Norton Rose Fulbright
33 Experts
19 Contributions by Norton Rose Fulbright
PRACTICE NOTES
In aircraft finance transactions, lenders take security as a means of credit enhancement to raise the likelihood that their loan will be repaid in full if the borrower becomes insolvent or falls into payment default.
Important considerations for lenders taking security are:
the validity and enforceability of the security in whichever jurisdiction the aircraft is situated at the relevant time
the security ranking in priority ahead of the borrower’s other creditors, with the aircraft ring-fenced for the secured lender’s benefit
the charged assets not being susceptible to claw-back in any insolvency proceedings of the borrower
Another reason lenders take security over aircraft is the Basel framework (implemented by the EU Capital Requirements Regulation (Regulation (EU) 575/2013) (EU CRR)), which requires in-scope banks to have legally effective and enforceable security over the aircraft in all relevant jurisdictions if they wish to use that security to reduce the risk
Banking & Finance
PRACTICE NOTES
When a lessor places an aircraft on lease, it is concerned to make sure the aircraft is run in a way that does not unduly undermine the market value of the aircraft, and therefore its value as quasi-security, over the term of the lease. As a bare minimum, the lessee will be asked to give an undertaking to the lessor that it will operate the aircraft as follows:
in full accordance with all applicable laws (which includes the laws of the state in which the aircraft is registered as well as those of any jurisdictions in which the aircraft is physically located)
in accordance with all permits or licences which are required by the lessee to operate the aircraft in question
in a way which will not invalidate any warranties granted by a manufacturer in respect of the aircraft
in accordance with the
Banking & Finance
PRACTICE NOTES
Aviation finance is well suited to tax leasing across multiple jurisdictions. Such leases are generally used to defer tax. From a tax viewpoint, they can be beneficial for equity investors who have taxable profits arising from their ordinary business activities. These arrangements can be executed in jurisdictions including Japan, Germany and France. The primary risk with tax leasing emerges if the transaction ends early, as this may prevent equity investors from deferring their tax exposure to the extent and for the period they had planned.
What is a tax lease?
Most tax leases operate as tax deferral structures. They occur when certain entities (equity investors) enter a transaction with the specific aim of creating an immediate tax loss, which they can offset against taxable profits from their normal course of business. At a later point, the transaction is expected to generate profits and, at that stage, the
Banking & Finance
PRACTICE NOTES
There are two main types of aircraft finance structure:
secured lending, under which the lender advances funds to the purchaser to acquire the aircraft and takes security over the asset, and
leasing, which in many cases provides greater flexibility to financiers in many instances
Difficulties with secured lending
Secured loan structure
Under a conventional secured loan arrangement, the lender will lend money to the prospective owner of the aircraft to fund its purchase or acquisition by the borrower. In return for making the finance available, the lender will typically then take first‑priority security generally by way of a mortgage over, and in respect of, the aircraft (see Practice Note: Taking security over aircraft in aviation finance transactions). Once the loan has been paid in full, together with any other sums due under the transaction documents, the lender will release the aircraft from the mortgage, with
Banking & Finance
PRACTICE NOTES
Non-compliance with emissions trading schemes may lead to civil penalties, operational prohibitions or the detention of aircraft. Accordingly, financiers need a clear grasp of the duties imposed on aircraft operators (and, in some cases, owners) by the applicable schemes and of the accompanying enforcement tools, so that these risks are properly catered for in their finance documentation. This Practice Note sets out the principal components of the leading emissions trading regimes relevant to aviation finance deals. It addresses:
the EU emissions trading system (EU ETS)
the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) (and its integration into the EU ETS)
the UK emissions trading system (UK ETS)
Introduction to the key emissions trading schemes
The EU ETS, CORSIA and the integration of CORSIA into the EU ETS
The relationship between these regimes, including how CORSIA is integrated into the EU ETS, is
Banking & Finance
PRACTICE NOTES
The core of aviation finance is a lender advancing funds to a borrower to finance, or refinance, the purchase of an aircraft. If the borrower defaults under the loan, the contractual documents and transaction structure are designed to give the lender prioritised access to the aircraft, or its sale proceeds, to recover outstanding sums...
This is a classic asset finance model (see Practice Note: Introductory guide to asset finance): the lender accepts the borrower’s credit risk, supported by security over the aircraft. Yet aviation finance has evolved distinct legal and structural features that differentiate it from other financing techniques...
Specificities of aviation finance
These can be summarised as follows...
Future value
Aircraft are generally regarded as retaining future value better than many other asset classes. While much turns on the specific aircraft type and the engines fitted, lenders can usually forecast an aircraft’s likely market value over the life of the
Banking & Finance
PRACTICE NOTES
Cape Town Convention
The Convention on International Interests in Mobile Equipment (the Convention), alongside the related Protocol to the Convention on Matters Specific to Aircraft Equipment (the Protocol), together more widely known as the Cape Town Convention, entered into effect on 1 March 2006. This Cape Town Convention sets out a harmonised body of rules that govern the creation, safeguarding, ordering and enforcement of specified rights relating to aircraft and aircraft engines. A central feature is the establishment of the International Registry for aircraft objects, through which certain classes of interest can be registered, including the recording of a security interest in an aircraft. It also affords protection to creditors in circumstances of default or where insolvency may then arise...
Banking & Finance
PRACTICE NOTES
Residual value agreements are a practical mechanism for apportioning an aircraft’s residual value risk.
The main purposes for deploying residual value agreements are:
to deliver added protection for financing parties within a specific aviation finance transaction
in operating leases, to minimise a lessor’s exposure to residual value risk
to give an airline reassurance about the worth of its investment in a fleet of aircraft
There are multiple forms of residual value agreement. Each allocates risk in different ways and to different parties within the transaction. Such arrangements appear in several variants, each designed to apportion residual value risk differently between stakeholders.
What is a residual value agreement?
Within aviation finance transactions, residual value agreements distribute the residual value risk in an aircraft among various parties, or transfer that risk to a third party, such as an insurer...
Banking & Finance
PRACTICE NOTES
Commercial aircraft can be funded through a variety of channels, including backing from governmental or quasi-governmental bodies known as export credit agencies (ECAs). The extent of ECA involvement in aircraft financing generally shifts with the supply of commercial funding available in the market. During periods of financial stress, when private finance is harder to secure, the share of aviation transactions supported by ECAs typically rises, and the reverse applies in stronger conditions. In recent years, the level of ECA support has moved more sharply than usual. Historically, the principal ECA-backed aircraft finance transactions related to Airbus and Boeing fleets. As many Airbus models are partly produced in the UK, France and Germany, the ECAs most commonly involved in financing Airbus aircraft have traditionally been:
Export Credits Guarantee Department (ECGD), a department of the UK government trading as UK Export Finance (for further
Banking & Finance
PRACTICE NOTES
ARCHIVED –
This archived practice note sets out information on EU competition law as it relates to big data and algorithms, reflecting the state of play at publication on 11 November 2017 and the position applicable. It is not maintained. As ‘big data’ becomes increasingly pivotal for uses across sectors, authorities, academics and practitioners have, in recent years, intensified their scrutiny of the antitrust consequences for policy and enforcement arising from big data and the algorithms used to analyse it. In September 2016, EU Competition Commissioner Margrethe Vestager pledged to ‘keep a close eye on how companies use data’, and several European competition authorities have undertaken, or in some instances continue to undertake, inquiries and studies on big data matters within jurisdictions. Two principal categories of concern have been highlighted by authorities and commentators:
the deployment of algorithms processing big data may
Competition
PRACTICE NOTES
The Islamic finance sector has expanded swiftly in recent years, as financial institutions and their customers look to explore alternative ways of financing and raising funds. It is an asset‑based system, and Islamic finance has seen rising deployment for both full and partial funding of aircraft—assets regarded as permissible investments under Islamic law (Shariah).
Principles of Islamic finance
The principles of Islamic finance are drawn from Shariah as prescribed in the Quran, the sacred scripture of Islam believed to record the Word of God revealed to the Prophet Mohammed, together with the Sunnah, the traditions and practices of the Prophet Mohammed. These sources set out the principles applied to finance. Islamic finance is established to ensure that wealth remains pure and is utilised justly, in accordance with these overarching principles, safeguarding fairness in application and conduct:
No unjust
Banking & Finance
PRACTICE NOTES
Such agreements are concluded between an aircraft manufacturer (the seller) and a customer (the purchaser). In the majority of situations, the customer will be an airline or an operating lessor, although the purchaser can equally be a different entity, such as a governmental body. The terms and conditions of aircraft purchase agreements are commonly kept confidential as between the aircraft manufacturer and the customer and are seldom made public. The bulk of those provisions will typically not be disclosed to any financier of the customer, even where that financier is providing the customer with funding in relation to an aircraft to be acquired pursuant to the terms of that purchase agreement.
An aircraft manufacturer will generally have a standard form purchase agreement that it enters into with all of its customers. Nevertheless, particular commercial terms are negotiated between the parties, and letter
Banking & Finance
PRACTICE NOTES
Pre‑delivery payment financing (PDP financing) has become a widely used funding tool for airlines and lessors. However, as the number of PDP transactions has risen, aircraft manufacturers have applied closer scrutiny to the industrial and commercial matters that arise when a financier participates in aircraft purchase arrangements.
As a result, any PDP financing may involve significant commercial points to negotiate, together with, at times, complex legal questions, particularly in relation to security.
PDP financing, and the protections open to any lender, differ substantially from other forms of aviation finance. Funding is supplied while the asset is still under construction, and security cannot be taken in the same way as for a completed aircraft. Therefore, the provisions setting out the steps to be taken on enforcement are of fundamental importance to the manufacturer, the purchaser and the lender.
PDPs and purchase agreements What are
Banking & Finance
PRACTICE NOTES
Contracts for the sale of second hand aircraft are concluded between an aircraft owner (as the seller) and, in the majority of situations, an airline or an aircraft leasing company (as the buyer). The parties usually keep the terms of such agreements confidential; however, where the buyer has a lender, certain provisions will be revealed to that lender if it is providing the airline with funding in relation to an aircraft to be acquired pursuant to the purchase agreement. There is no single standard form of agreement for second hand aircraft, though some sellers maintain a preferred form of purchase agreement that they seek to use with customers. The requirements of different participants in respect of second hand aircraft sales and purchases, as well as the commercial particulars of these transactions, vary markedly, and are considered in greater detail below.
Key
Banking & Finance
PRACTICE NOTES
Types of special purpose vehicle and orphan trust
The deployment of special purpose vehicle structures is widespread in aviation finance. They offer lenders several advantages, including tax benefits and a bankruptcy-remote platform for the financing. A special purpose vehicle (SPV), also known as a single purpose company (SPC), is a legal entity established for a limited aim; in aviation finance this is commonly to own an aircraft for a particular transaction. There are numerous forms of SPV used in aviation finance, with the principal categories being:
subsidiary companies
orphan trusts
limited partnerships
Each of these is considered below. The type of SPV selected will vary on a transaction-by-transaction basis.
Subsidiary companies
Subsidiary companies are typically limited liability companies incorporated in a tax-friendly jurisdiction...
Banking & Finance
PRACTICE NOTES
Operating leases are widely used across the airline sector. Because aircraft have long service lives, a mature marketplace for trading pre-owned aircraft has emerged. For a lessee, the essentials are that the leased aircraft is airworthy and that it can operate it without interference from the lessor. For a lessor, the fundamentals are being paid for the lessee’s use of the aircraft and avoiding any loss arising from the lessee’s operation of the aircraft.
This Practice Note sets out what an operating lease is, how it contrasts with other leasing structures, and the core concepts underpinning the business of operating lessors. It highlights the principal clauses typically found in operating leases, including delivery condition, quiet enjoyment, rent and deposits, and operational indemnities. It also addresses key provisions on subleasing and events of default.
The business of operating
Banking & Finance
PRACTICE NOTES
To operate an aircraft across borders, the owner must register it with an aviation authority. While international conventions exist, the form of the register, the procedures for registration and deregistration, and the criteria for keeping a registration valid differ between countries, so the chosen state of registration requires careful consideration by any aircraft owner.
Why do you register aircraft and where do you do it?
In 1944, the Convention on International Civil Aviation took place in Chicago (the ‘Chicago Convention’). It led to the creation of the International Civil Aviation Organisation, a specialised United Nations agency responsible for coordinating and regulating international air travel. Under Article 20 of the Chicago Convention, to which the UK is a signatory, every aircraft engaged in international air navigation must carry appropriate nationality and registration marks. Therefore, all aircraft must be registered with an aviation authority to fly
Banking & Finance
PRACTICE NOTES
Aircraft represent high-value assets, vulnerable to damage and capable of causing significant destruction. Securing appropriate insurance is therefore essential for financiers; policy wording and its legal impact often warrant closer scrutiny than is usual in other forms of asset finance. This Practice Note addresses insurance where an aircraft owner, as lessor, leases an aircraft to an airline as lessee. If a bank or other lender has financed the aircraft, the matters identified as relevant to a lessor will likewise apply to the aircraft financier. This is because, in many aviation finance structures, the financier will typically take security over the lessor’s rights against the lessee under the lease...
The nature of insurance contracts
An insurance contract is an agreement to indemnify against loss arising from specified perils (for example, loss resulting from damage to, or destruction of, the insured asset). The contract is formed between the
Banking & Finance
PRACTICE NOTES
Registration of aircraft mortgages at the Civil Aviation Authority (CAA)
This Practice Note explains how to record aircraft mortgages with the Civil Aviation Authority (CAA) within a typical aviation finance deal. It does not address every action that might be necessary to perfect security over an aircraft. For guidance on filing security at Companies House, and on how that filing interacts with entry on the UK Register of Aircraft Mortgages, consult Practice Note: Perfecting security over aircraft and registering security on the UK Register of Aircraft Mortgages. See also Practice Note: Aviation finance and the Cape Town Convention. The CAA is responsible for keeping the United Kingdom Register of Civil Aircraft (the ‘Register’). The Register contains entries where an aircraft serves as collateral for a mortgage or loan. It does not, however, record other categories of security interest, for example liens over the
Banking & Finance
43 Contributions by Norton Rose Fulbright Experts
PRACTICE NOTES
This Practice Note addresses arbitration solely under the CIETAC Arbitration Rules 2024 (CIETAC Rules). As a general rule, those Rules govern arbitrations accepted by CIETAC on or after 1 January 2024, or where the parties have agreed to adopt the 2024 Rules (CIETAC, art 88). The 2015 rules continue to apply to any arbitrations accepted by CIETAC between 1 January 2015 and 31 December 2023. This Practice Note applies to international or foreign related disputes, as well as matters connected with Hong Kong SAR, Macao SAR or the Taiwan region (CIETAC, art 3.2). CIETAC has distinct provisions for summary arbitration—see Practice Note: CIETAC (2024)—summary procedure (and early dismissal)—and for domestic arbitration; these are not addressed in this Practice Note. There are also separate provisions for cases administered by the CIETAC Hong Kong Arbitration Centre, which are not covered here.
Prior to
Arbitration
PRACTICE NOTES
Rule 144A has operated since April 1990. This Practice Note examines the key legal issues when assessing whether to add a so‑called 'Rule 144A tranche' to a company's Main Market initial public offer (IPO). It also considers further points that arise when a company weighs up accessing the US market by offering and selling shares to 'qualified institutional buyers' as defined in Rule 144A in connection with its Main Market IPO.
What is a Rule 144A tranche?
There are several ways for a company to extend the initial admission of its securities to listing on the Official List of the Financial Conduct Authority (FCA) and to trading on the main market for listed securities of the London Stock Exchange (Main Market) (initial public offer or IPO) to investors in the US, eg by means of:
a public offering in the US (a
Corporate
PRACTICE NOTES
Introduction to the airline industry
The purpose of this Practice Note is to present an overview of certain key features of airline insolvencies in England and Wales, and to highlight legal and practical considerations that can shape strategies and outcomes when an airline enters insolvency proceedings. This Practice Note forms part of a wider suite on airline insolvency. For further information, see the following Practice Notes:
Guide to airline insolvency—insolvency proceedings, receivership, restructuring plans and schemes of arrangement
Guide to airline insolvency—international considerations and implications for office-holders
There are particular aspects of the airline industry that set airline insolvencies apart from those of companies in many other sectors. In particular:
the financing structures for the manufacture and acquisition of aircraft, together with the related ownership and leasing frameworks, are often highly complex and can differ significantly from one case to another
the
Restructuring & Insolvency
PRACTICE NOTES
This Practice Note sits within a wider suite on airline insolvency; for further detail, see:
Guide to airline insolvency—introduction
Guide to airline insolvency—insolvency proceedings, receivership, restructuring plans and schemes of arrangement
Cross-border issues
If an airline enters insolvency, the appointed insolvency office-holder, or a lessor or financier, may need to pursue asset recovery in numerous jurisdictions, influenced by the airline’s scale and global reach. For office-holders, consideration should be given to the potential application of the Cape Town Convention (see Practice Note: Guide to airline insolvency—insolvency proceedings, receivership, restructuring plans and schemes of arrangement).
Where aircraft and other assets are situated in jurisdictions that have implemented the UNCITRAL Model Law on Cross-Border Insolvency, the office-holder may seek recognition and assistance in those places (see generally: UNCITRAL Model Law and Cross-Border Insolvency Regulations 2006 (CBIR)—overview). Outside such jurisdictions, alternative routes to
Restructuring & Insolvency
PRACTICE NOTES
Oil & Gas M&A—SPA risk allocation
Introduction
During the due diligence phase, any matter that causes concern will be highlighted in the relevant teams’ reports (legal, technical, financial), together with recommendations on the most effective way to address it. Such reports identify the concerns, cite the responsible legal, technical and financial teams, and set out how best to resolve them. For broader guidance on diligence topics in oil and gas deals, see Practice Note: Due diligence and warranties in oil and gas M&A transactions. Commonly, the key mechanisms used within the sale and purchase agreement (SPA) to tackle identified risks, and to apportion exposure between buyer and seller, include the
Energy
PRACTICE NOTES
This Practice Note sets out a concise overview of the financing structures typically used by UK asset-based lenders and highlights the key English law legal issues encountered when funding receivables (often called book debts) in the asset-based lending market, together with one or more of the following assets:
inventory (also referred to as stock)
plant and machinery (also referred to as equipment)
real estate
cashflow loan
It also summarises common asset-based lending structures and the principal issues to consider when arranging asset-based financing.
Key features of asset-based lending
ABL is senior, secured lending primarily intended to fund a trading business’s working capital. Advances are determined by the realisable value of defined classes of a borrower’s assets, collectively known as the borrowing base. ABL is often event-led, offering flexible access to liquidity during periods of transition, such as an
Banking & Finance
PRACTICE NOTES
The most prominent Chinese arbitral body is the China International Economic Trade Arbitration Commission (CIETAC), established in 1954 to bolster China’s expanding trade and economic ties with other nations, and it endured the Cultural Revolution, continuing to operate. Today, CIETAC ranks among the world’s foremost commercial arbitration centres, administering a very considerable caseload. Chinese parties tend to favour arbitration as the vehicle for resolving commercial disputes, particularly those arising out of international commercial transactions.
Amid China’s current extensive outward investment, Chinese parties participate in international arbitration across all leading global centres. Nevertheless, wherever they can, they prefer to arbitrate at home, so foreign parties should understand clearly what to expect when confronted with an arbitration before a tribunal in China.
An introduction to arbitration in China
Two significant and enduring characteristics of arbitration in China stem from its historical evolution. The first concerns the clear divide
Arbitration
PRACTICE NOTES
ARCHIVED: This Practice Note has been archived and is not maintained
Please note that on 5 September 2023, CIETAC unveiled amendments (the Revisions) to its 2015 arbitration rules, prompted by the growing demand for flexibility and efficiency in the digital era and developments in international arbitration practice, following a revision programme launched in April 2021. Spanning over 30 provisions, the Revisions cover digital case management, stepped arbitration agreements, jurisdiction, arbitrations involving multiple contracts, procedural matters and other complex issues. The Revisions will come into force on 1 January 2024 and will apply to all CIETAC arbitrations begun from that date. CIETAC’s current arbitration rules have been in effect since 1 January 2015 (the CIETAC Rules 2015). This Practice Note is UNDER REVIEW—it currently mirrors CIETAC’s structure and functions as outlined in the CIETAC Rules 2015. This Practice Note addresses arbitration under the CIETAC
Arbitration
PRACTICE NOTES
ARCHIVED: This Practice Note has been archived and is not maintained
NOTE: On 5 September 2023, CIETAC announced amendments (the Revisions) to its 2015 arbitration rules, driven by the need for greater flexibility and efficiency in a digital era and by developments in international arbitration practice, following a revision programme begun in April 2021. Spanning more than 30 articles, the Revisions cover digital case management, multi-tiered arbitration agreements, jurisdictional matters, multi-contract arbitrations, procedural issues and other complex topics. The Revisions will take effect on 1 January 2024 and will apply to all CIETAC arbitrations commenced from that date. CIETAC’s current arbitration rules have been in force since 1 January 2015 (the CIETAC Rules 2015). This Practice Note is UNDER REVIEW—it presently reflects CIETAC’s structure and functions as described in the CIETAC Rules 2015. It addresses arbitration under the CIETAC Arbitration Rules 2015 (CIETAC Rules), which
Arbitration
PRACTICE NOTES
ARCHIVED: This Practice Note has been archived and is not maintained
NOTE: On 5 September 2023, CIETAC unveiled amendments (the Revisions) to its 2015 arbitration rules, prompted by increasing demands for flexibility and efficiency in the digital era and by evolving international arbitration practice, following a revision programme launched in April 2021. Spanning more than 30 provisions, the Revisions address digital case management, stepped arbitration clauses, jurisdiction, arbitrations involving multiple contracts, procedural steps and other complex issues. They will take effect on 1 January 2024 and will apply to all CIETAC arbitrations initiated from that date. CIETAC’s current arbitration rules have applied since 1 January 2015 (the CIETAC Rules 2015). This Practice Note is UNDER REVIEW—it presently reflects CIETAC’s organisation and remit as set out in the CIETAC Rules 2015. It covers arbitration under the CIETAC Arbitration Rules 2015 (CIETAC Rules), which
Arbitration
PRACTICE NOTES
ARCHIVED: This Practice Note has been archived and is not maintained .
NOTE: On 5 September 2023, CIETAC announced amendments (the Revisions) to its existing 2015 arbitration rules, prompted by the increasing demands for adaptability and speed in the digital era and shifts in international arbitration practice following a revision programme launched in April 2021. Spanning more than 30 provisions, the Revisions address digital case administration, stepped arbitration clauses, jurisdictional matters, arbitrations arising from multiple contracts, procedural aspects and other complex topics.
The Revisions take effect on 1 January 2024 and will govern all CIETAC arbitrations started on or after that date. CIETAC’s current arbitration rules have been in force since 1 January 2015 (the CIETAC Rules 2015). This Practice Note is UNDER REVIEW and presently mirrors CIETAC’s framework and functions as described in the CIETAC Rules 2015.
This Practice Note concerns
Arbitration
PRACTICE NOTES
ARCHIVED: This Practice Note has been archived and is not maintained
NOTE: On 5 September 2023, CIETAC announced new revisions (Revisions) to its 2015 arbitration rules, prompted by the growing demand for flexibility and efficiency in the digital era and shifts in international arbitration practice, following a revision programme launched in April 2021. Extending across more than 30 articles, the Revisions address digital case management, tiered arbitration agreements, jurisdiction, multi-contract arbitrations, arbitral procedures and other complex issues. The Revisions will come into force on 1 January 2024 and will apply to all CIETAC arbitrations commenced from that date. CIETAC’s current arbitration rules have been in effect since 1 January 2015 (the CIETAC Rules 2015). This Practice Note is UNDER REVIEW—it presently reflects CIETAC’s structure and role as set out in the CIETAC Rules 2015. This Practice Note relates to arbitration under the CIETAC
Arbitration
PRACTICE NOTES
This Practice Note addresses arbitration conducted under the CIETAC Arbitration Rules 2024 (CIETAC Rules), which, as a general rule, govern arbitrations accepted by CIETAC on or after 1 January 2024, or where the parties have chosen to apply the CIETAC Arbitration Rules 2024 (CIETAC, art 88). The 2015 arbitration rules continue to apply to all arbitrations accepted by CIETAC between 1 January 2015 and 31 December 2023. This Practice Note is relevant to international or foreign-related disputes, and to matters connected with Hong Kong SAR, Macao SAR, or the Taiwan region (CIETAC, art 3.2). CIETAC has distinct provisions for summary arbitration (see Practice Note: CIETAC (2024)—summary procedure (and early dismissal)) and for domestic arbitration; these fall outside the scope of this Practice Note. There are also separate provisions for arbitrations by the CIETAC Hong Kong Arbitration Centre (CIETAC, art 76), which are not dealt with in
Arbitration
PRACTICE NOTES
This Practice Note addresses arbitrations conducted under the CIETAC Arbitration Rules 2024 (CIETAC Rules), which typically govern cases accepted by CIETAC from 1 January 2024 onwards, or where the parties have expressly chosen the 2024 CIETAC Arbitration Rules (CIETAC, art 88). The 2015 rules continue to apply to arbitrations taken on by CIETAC between 1 January 2015 and 31 December 2023. This Note concerns international or foreign-related matters, as well as disputes connected to Hong Kong SAR, Macao SAR, or the Taiwan region (CIETAC, art 3.2). CIETAC provides distinct regimes for summary arbitration (see Practice Note: CIETAC (2024)-summary procedure (and early dismissal)) and for domestic cases; these fall outside the scope of this Note. Arbitrations administered by the CIETAC Hong Kong Arbitration Centre are likewise governed by separate provisions (CIETAC, art 76) and are not addressed here. The 2024 Rules include
Arbitration
PRACTICE NOTES
This Practice Note addresses only arbitrations conducted under the CIETAC Arbitration Rules 2024 (CIETAC Rules). In general, these govern cases accepted by CIETAC on or after 1 January 2024, or where the parties have expressly chosen the 2024 Rules (CIETAC, art 88). The 2015 rules continue to apply to arbitrations accepted by CIETAC between 1 January 2015 and 31 December 2023.
The Note concerns international or foreign-related disputes, as well as matters connected to Hong Kong SAR, Macao SAR, or the Taiwan region (CIETAC, art 3.2). Separate provisions exist for summary arbitration—see Practice Note: CIETAC (2024)—summary procedure (and early dismissal)—and for domestic arbitration; neither is covered here. There are also distinct provisions for cases administered by the CIETAC Hong Kong Arbitration Centre (CIETAC, art 76), which likewise fall outside the scope of this Note.
Under the CIETAC Rules, proceedings begin when the claimant lodges a
Arbitration
PRACTICE NOTES
This Practice Note is confined to arbitration conducted under the revised CIETAC Arbitration Rules 2024 (CIETAC Rules). As a general proposition, the 2024 CIETAC Rules apply to arbitrations accepted by CIETAC on or after 1 January 2024, or where the parties have opted to adopt the CIETAC Arbitration Rules 2024 (CIETAC, art 88). The 2015 rules remain applicable to arbitrations accepted by CIETAC between 1 January 2015 and 31 December 2023. For help on the CIETAC Rules 2015, see: CIETAC arbitration—overview. This Practice Note relates to international or foreign‑related disputes, or disputes linked to Hong Kong SAR, Macao SAR or the Taiwan region (CIETAC, art 3.2). CIETAC has separate provisions for domestic arbitration, which are excluded from this Note. There are also distinct provisions for arbitrations administered by the CIETAC Hong Kong Arbitration Center (CIETAC, art 76), which are not covered
Arbitration
PRACTICE NOTES
This Practice Note
This Practice Note addresses solely arbitrations governed by the CIETAC Arbitration Rules 2024 (CIETAC Rules). As a rule, those Rules apply to cases that CIETAC accepts on or after 1 January 2024, or where the parties have expressly opted for the 2024 CIETAC Arbitration Rules (CIETAC, art 88). The 2015 rules continue to govern arbitrations that CIETAC accepted from 1 January 2015 to 31 December 2023. This Practice Note concerns international or foreign-related disputes, as well as matters linked to Hong Kong SAR, Macao SAR, or the Taiwan region (CIETAC, art 3.2). CIETAC provides distinct regimes for summary arbitration (see Practice Note: CIETAC (2024)—summary procedure (and early dismissal)) and for domestic arbitration; these fall outside this Practice Note. Arbitrations administered by the CIETAC Hong Kong Arbitration Center are likewise subject to separate provisions (CIETAC, art 76) and are not
Arbitration
PRACTICE NOTES
This Practice Note
This Practice Note addresses only arbitrations conducted under the CIETAC Arbitration Rules 2024 (CIETAC Rules). As a general rule, those Rules govern cases accepted by CIETAC on or after 1 January 2024, or where the parties have chosen to adopt them (CIETAC, art 88). The 2015 rules continue to govern arbitrations accepted by CIETAC from 1 January 2015 to 31 December 2023. The Note concerns international or foreign-related disputes, and matters involving Hong Kong SAR, Macao SAR, or the Taiwan region (CIETAC, art 3). CIETAC provides distinct regimes for summary arbitration (see Practice Note: CIETAC (2024)—summary procedure (and early dismissal)) and for domestic arbitration; neither is addressed here. Separate provisions also apply to arbitrations administered by the CIETAC Hong Kong Arbitration Centre (CIETAC, art 76), which fall outside the scope of this Note. Among the notable
Arbitration
PRACTICE NOTES
ARCHIVED: This Practice Note has been archived and is not maintained .
NOTE: On 5 September 2023, CIETAC unveiled revisions (Revisions) to its 2015 arbitration rules, responding to growing demands for agility and effectiveness in the digital age and developments in international arbitration practice, following a revision plan initiated in April 2021.
Covering more than 30 articles, the Revisions address:
Digital case management
Multi-tiered arbitration agreements
Jurisdiction
Multi-contract arbitrations
Arbitral procedures
Other challenging issues
The Revisions take effect on 1 January 2024 and apply to all CIETAC arbitrations commenced from that date. CIETAC’s current arbitration rules have been in force since 1 January 2015 (the CIETAC Rules 2015).
This Practice Note is UNDER REVIEW—it presently reflects CIETAC’s structure and role as set out in the CIETAC Rules 2015. It covers arbitration under the CIETAC Arbitration Rules 2015 (CIETAC Rules), which
Arbitration
PRACTICE NOTES
Practice Note
This Practice Note provides a concise outline of the principal legal considerations and discussion themes typically faced in practice when financial institutions assess whether to offer receivables purchase or invoice discounting facilities, or instead to advance a loan secured against the value of receivables. There are several reasons why suppliers might opt to sell receivables (on a no recourse or limited recourse basis) rather than borrow...
Banking & Finance
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