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Party autonomy is a cornerstone of commercial arbitration, encompassing the choice of arbitration language. This language applies throughout the entire arbitration procedure from filing, service of documents and oral hearings to the final award.

Disputes often arise when parties have not agreed on a language, have conflicting agreements, or have agreed on multiple languages. The sophistication of arbitration language rules is a critical measure of their quality.

Drawing from a case administered by the Shanghai International Arbitration Centre (SHIAC), the authors of this article introduce the ¡°3 + 4 + X¡± framework for determining arbitration language under the updated 2024 SHIAC Arbitration Rules, offering guidance to commercial entities, agents and arbitrators to enhance procedural efficiency and integrity.

Summary of dispute

The claimant was a wholly foreign-owned enterprise established under Chinese law and the respondent was a domestic supplier. They signed bilingual purchase contracts and a memorandum of understanding regarding the supply of certain equipment, the latter declaring both language versions as equally valid.

The English contract specified arbitration at SHIAC with English as the language, while the Chinese version omitted language specifics. A dispute subsequently ensued over performance of the purchase contract, leading to arbitration.

Before constituting the arbitral tribunal, the SHIAC secretariat used both languages per the 2015 SHIAC Arbitration Rules, sparking dispute over language choice. The claimant argued for English ¨C as the English contract specified as much, and was more convenient for a foreign-owned enterprise ¨C while the respondent advocated for Chinese, citing article 60 of the 2015 rules, which stipulates that ¡°if the parties did not agree on the language of arbitration, Chinese should be the language of arbitration¡±.

Respective views

Prior to the hearing, the tribunal convened a case management conference where the representatives of both parties reiterated their respective views on procedural matters, including the language.

The tribunal eventually determined the language by way of procedural order in accordance with articles 29 and 60 of the 2015 rules, holding that the two versions of the purchase contract had the same legal effect, but the agreement on language of arbitration was inconsistent, which should be regarded as a case of unclear language agreement.

Although the 2015 rules do not provide relevant guidance for dealing with such a scenario, rules applicable when parties have not agreed on the language were referenced.

Article 60(1) provides: ¡°Where the parties have agreed on the language for arbitration, their agreement shall prevail. Absent such an agreement, the Chinese language shall be the working language of arbitration. The tribunal may, based on the mutual agreement of parties, decide to use other languages as the working language for arbitration, taking the working language of the arbitration agreement, the language of the contract and other factors in arbitration into account.¡±

With reference to the above-mentioned rules, the tribunal decided that: (1) the language of arbitration in this case shall be Chinese, and (2) documentary evidence written in languages other than Chinese can be submitted in the original language without translation.

Clarifying a new path

Dispute can arise over the lack of accuracy of arbitration language contained in a single contract, lack of consistency across multiple versions of a contract, or even incompatibility of language clauses contained in multiple contracts.

This necessitates a system clarifying the issue of arbitration language. The 2015 rules established a default rule to use Chinese as the language, unless otherwise agreed. The updated SHIAC Arbitration Rules (2024) make the following changes:

• Depending on the stage of arbitration proceedings, different functions may determine the language. The secretariat has the right to make preliminary decisions, while the arbitral tribunal is entitled to make the final decision.
• If the parties have not agreed on the language, Chinese as the language of arbitration shall no longer apply by default.
• If the parties have agreed on two or more arbitration languages, the tribunal may, after hearing their views, determine that more than one language shall apply to the case.
• When the agreement on language is unclear, the parties may reach a new agreement, or the tribunal may refer to the no-agreement clause under the 2024 rules; and
• After the language has been determined, the tribunal may adjust the working language of certain procedural activities with consent of the parties. For example, under article 84.5 of the 2024 rules, if the parties submit evidence not written in the arbitration language, the tribunal may at its discretion order translation.

It is worth noting that the arbitration language, once determined, applies to the entire proceedings. But in some procedures, the tribunal may make adjustments with the parties¡¯ consent; for example, if the parties agreed on English as the language but the agents attending the hearings and the arbitrators are all native Chinese speakers.

In this case, the tribunal may decide to conduct the hearings in Chinese if the parties agree, but still maintain the use of English for submission of evidence, transmittal of documents, writing the award, and other arbitration activities.

For another example, if language of arbitration is Chinese but some of the evidence material is written in English, this may not need to be translated into Chinese if the parties and tribunal can read and understand English sufficiently well.

Key takeaway

In arbitration, three bodies may determine the language. In order of priority, they are the parties, the arbitration institution, and the tribunal.

There are also four common types of dispute over the arbitration language: no agreement; unclear agreement; two or more languages; and conflicting languages.

In the course of arbitration, the tribunal may adjust the language for some parts of the proceedings with the parties¡¯ consent.

In complex cases, the above-mentioned ¡°3+4+X¡± system effectively safeguards party autonomy on the choice of language and improves efficiency of the arbitration proceedings.

Meanwhile, tribunals should stick to the principle of party consent and give proper reasoning in decisions to avoid any arbitral award being overturned on subsequent judicial review.

Li Tingwei is a senior manager and Shou Yiming is a specialist in the research department of the Shanghai International Arbitration Centre.