After the Shanghai and South China sub-commissions split from
the China's arbitration institute CIETAC, there was uncertainty
about the interpretation and validity of existing arbitration
clauses referring to these sub-commissions. Two recent judgments
now clarify that if an arbitration clause refers to the Shanghai or
South China sub-commission, SHIAC or SCIA has jurisdiction instead
of CIETAC. Where parties have a preference for CIETAC as the
competent arbitration institute, we recommend exploring whether the
existing arbitration clause that refers to the Shanghai or the
South China sub-commission of CIETAC can be amended.
In 2013, the internal struggle within China's arbitration
institute CIETAC resulted in a split off by the Shanghai
sub-commission and the South China sub-commission in Shenzhen. The
Shanghai sub-commission changed its name to Shanghai International
Arbitration Centre (SHIAC), and the South China sub-commission to
Shenzhen Centre of International Arbitration (SCIA). CIETAC
established new offices in Shanghai and Shenzhen.
Since the split off, there has been uncertainty regarding the
interpretation of arbitration clauses agreed prior to the split off
and referring to the Shanghai or the South China sub-commission of
CIETAC. The question was whether disputes should be referred to the
Shanghai or Shenzhen office of CIETAC or to the newly formed
arbitration institutes (SHIAC or SCIA)? Judgments by local courts
led to different outcomes, creating uncertainty about the
enforceability of arbitral awards.
The Shanghai No. 2 Intermediate People's Court ruled
on 31 December 2014 that SHIAC was the competent arbitration
institute under an arbitration clause that referred disputes to the
CIETAC Shanghai sub-commission. One week later, on 6 January 2015,
the Shenzhen Intermediate People's Court ruled that an
arbitration clause referring to the South China sub-commission gave
jurisdiction to SCIA. Both recent judgments therefore resulted in
the same outcome: arbitration clauses referring to the Shanghai or
the South China sub-commission give jurisdiction to the new
arbitration institute and not to CIETAC.
On 4 September 2013, the Supreme People's Court issued a
notice instructing all local courts to first consult with the
Supreme People's Court before ruling on the competence of
CIETAC or its former sub-commission. This notice suggests that the
judgments of the Shanghai Court and the Shenzhen Court have been
Where parties have a specific preference for CIETAC as the
competent arbitration institute instead of SHIAC or SCIA, we
recommend reviewing existing arbitration clauses and exploring
whether clauses referring to either the Shanghai or the South China
sub-commission of CIETAC can be amended.
For new arbitration clauses, we recommend careful drafting and
using the model arbitration clauses provided by the relevant
arbitration institute. If the intention is to choose CIETAC as the
competent arbitration institute, the clause should appoint CIETAC
Beijing as the arbitration institute. Parties can subsequently
choose to have the seat of arbitration in Shanghai or Shenzhen.
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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Parties have agreed on the resolution themselves, so it is often more practical for their own particular circumstances.
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