In our Commentary in August 2012, we reported on the
dispute between the China International Economic and Trade
Arbitration Commission in Beijing ("CIETAC") and its
Shanghai and South China (Shenzhen) Sub-Commissions.
To recap, the dispute came about because CIETAC's amended
2012 Arbitration Rules contain a requirement that all cases
submitted to CIETAC should be administered in Beijing, unless the
parties have expressly submitted them to a sub-commission in their
arbitration agreement. This was a departure from past practice,
which saw disputes allocated based on regional connection, party
convenience, or cost. In other words, if an arbitration agreement
simply refers to CIETAC and states that the hearing should be held
in Shanghai, for example, the past practice was that the CIETAC
Shanghai Sub-Commission would administer the case. However, the
amended 2012 Arbitration Rules now suggest that such an arbitration
agreement would require the case to be administered by Beijing,
with the hearing held in Shanghai, thus leaving the Shanghai
Sub-Commission out of the picture.
Perhaps not surprisingly, Shanghai and Shenzhen objected to the
centralizing effect of the amended 2012 Arbitration Rules, most
likely because they feared that they would lose revenue as a
result, but also because most arbitration agreements in practice
simply refer to CIETAC and do not specifically refer to
arbitrations being administered expressly by either
CIETAC attempted to resolve the impasse with its two
sub-commissions, without success, and on August 1, 2012,
effectively disqualified its Shanghai Sub-Commission and its
Shenzhen Sub-Commission from accepting and administering
arbitration cases with effect from that date. In practice, both
Shanghai and Shenzhen have ignored this edict and have continued to
accept cases referred to CIETAC in Shanghai and Shenzhen
respectively. This has led to considerable confusion as to which
institution is legally qualified to administer CIETAC arbitrations
in Shanghai and Shenzhen.
The "New" Institutions—A
Both of the former CIETAC sub-commisions have now rebranded
themselves, with Shanghai now being known as the Shanghai
International Arbitration Commission ("SHIAC") and the
slightly longer Shanghai International Economic and Trade
Arbitration Commission. Interestingly, its web site remains
www.cietac-sh.org. Shenzhen is now known as the South China
International Economic and Trade Arbitration Commission and the
Shenzhen Court of International Arbitration ("SCIA"), and
its web site also remains www.sccietac.org.
The SCIA launched new rules and a new panel of arbitrators on
December 1, 2012, and the SHIAC started using new arbitration rules
and a new panel of arbitrators on May 1, 2013.
Thus far, this seems to provide a solution to the confusion.
However, this is not necessarily the case because both the SHIAC
and the SCIA have said that they will continue to accept disputes
where the parties have agreed to arbitrate through CIETAC Shanghai
or CIETAC Shenzhen respectively.
It is unclear how CIETAC in Beijing will respond to this approach,
or whether there will continue to be debate over where proceedings
should be filed if the reference is simply to CIETAC. In this
regard, we have recently seen a number of cases—where the
arbitration clause specifies CIETAC as the institution and Shanghai
as the venue for the arbitration hearing—that have been
accepted by SHIAC and that have been disputed by CIETAC
Parties should also be aware that apart from SHIAC, there is a new
CIETAC sub-commission in Shanghai and the existing Shanghai
Arbitration Commission (and the same applies in Shenzen). This
complicates matters because where an arbitration agreement provides
for a dispute to be submitted to an arbitration institution at a
specific locality, and there are two or more institutions at that
locality, then the parties must agree on the selection of one of
the institutions. In the event that the parties cannot agree (which
is often the case in a dispute), then the arbitration agreement
will be invalid according to the interpretation of the Supreme
People's Court on Certain Issues Relating to the Application of
the Arbitration Law in 2006. This is a nightmare scenario!
Going forward, if you wish to have your disputes arbitrated before
CIETAC, then it is probably best to refer to CIETAC in Beijing, or
alternatively you can expressly refer to SHIAC or SCIA if you wish
to use one of the two "new" 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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