Shanghai International Aviation Court of Arbitration: Take-Off in Aviation Arbitration

In June, 2014, supported by the International Air Transport Association (IATA) and the China Air Transport Association (CATA), the Shanghai International Arbitration Center (SHIAC) established the Shanghai International Aviation Court of Arbitration (SIACA).

As one of SHIAC’s affiliations which provides international aviation arbitration services, SIACA accepts various disputes in which the disputing parties, subject matter or the legal facts lead to the establishment, change or termination of civil and commercial relationships connected to the aviation industry, including but not limited to manufacturing, sale and other transactions of aircrafts and aircraft components, air transportation, airport services, supply of aviation fuel and materials, aviation intermediary services, aviation finance and aviation facilities. Therefore, SIACA steps into the circle of professional international arbitration courts.

SIACA entered the Shanghai Hongqiao Linkong Business Park bordering the Shanghai Hongqiao International Airport in 2017, and acquired a 600 square metre facility for arbitration, including two hearing rooms, one reception room, one deliberation room, one consulting room and several office rooms.

Diversified routes for aviation dispute resolution

Connect IATA Arbitration Rules and offer ad hoc arbitration service

In accordance with article 16 of the Arbitration Law of China, an effective arbitration clause shall contain agreement on the arbitration institution, which renders the conclusion that institutional arbitration, rather than ad hoc arbitration awards rendered in mainland China that are judicially recognised by China’s courts. However, it seems that changes have taken place with the release of the Opinions of the Supreme People’s Court on Providing Judicial Guarantee for the Building of Pilot Free Trade Zones on 9 January 2017. It stipulates that if two enterprises registered in China’s pilot free trade zones (FTZs) agree that relevant disputes shall be submitted to arbitration at a particular place in mainland China, according to particular arbitration rules, and by particular personnel, the effectiveness of such agreement shall be upheld.

Furthermore, the courts in China have recognised the arbitration awards rendered by Chinese arbitration institutions applying the UNCITRAL Arbitration Rules. For example, the Shanghai No. 2 Intermediate People’s Court affirmed, in Nantong Si Jian Construction Group Co Ltd v Exxon Mobil [Shanghai Er Zhong Yuan (2013) Hu Er Zhong Min Ren (Zhong Xie) Zi No. 1], that the aforementioned kind of arbitration awards shall be effective and recognised.

The above conditions constitute the foundation for the connection between the SHIAC arbitration rules and IATA arbitration rules which are of ad hoc nature. Based on the latest judicial practice and thoughts on arbitration, SHIAC uses its Ad Hoc Arbitration Service Guidance to implement ad hoc arbitration rules like the IATA arbitration rules. Therefore, SHIAC is capable to provide hearing room and facilities, to appoint arbitrators, and to administrate the procedures due to the authorisation of the disputing parties or the tribunal in the cases applying the IATA arbitration rules.

Enact aviation arbitration rules and accept aviation disputes

To provide professional and individualised arbitration service to aviation industry participants, SHIAC has commenced the draft of SIACA Arbitration Rules. For this purpose, SHIAC has gathered over 40 aviation dispute resolution experts to organise multiple rounds of seminars to discuss the rules. To cater to the aviation industry’s features, the aviation arbitration rules shall contain mechanisms of pre-arbitration mediation, stipulations about a specialised panel of aviation dispute arbitrators and the results of the consultation report from the experts committee. This ensures more flexibility and professionalisation of the procedure.

Draft model aviation commercial contracts

The enormous increase scale of the aircrafts lease and financial lease business in China causes various potential risks and disputes. Challenging factors are the vagueness of terms, defects of the processes and the imbalance of rights and obligations in the contracts. Thus, based on the international practices and customs, and conditions of the aircraft lease market in China, SHIAC drafted the Model Contract of Aircrafts Lease (exposure draft) to offer hints to the users to reduce risks and allocate contractual rights and obligations. The model contract further recommends submitting the disputes under the contract to SIACA.

Gather aviation experts and educate young practitioners

SIACA has organised various events to gather aviation legal and business experts and educate young practitioners.

To provide support and guidance to SIACA, SHIAC established the Experts Committee (Committee) on Shanghai International Aviation Arbitration by the joint initiation of IATA, CATA and SHIAC. The Committee has 23 members from world-famous airlines, aviation manufacturer corporations, airports, aviation fuel corporations and aircraft financial lease companies. The committee will provide policy-making suggestions to the marketing and improvement of aviation arbitration. It will further offer advice in individual arbitration cases, and it will recommend and appraise evaluation institutions or experts.

Expand panel of aviation dispute arbitrators

In November 2014, for the operation of aviation arbitration under SIACA, SHIAC recruited 71 experts all over the world with both legal and aviation business background. So as to optimise the management structure, and the segmenting of domestic aviation industry, SHIAC will focus on aviation arbitration and recruit more experts, inter alia, from the fields of general aviation, unmanned aerial vehicle, internet plus aviation, construction and operation of aviation facilities, and aviation environmental-protection, for its 2018–2021 term panel. SHIAC will also establish a specialised panel of aviation dispute arbitrators to facilitate the user’s in selection of the optimal arbitrators in aviation disputes.

Training of international aviation legal practitioners

In January 2018, SIACA organised the China Round of Ninth International Air Law Moot Court (Moot Court). The Moot Court was proposed and established by the International Civil Aviation Organization (ICAO), organised by the Sarin Memorial Legal Aid Foundation from India and the International Institute of Air and Space Law of Leiden University in the Netherlands. It is the sole air law moot court competition around the world and of significant influence in air transport field. The Moot Court’s purpose is to encourage more law students to study international air law. This competition focused on the case involving the collision between a unmanned aerial vehicle and a civil airplane, and inspired a thorough discussion on air law and aviation dispute resolution among the students. SHIAC will keep tracing and studying the legal issues in the moot court case to prepare for future real disputes.

The aviation arbitration of SHIAC has just taken off, yet has a long way to fly. Despite of the current limited number of cases, SHIAC’s exploration to aviation arbitration will be beneficial and significant. SHIAC will also offer fair, impartial and efficient dispute resolution services, escort the aviation industry and provide a stage to protect the rights and interests of the users.

Timeline for the Shanghai International Arbitration Centre

Date

Event

June 2014

SHIAC established SIACA

28 July 2014

SHIAC visited ICAO and IATA in Montreal, Canada

28 August 2014

IATA, CATA and SHIAC concluded the strategic cooperation agreement

Inauguration of SIACA

Establishment and first Conference of the Experts Committee

13 November 2014

SHIAC recruited 71 aviation legal experts into its panel

25 February 2015

SHIAC attended the 2015 IATA Legal Symposium in Seoul, Korea

23 November 2015

SHIAC attended the 2015 ICAO World Aviation Forum, and visited ICAO and IATA in Montreal, Canada

29 January 2016

SHIAC attended the 2015 CATA Legal Committee Annual Conference

10 May 2016

SHIAC organized the 2016 Shanghai International Aviation Legal Forum

1 May 2017

SIACA started to use the premises in Hongqiao Linkong Business Park

25 May 2017

ECUPL, IIASL of the Leiden University and SHIAC organized the 2017 Shanghai International Aviation Legal Forum

16 August 2017

Ms Liu Fang, Secretary-General of ICAO visited SIACA

8 November 2017

SHIAC attended the Asia-Pacific Regional Seminar on the Cape Town Convention and its Aircraft Protocol and Cross-Border Transferability of Aircraft, and visited IATA Singapore office in Singapore

17 November 2017

SHIAC attended the OBOR Civil Aviation Legal Practice and Innovation Forum & 2017 Air Law Society Annual Conference

25 January 2018

SHIAC hosted China Round of Ninth International Air Law Moot Court

27 February 2018

SHIAC attended the 2018 IATA Legal Symposium in Bangkok, Thailand

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