanghai Sub-Commission in Shanghai. The
Arbitration Commission and the sub-commissions are considered as a whole.

    Under the sub-commissions of the Arbitration Commission, secretariats are
established to handle the day-to-day work of the sub-commissions.

    These Rules apply to the Arbitration Commission and the sub-commissions as
well. In the arbitration proceedings conducted by the sub-commissions, the
functions and duties of the Chairman and the Secretariat of the Arbitration
Commission under these Rules shall be performed by the chairmen and the
secretariats of the sub-commissions.

    Section 1  Application for Arbitration, Defence and Counterclaim

    Article 13  The arbitration proceedings commence from the date on which
the Respondent receives the Arbitration Notice from the Arbitration
Commission, or, if there are two or more respondents in a case, from the date
on which the last Respondent receives the Notice.

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