CIETAC update

Katherine McMenamin, associate, Singapore

We have previously reported on issues that have arisen within CIETAC following the adoption of its new Rules in 2012. There have been further developments since our last arbflash, and we report on them here.

Background

Under the Chinese arbitration law, parties are required to submit arbitrations to arbitration commissions (i.e. arbitration institutions). The largest arbitration commission is the China International Economic and Trade Arbitration Commission (CIETAC), which forms an integrated arbitration commission with its sub-commissions in other regions in China, using a uniform set of Arbitration Rules and Panel of Arbitrators.

The CIETAC Arbitration Rules 2012 came into effect as of 1 May 2012. The introduction of the 2012 Rules resulted in an open dispute between the CIETAC Beijing headquarters and the Shanghai and South China (Shenzen) sub-commissions; the sub-commissions consequently refused to follow the 2012 Rules and declared themselves independent arbitral commissions, with separate arbitration rules. On 31 December 2012, the CIETAC Beijing headquarters announced that the Shanghai and South China sub-commissions are forbidden from using the CIETAC name and brand and no longer authorised to accept and administer arbitration cases. It advised parties who had already agreed to arbitrate their disputes with the Shanghai or South China sub-commissions to submit their requests for arbitration to CIETAC in Beijing.

Current position

The CIETAC South China sub-commission has changed its name to the Shenzen Court of International Arbitration South China International Economic and Trade Arbitration Commission (SCIA), and the CIETAC Shanghai Commission is now known as the Shanghai International Arbitration Commission (SHIA) or Shanghai International Economic and Trade Arbitration Commission (SIETAC). They have issued a Joint Announcement declaring themselves independent arbitration commissions, approved and established by the Shenzhen Municipal Government and Shanghai Municipal Government respectively. Both state that, according to the law, they will accept and administer any arbitration cases where parties have designated them in their agreement.

To date, the Tianjin and Chongqing sub-commissions of CIETAC have not taken any action or made any statements similar to those of the former CIETAC Shanghai or Shenzen sub-commissions.

Implications

These developments have caused uncertainty regarding the status of arbitration agreements and awards made where the Shanghai or Shenzhen branches of CIETAC were stipulated in the arbitration clause. For example, we understand that a court in Suzhou has recently refused to enforce a CIETAC Shanghai arbitration award because SIETAC now has jurisdiction over Shanghai arbitrations rather than CIETAC Shanghai. In light of these developments, parties wishing to arbitrate before CIETAC should make sure that the clause explicitly stipulates CIETAC Beijing as the arbitration institution so as to avoid any unnecessary confusion and potential challenges with regard to validity of awards; and if they agree to arbitration outside Beijing, they should take care to identify the correct arbitration commission.

Please click on the links below for the other articles in the July 2013 Arbflash:

• English courts can protect agreements to arbitrate even where arbitration not commenced or contemplated
• High Court upholds Australia's international arbitration laws
• Interim relief in support of arbitration in court other than court of seat: drafting implications of the Konkola decision
• Disclosure of overseas assets permitted in the English courts
• The IBA Guidelines on Party Representation in International Arbitration: levelling the playing field?
• New arbitration rules for HKIAC
• New governance structure and revised rules for SIAC
• PwC and Queen Mary 2013 survey on industry perspectives on international arbitration
• Paris launches Paris Arbitration Rules
• SIAC sets up in Mumbai
• New international arbitration centres in New York, Seoul and Karnataka
• Myanmar accedes to the New York Convention