Counterclaim

a) Conditions for Counterclaim

According to The Arbitration Law, the respondent may admit or rebut the claims of the claimant or file a counterclaim.

A counterclaim is a cross-claim brought by a respondent that asserts an independent cause of action but is not also a defence to the claim made of the claimant. A counterclaim:

(1) is a claim filed by the respondent or a respondent member against the claimant or a claimant member;

(2) is a claim arising from the same dispute or transaction in the claim filed by the claimant;

(3) is independent of the claim filed by the claimant, i.e., it does not affect and is not affected by the claim filed by the claimant in respect of filing for arbitration, payment of arbitration cost, acceptance/refusal, notice, proceedings, amendment, withdrawal, etc.; and

(4) may be reviewed and heard together with the claim of the claimant by the same arbitral tribunal and included in the same arbitration award.

b) Time Period for Submitting a Counterclaim

After receiving a copy of the request for arbitration which has been accepted, the respondent shall submit a statement of counterclaim, if any, to the arbitration commission within the time period specified in the applicable arbitration rules. Such a time period may also be different under different arbitration rules, for example, 45 days from the date of receipt of the notice of arbitration according to the arbitration rules of CIETAC, SHIAC, SHIAC FTZ etc., and 30 days under SCIA Arbitration Rules, upon receipt of the notice of arbitration from the arbitration commission.

c) Extension of the Time Period for Submitting a Counterclaim

A respondent may request an extension of the time period for submitting a counterclaim with good cause shown. The request will be accepted or denied by the arbitral tribunal at its sole discretion or by the secretariat at his sole discretion if an arbitral tribunal has not been appointed.

d) Delayed Submission of a Counterclaim

If a statement of counterclaim is submitted beyond the time period specified by the arbitration rules, it may be accepted or denied, at the sole discretion of the arbitral tribunal.

Failure to submit a counterclaim. The respondent’s failure to submit a statement of counterclaim shall be without prejudice to the arbitration proceedings.

e) Content of a Statement of Counterclaim

A statement of counterclaim must contain specific counterclaim of and reliefs sought by the respondent and state the facts and grounds on which the counterclaim is based, and shall be accompanied by the evidence to support the counterclaim. Where necessary and readily available, it may be accompanied by documents and other evidence to support the counterclaims.

f) Advancement of Arbitration Fee for a Counterclaim

A respondent who submits a statement of counterclaim shall advance the arbitration fee within the specified time period according to the arbitration rules. In case of his failure to pay the arbitration fee, the statement of counterclaim will be denied.

g) Answer to Counterclaim

After a counterclaim filed by the respondent is accepted, the arbitration commission will send a copy of the statement of counterclaim and its attachments to the claimant. The claimant shall submit an answer or statement of defense to the respondent’s counterclaim within the time period specified in the applicable arbitration rules.

For example, SHIAC Arbitration Rules applicable to international arbitration specify a period of 30 days from the date of receipt of the statement of counterclaim for the claimant to submit his statement of defense in writing to the counterclaim.

h) Delayed Submission of a Defense to Counterclaim

In case of delay in submitting a statement of defense to the respondent’s counterclaim, the respondent may request an extension of the time period for submission with good cause shown, and the request will be accepted or denied by the arbitral tribunal at its sole discretion, or by the secretariat at his sole discretion if an arbitral tribunal has not been appointed.

Failure to Submit a Defense to Counterclaim

The claimant’s failure to submit a statement of defense to the respondent’s counterclaim shall be without prejudice to the arbitration proceedings.

The following are the provisions of different arbitration rules pertaining to the time period for submissions.

The Shenzhen Court of International Arbitration Rules for Financial Loan Disputes states,

“Article 4 Time Period for Defence and Counterclaim

1. The Respondent shall submit its Statement of Defence and evidentiary materials within seven (7) days after receipt of the Notice of Arbitration.

2. The Respondent shall submit its counterclaim (if any) in writing within seven (7) days after receipt of the Notice of Arbitration. The Claimant shall submit its Statement of Defence to the Respondent’s counterclaim within seven (7) days after receipt of the Notice of Acceptance of Counterclaim.”

Shenzhen Court of International Arbitration Rules of Maritime and Logistics Arbitration states,

“Article 13 Defence and Counterclaim

1. The Respondent shall submit its Statement of Defence and evidentiary materials within twenty (20) days of the receipt of the Notice of Arbitration.

2. The Respondent shall submit a counterclaim, if any, in writing within twenty (20) days from the date of receipt of the Notice of Arbitration. The Claimant shall submit its Statement of Defence to the counterclaim in writing within twenty (20) days from the date of receipt of the Notice.”

CIETAC Arbitration Rules states,

“Article 16 Counterclaim

1. The Respondent shall file a counterclaim, if any, in writing within forty-five (45) days from the date of its receipt of the Notice of Arbitration. If the Respondent has justified reasons to request an extension of the time period, the arbitral tribunal shall decide whether to grant an extension. Where the arbitral tribunal has not yet been formed, the decision on whether to grant the extension of the time period shall be made by the Arbitration Court.

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“Article 68 Defense and Counterclaim

1. Within twenty (20) days from the date of its receipt of the Notice of Arbitration, the Respondent shall submit its Statement of Defense, evidence and other supporting documents. Counterclaim, if any, shall also be filed with evidence and other supporting documents within the time period.

2. The Claimant shall file its Statement of Defense to the Respondent’s counterclaim within twenty (20) days from the date of its receipt of the counterclaim and its attachments.

3. If a party has justified reasons to request an extension of the time period, the arbitral tribunal shall decide whether to grant such extension. Where the arbitral tribunal has not yet been formed, such decision shall be made by the Arbitration Court.”