China: China - Trends For 2014

Last Updated: 9 June 2014
Article by David Toscano

The year 2014 is the Lunar Year of the Horse which is traditionally thought to be a zodiac sign of high activity and energy. But what will this year hold for those working on projects in and with China? We look ahead at the key areas in construction, investment and arbitration.

Closer ties for China and the UK

In 2013, the UK government led a charm offensive in China with both the Chancellor and the London Mayor taking delegations to the Far East to improve bilateral investment ties. The value of this relationship to the recovering UK economy was recently confirmed by the Chinese Ambassador who noted a record high of over £40 billion in bilateral trade in 2013. With an increase in UK exports to China of almost 14% last year and China directly investing over £7 billion in the UK over 2012-13, it is clear that projects both here and in China will continue to be supported by both countries.

UK contractors and designers are leading large projects in China this year, such as the Atkins designed "Pearl of the North" 565m-tall skyscraper in Shenyang and the Suzhou sports and leisure complex being built by Mott Macdonald incorporating a 45,000-capacity stadium.

Equally, Chinese expertise and investment will be driving many 2014 UK projects. High-profile plans by the telecoms giant Huawei to open a £125m UK research and development centre and the 49% stake in the EDF Hinkley nuclear plant taken by the Chinese Nuclear Power Group have made headlines.

Perhaps less controversial but equally important is the Manchester "Airport City" project as it is set to create 16,000 jobs in the area and pave the way for direct flights to China. The project will be led by a joint venture of Manchester Airports Group, Beijing Construction Engineering Group, Carillion and the Greater Manchester Pension Fund, delivering a new 61-hectare business district featuring 465,000 square metres of offices, shops and green space.

EU-China bilateral investment treaty

The EU has also sought to cement its relations with China Sino-relations by announcing in November 2013 that it would begin talks on a bilateral investment treaty ("BIT"), the first ever stand-alone EU investment agreement.

Investment between the EU and China is starting from a low base as it accounted for less than 3% of each of their total overseas direct investment in 2012. However, China's investment in the EU grew by over 100% in 2013 and it is expected that the figure will reach over £600 billion by 2020, from a base of less than £500 million prior to 2008.

Negotiations on the EU-China BIT will continue into 2014 with the key aim to seek broader access for investment in China for EU companies, particularly those in the construction, energy, telecommunications and rail sectors. The EU-China BIT will consolidate 27 existing EU member state BITs into a single comprehensive agreement and the hope is that it will provide a more secure and simpler framework for investment protection including Investor-to-State dispute settlement provisions.

While the EU-China BIT will take two or three years to finalise, negotiations in 2014 may provide an insight into the role to be played by bilateral ties in the construction and energy sectors.

Uncertainty in CIETAC arbitration

The year 2014 is also likely to provide developments in the ongoing public dispute running in the Chinese international arbitration market. In April 2012, the China International Economic and Trade Arbitration Commission ("CIETAC") issued new arbitration rules which led to an open conflict between its Beijing, Shanghai and Shenzen sub-commissions. The new 2012 rules provided that any cases arising under CIETAC's standard arbitration clauses would be administered by CIETAC Beijing. This included clauses where parties specifically agreed to submit their dispute to arbitration in Shanghai or Shenzen, and even if the arbitration clause was agreed before the 2012 rules came into force. In response, the Shanghai and Shenzen offices initially announced they would refuse to implement the 2012 rules, and then that they would split from the CIETAC umbrella, leading to Beijing first suspending and then terminating their authority to accept and administer arbitration cases. This of course placed parties with CIETAC arbitration clauses in their contracts in a very uncertain position, particularly as to the enforceability of any award they might obtain through the Shanghai and Shenzen offices.

Those sub-commissions countered by declaring themselves as independent arbitration institutions approved and established by the municipal governments of Shanghai and Shenzen, and rebranding as the Shanghai International Arbitration Centre ("SHIAC") and the Shenzen Court of International Arbitration ("SCIA").

This uncertainty gave rise to jurisdictional challenges in lower courts in China, with conflicting decisions being issued to add to the confusion. For example, in May 2013, the Intermediate People's Court of Suzhou refused to enforce a SHIAC arbitral award following the Shanghai name change, while the High People's Court of Zhejiang held that a SHIAC award was enforceable notwithstanding the change.

China's highest court, the Supreme People's Court of China (the "SPC"), sought to control the situation by issuing a Notice in September 2013 that any lower court hearing a case arising out of the former CIETAC sub-commissions of Shanghai or Shenzen must report to the SPC before making any decision. Lower courts in China are likely to be asked to review the validity of a CIETAC arbitration agreement or to hear an application to set aside or not enforce an award made by CIETAC, SHIAC or SCIA.

The SPC Notice directs the lower court to report its intended decision to the SPC on a "level by level" basis, i.e. to all court levels between the court where the application is made and the SPC. The SPC will then give its opinion which the lower courts will follow. Interestingly, it appears that this reporting will be required in all cases that arise out of the CIETAC split, not simply those where the court might be minded to nullify a CIETAC arbitration clause or a CIETAC, SHIAC or SCIA award.

Both SHIAC and SCIA now have their own arbitration rules with modern features such as allowing third-party participation in proceedings (SHIAC) and the joinder of additional parties (SCIA). Each forum employs large panels of arbitrators including over a third from outside China, showing a clear international focus.

The key point for parties contracting in China is to use the correct model arbitration clause for CIETAC, SHIAC or SCIA. All three institutions have published new model arbitration clauses which are available on their respective websites. If parties already have contracts with CIETAC arbitration clauses, they should consider amending the clause to minimise the risk of jurisdictional challenges in the Chinese courts.

With their cooperative at an end, it is expected that the three institutions will use 2014 to stamp their own mark on the international arbitration market by conveying the individual qualities they bring to resolving disputes. This is likely to increase competition for parties' business which can only continue to improve China's arbitration reputation.

The year 2014 certainly looks like another important year for China. Watch this space.

International Quarterly is produced quartely by Fenwick Elliott LLP, the leading specialist construction law firm in the UK, working with clients in the building, engineering and energy sectors throughout the world.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

David Toscano
Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions