China (Shanghai) Free Trade Zone's (FTZ) promulgated new rules on arbitration on April 8, which will come into force starting from May 1.

This is the first of its kind in China.The document is regarded as a new institutional innovation of FTZ.

The set of new arbitration rules has 85 articles in 10 chapters. It has drawn on and improved many of the international commercial arbitration systems. This includes the improvement on the "Interim Measures" and addition of "emergency arbitration board" system, which has broken through the limitations by the "arbitrator list" system. It has instituted the open list of arbitrators and draws on the "goodwill" arbitration system. It has also added the procedures for settling small-sum disputes and lowered the arbitration fees.

Wen Wanli, secretary general of the Council for the Promotion of International Trade Shanghai, said: "It is a system that has further improved on the combination of arbitration with meditation. By the system, mediation will be carried out first if parties concerned so demand before the arbitration panel is formed. This system is very international. An arbitrator who participates in meditation is not allowed to act as an arbitrator."

The Shanghai International Economic and Trade Arbitration Commission was among the first batch of organizations that moved into the FTZ and started to prepare for the drafting of the new arbitration rules.

After three months of drafting and nine revisions, the commission completed the rules. The rules have empowered the arbitration board with greater powers of managing and deciding on procedures and allowed free options for disputed parties concerned. The rules are fully in line with the common international practice.

"We shall first of all apply the terms of contracts or agreements before applying the relevant laws of China and a diverse means for settling disputes. Arbitration plays an irreplaceable role in building up the law and order atmosphere in the FTZ. It can meet to the maximum the all kinds of demands by disputed parties," said Wen.