The network Asia2Europe Association ("A2E") based in Zurich, Switzerland, provides a platform for investors from Asia who desire to enter into the European market (see www.asia2europe.net).

In its newsletter of 7 July 2008, A2E reported the creation of CEAC as follows:

– 2. New Chinese European Arbitration Centre (CEAC) in Hamburg
(by SvH Schaufelberger & van Hoboken, www.svh.ch)

Whenever a conflict between two parties arises in China, the wish to save face and to allow the other party to save face as well is an important factor which needs to be taken into account in the selection of the appropriate dispute settlement mechanism.

The initiation of legal proceedings is very often understood as the final and mutually undesired breaking-off of a relationship. Therefore, in China, the settlement of disputes by way of mediation and conciliation is by far more popular than by way of arbitration. But also in the western world, the statement that the best legal action is one which does not take place at all is likely to meet with broad approval.

Nevertheless, disputes do arise, especially in global economic relations, and they need to be adjudicated in a transparent, clear, binding and final manner so that the parties obtain legal certainty and thus planning reliability. In this context, it is important to note that presently, the recognition and enforcement of foreign judgments in China and of Chinese judgements in foreign countries is often difficult or even impossible.

A project is under way to set up a Chinese European Arbitration Centre in Hamburg. The project's purpose is to establish a tailor-made arbitration institution in Europe targeting Chinese business worldwide, including (i) disputes in connection with Chinese investments in or trade with Europe, and (ii) disputes with respect to China trade in other parts of the world (e.g. Africa) where parties want to turn to a neutral arbitration institution. The Chinese European Arbitration Centre will be established in the form of a German limited liability company under the name "Chinese European Arbitration Centre Hamburg GmbH" ("CEAC"). The inauguration of CEAC will be celebrated on September 18, 2008 in Hamburg.

Parallel to CEAC's establishment, the non profit organisation Chinese European Legal Association e.V. ("CEAL") is being founded. CEAL will be the sole shareholder of CEAC. The purpose of CEAL is the support of interaction and exchange between China and Europe regarding issues of law and legal culture, including issues of prevention of international disputes related to China as well as the settlement and resolution of such disputes.

One of the key-features of the whole institution is to achieve equal representation of China, Europe and other regions of the world in the boards of CEAL and CEAC.

Advantages of the CEAC Hamburg

The main question is which advantages for commercial disputants will arise out of the establishment of this new China tailored arbitration centre.

Some of them seem to be obvious. By the above mentioned institutionalized equal representation, the arbitration centre promotes the equal treatment of parties. Thus, each party feels adequately represented. It is, for instance, planned to establish an "Appointing Authority" within CEAC consisting of up to three chambers to each of which three arbitrators -  one from China, one from Europe and one from another part of the World - will be appointed. The task of this Appointing Authority is, inter alia, to overcome any disagreements between the contracting parties in the nomination of arbitrators. The Appointing Authority's intercultural composition should lead to a well balanced consideration of all interests and cultural differences involved.

Another advantage is the cooperation of the CEAC with the Beijing-Hamburg Conciliation Centre in Hamburg. The Conciliation Centre can look back on a long record of dispute conciliation cases between European and Chinese parties. By this cooperation, CEAC will certainly benefit from the experience the Conciliation Centre has gathered over the years. Moreover, the CEAC Hamburg Arbitration Rules expressly provide that the parties may opt for conciliation proceedings under the Rules of the Hamburg-Beijing-Conciliation Centre or for any other mediation or conciliation proceedings either prior to the commencement of arbitration under the CEAC Hamburg Arbitration Rules or within 21 days after receipt of the notice of arbitration by the Respondent.

The CEAC's location in Hamburg conveys some further advantages. The harbour of Hamburg is the second largest container port in Europe which makes the city a gateway for business in Europe. Numerous Chinese companies are located in Hamburg and the Hamburg City Council, which is one of the initiators of the development of CEAC, is very active in strengthening its ties with China. Last but not least, Hamburg has a sister-city arrangement with Shanghai. Thus Hamburg qualifies in an excellent manner for hosting this arbitration centre.

Is there a need for a new China related arbitration centre?

The success of CEAC will show whether there is a need for a new arbitration centre specialized in the resolution of disputes between Chinese and European or other parties. It may be that existing international arbitration institutions, such as the Arbitration Institute of the Stockholm Chamber of Commerce (which has a long-established tradition of handling China related disputes), the China International Economic and Trade Arbitration Commission (CIETAC) or other renowned international arbitration institutions such as the ICC Court of Arbitration or the Swiss Chambers' Court of Arbitration and Mediation already cover that field.

Moreover, CEAC will need to be watchful that its main asset, i.e. its homogenous intercultural features, will not turn into a disadvantage. Since too many cooks may spoil the broth, CEAC has to ensure that its intercultural dispute resolution process will not jeopardize the ultimate goal of securing the transparent, just and speedy adjudication of legal disputes.

Conclusion

CEAC is an ambitious project which has the potential of evolving into a major European arbitration centre for Sino-European business disputes. In particular, the institutional interplay between CEAL and CEAC may improve the quality and acceptability of decisions in disputes between European and Chinese business partners and could even contribute to avoiding conflicts which are often based on intercultural misunderstandings.

This development, however, will doubtlessly need its time, notably because there are already a number of arbitration institutions which enjoy a very good reputation around the globe and particularly in China.

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