An internal dispute between the China International Economic and
Trade Arbitration Commission ("CIETAC"), China's
leading arbitration institution, and its sub-commissions, CIETAC
Shanghai Commission ("CIETAC-SH") and CIETAC South China
Commission ("CIETAC-SC"), has escalated recently since it
initially came to the public attention earlier in 2012.
On August 1, 2012, CIETAC released an announcement on its offi
cial website ("Announcement"), declaring immediately
effective, that CIETAC's authorization for CIETAC-SH and
CIETAC-SC to accept and administer arbitration cases was suspended.
Additionally, where parties have agreed to arbitrate their disputes
by reference to CIETAC-SH or CIETAC-SC, the parties should instead
submit their applications for arbitration to CIETAC. The CIETAC
Secretariat would accept such arbitration applications and
administer these cases. In response to this, CIETAC-SH and
CIETAC-SC issued a joint statement on August 4, 2012, asserting
that both CIETAC-SH and CIETAC-SC are independent arbitration
institutions and would continue to accept and manage the cases as
agreed to be submitted to them.
The dispute was first triggered by CIETAC's promulgation of
the new arbitration rules effective as of May 1, 2012 (the
"New Rules"), which enlarged CIETAC's jurisdiction by
"Where the sub-commission/centre agreed upon by the parties
does not exist, or where the agreement is ambiguous, the
Secretariat of CIETAC shall accept the arbitration application and
administer the case. In the event of any dispute, a decision shall
be made by CIETAC."
However, the forum for such cases was subject to the option of
the party commencing the claim according to the previous rules.
Both sub-commissions generally refused to apply the New Rules, and
CIETAC-SH put forward its own arbitration rules and panel of
arbitrators. CIETAC thereafter responded that CIETACSH's own
arbitration rules were null and void.
The ongoing dispute between CIETAC and its sub-commissions has
clearly caused confusion. The enforceability of the awards issued
by the two sub-commissions is uncertain.
In order to avoid inconvenience and uncertainty, in the event
the parties decide to choose arbitation in China, it should provide
for CIETAC rather than by one of its sub-commissions.
Alternatively, to the extent permitted by the PRC law, the parties
may also consider to choose offshore arbitration institutions, such
as the Hong Kong International Arbitration Centre, Singapore
International Arbitration Centre, or ICC in Hong Kong or Singapore.
If CIETAC-SH or CIETAC-SC has already been designated as the
arbitration forum in a previously executed contract, the parties
may want to consider amending the forum to CIETAC or any of the
offshore arbitration institutions.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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