Shanghai Photo:VCG

Two companies registered in Shanghai have recently agreed to arbitrate in a jointly agreed location with an arbitrator appointed by both parties to resolve the dispute in question, marking the first instance of a foreign-related maritime interim arbitration case in China. 

Experts said on Sunday that the ruling demonstrated a high level of flexibility and broad applicability, paving the way for its wider implementation in the future.

The two companies reached an arbitration agreement following a dispute arising from the performance of an international shipping crew management contract. After negotiation, they selected Shanghai as the location of arbitration and the North Bund in Hongkou as the venue for the hearing, China Central Television reported on Saturday.

They also jointly appointed a highly respected expert with great influence in the international shipping industry as the arbitrator, according to the report.

The process followed international maritime dispute resolution practices and is in accordance with relevant interim arbitration rules implemented in Shanghai. 

Following the formation of the arbitral tribunal, a final arbitral award was rendered after a hearing in accordance with the agreed procedures, which is legally binding on both parties, the report said.

Liu Changsong, a lawyer from the Beijing Mugong Law Firm, told the Global Times on Sunday that traditionally, maritime arbitration is conducted by the China Maritime Arbitration Commission, which is headquartered in Beijing and Shanghai, with major domestic port cities having set up offices, which means previous arbitration cases must be conducted at designated locations. 

This interim arbitration, however, has allowed the involved parties to choose any location for arbitration, such as the North Bund in Hongkou, Shanghai, in this case. This is highly convenient for a region that is home to over 4,000 shipping companies, enabling maritime disputes to be resolved locally, saving time and cost, Liu said. 

In addition, the greater flexibility of interim arbitration is reflected in the selection of arbitrators, the expert said, explaining that while traditional arbitration institutions typically have a fixed list of arbitrators to choose from, this case allows the parties to choose any person they trust to serve as an arbitrator, even if that person is not on the fixed list. Such flexibility enhances the credibility of arbitration and the satisfaction of the parties involved, observers said. 

Liu further noted that the arbitral tribunal is a private organization rather than a state run body, and its arbitration authority comes from the agreement of the parties. Once an arbitration agreement is signed, the arbitral tribunal's decision has the same legal effect as a court judgment and can be enforced by the court.

The Regulation of the Shanghai Municipality on Promoting the Initiative for an International Commercial Arbitration Center came into effect in December last year, leading the nation in introducing arbitration rules that align with international practices such as arbitration venues and interim arbitration. 

In June, the Shanghai Municipal Bureau of Justice issued the Measures for Promoting Interim Arbitration in Foreign-related Commercial and Maritime Matters in Shanghai, which stipulates the scope of application of interim arbitration, the selection of arbitrators and arbitration rules, and the advancement and protection of arbitration procedures. 

With a range of measures released, Shanghai's North Bund is eyeing an opportunity become a preferred location for resolving international maritime disputes. In addition to being a base for over 4,000 maritime service enterprises, it also hosts nearly 40 functional institutions, covering ship companies, agency services, maritime finance and insurance, as well as the entire maritime service industry chain.