China: Guangdong DOJ Wades Into The Fray By Demanding That CIETAC Cease "Illegal Arbitration Activities" In Guangdong


On July 15, 2015, the PRC Supreme People's Court (SPC) issued an interpretation clarifying various jurisdictional issues arising from the mid-2012 decision of the former South China and Shanghai Sub-Commissions of the China International Economic and Trade Arbitration Commission (CIETAC) to become independent arbitration commissions.1 Commentators had hoped that the SPC's interpretation had put to rest many of the thorny jurisdictional issues arising from the CIETAC split. In August 2015, however, the Guangdong Provincial Department of Justice (the "Guangdong DOJ") issued a letter to CIETAC demanding that it immediately cease the "illegal arbitration activities" of its newly formed sub-commission in Guangdong under the names of "CIETAC South China Sub-Commission" and "CIETAC Shenzhen Branch." CIETAC has denied that it is operating illegally in Guangdong and has asserted that its sub-commission is merely acting on its behalf. This development adds yet another twist to the long-running disputes and uncertainties flowing from the CIETAC split.


Today, there are more than 200 arbitration commissions in China, which administer over one hundred thousand cases every year. PRC law requires that PRC-seated arbitrations be administered by registered PRC arbitration commissions and does not recognize ad hoc arbitration. Article 3 of the Interim Measures for Registration of Arbitration Commissions stipulates that the establishment of an arbitration commission must be registered with the government authority responsible for registration; if the establishment of an arbitration commission is not registered, any arbitral awards rendered by such commission shall not be legally binding. Article 10 of the PRC Arbitration Law provides that registration of arbitration institutions is the responsibility of judicial administration offices at the provincial, autonomous regional or directly administered municipal level.

CIETAC was one of the first arbitration commissions to be established in China in the late 1950s. Today, CIETAC is the most well-established and commonly used arbitration commission in the PRC. CIETAC is headquartered in Beijing. By 2012, CIETAC had established numerous sub-commissions throughout China, including the South China Sub-Commission in Shenzhen, the Shanghai Sub-Commission, the Tianjin Sub-Commission and the Southwest Sub-Commission in Chongqing.2

In mid-2012, however, the Shanghai and South China Sub-Commissions very publicly declared their independence from CIETAC and became independent arbitration commissions. In late 2012, the former South China Sub-Commission changed its name to the South China International Economic and Trade Arbitration Commission/Shenzhen Court of International Arbitration (SCIA). In April 2013, the former Shanghai Sub-Commission followed suit and changed its name to the Shanghai International Economic and Trade Arbitration Commission/Shanghai International Arbitration Center (SHIAC). In response to the secession of the former South China and Shanghai Sub-Commissions, CIETAC announced the establishment of new sub-commissions in both Shenzhen and Shanghai on December 31, 2014.3

The secession of the former South China and Shanghai Sub-Commissions and the establishment by CIETAC of new sub-commissions in Shenzhen and Shanghai raised difficult jurisdictional and procedural questions and resulted in significant uncertainty about the validity of arbitral awards issued by both the new and old sub-commissions in Shenzhen and Shanghai. On July 15, 2015, the SPC sought to resolve that uncertainty by issuing a judicial interpretation regarding arbitration agreements providing for submission of disputes to either the CIETAC South China Sub-Commission or the CIETAC Shanghai Sub-Commission (the "Reply"). In the Reply, the SPC confirmed that, if an arbitration agreement provides for reference of disputes to "CIETAC Shanghai Sub-Commission" or "CIETAC South China Sub-Commission," parties should:

  • Refer such disputes to SCIA or SHIAC if the arbitration agreement was concluded before the name change to SCIA or SHIAC (as appropriate); or
  • Refer such disputes to the relevant new CIETAC Sub-Commission if the arbitration agreement was concluded after the name change to SCIA or SHIAC (as appropriate).4

 The Reply, which came into effect on July 17, 2015, has de facto precedential effect and is binding upon courts of all levels throughout the PRC.

Many thought that the guidance provided by the Reply would put to rest the core jurisdictional uncertainty flowing from the CIETAC split. The conflict that has arisen between CIETAC and the Guangdong DOJ suggests that this may not quite be the case.


The Guangdong DOJ is the provincial governmental department responsible for judicial and administrative matters in Guangdong Province, including the registration of arbitration commissions. In August 2014, the Guangdong DOJ published a notice on its website stating that the PRC Arbitration Law and other regulations require that any arbitration commission must be registered with its local government department of judicial administration (the "August 2014 Notice").5 In its August 2014 Notice, the Guangdong DOJ asserted that, if an arbitration commission fails to register as required, any arbitral awards that it renders shall not be legally binding. The Guangdong DOJ appended to the August 2014 Notice a list of the 13 arbitration commissions (or their branches) that were registered to operate in Guangdong Province, including the SCIA.

It appears that—despite CIETAC's announcement of its new sub-commission's establishment in December 2014—CIETAC did not register its new sub-commission as an arbitration commission with the Guangdong DOJ. Likely due to strong local support for the SCIA, this failure to register the new sub-commission became a source of conflict between CIETAC and the Guangdong DOJ that became public in August 2015. On August 3, 2015, the Guangdong DOJ issued a letter to CIETAC, which was leaked to the media (the "August 3, 2015 Letter"). In the August 3, 2015 Letter, the Guangdong DOJ asserted that CIETAC had not registered its new South China Sub-Commission as an arbitration commission in Guangdong.6 The August 3, 2015 Letter also stated that the Guangdong DOJ had received complaints that CIETAC has been conducting arbitrations in Guangdong under the names "CIETAC South China Sub-Commission" and "CIETAC Shenzhen Branch," which remain registered names associated with the breakaway SCIA. The Guangdong DOJ demanded that CIETAC immediately cease its "illegal arbitration activities" in Guangdong.

In response, CIETAC issued a robust reply to the Guangdong DOJ on August 12, 2015, in which it denied violating any PRC laws and regulations, and demanded that the Guangdong DOJ withdraw its August 3, 2015 Letter. CIETAC asserted that its sub-commissions act on behalf of CIETAC, which is a registered arbitration commission approved by the PRC State Council. CIETAC further asserted that its sub-commissions function as branch offices that accept applications, and that arbitral awards are always issued in the name of CIETAC itself, not in the name of the new CIETAC South China Sub-Commission.7 This characterization is in accordance with the practice of CIETAC's headquarters, which is to affix its seal to all awards issued in PRC-seated arbitrations.


Although commentators had hoped that the recent Reply issued by the SPC would eliminate jurisdictional uncertainties arising from the CIETAC split going forward, the Guangdong DOJ's August 3, 2015 Letter has the potential to bring into question the validity of awards issued in respect of disputes referred to CIETAC's new South China Sub-Commission. It is conceivable that losing parties in arbitration may seek to use the Guangdong DOJ's declaration that CIETAC's new South China Sub-Commission is improperly registered as a basis for seeking to set aside or challenging enforcement of arbitral awards in respect of disputes submitted to CIETAC's new South China Sub-Commission. While no awards have yet been set aside or refused enforcement in Guangdong for this reason, the August 3, 2015 Letter may encourage losing parties to raise opportunistic challenges to awards on the jurisdictional basis of improper registration.

Given that awards are issued in the name of CIETAC's headquarters, which is indisputably a registered arbitration commission, the risk of successful applications for set aside or challenges to enforcement should be low. The threat of successful challenges is most likely where set aside is sought or enforcement is challenged in Guangdong Province, where the courts are particularly likely to pay heed to the pronouncements of the Guangdong DOJ. The risk of a successful challenge is particularly great for awards issued in domestic arbitrations. The SPC has implemented a safeguard in respect of awards issued in foreign or foreign-related arbitrations in the form of a pre-reporting system. Before a Chinese court may set aside a foreign-related award or deny enforcement of a foreign or foreign-related award, the SPC conducts a review to pre-approve the lower court's decision in all cases.8 This safeguard does not, however, apply in respect of awards issued in domestic arbitrations.

Notably, this issue of improper registration of sub-commissions may potentially have implications for awards issued in arbitrations submitted not just to the new CIETAC South China Sub-Commission, but also to the new CIETAC Shanghai Sub-Commission. As Shanghai has not published a list of duly registered arbitration commissions, it is unclear whether CIETAC has registered its new Sub-Commission in Shanghai. The Justice Department of Shanghai has not taken an aggressive stance towards CIETAC's operations in Shanghai. However, if the new CIETAC Shanghai Sub-Commission is improperly registered or if it is not registered under the name "CIETAC Shanghai Sub-Commission," there is a risk that awards issued in arbitrations submitted to this Sub-Commission may face set aside and/or challenges to enforcement on the same ground of improper registration.


In sum, the Guangdong DOJ's August 3, 2015 Letter may encourage losing parties to lodge opportunistic challenges to awards for improper registration. Users of CIETAC's new South China Sub-Commission (and, potentially, its new Shanghai Sub-Commission) should be aware of the potential for opportunistic litigation. While set aside or refusal of enforcement may be unlikely, parties to arbitration agreements providing for PRC-seated arbitration to take place in Shenzhen or Shanghai are advised to take steps to avoid jurisdictional issues.

Parties wishing to avoid the risk of jurisdictional issues arising from the split of the former Shanghai and South China Sub-Commissions from CIETAC should consider avoiding entering arbitration agreements referring disputes to CIETAC's new South China or Shanghai Sub-Commissions. Parties may eliminate the risk and achieve the same practical outcome by specifying in their arbitration agreements that disputes shall be submitted to CIETAC headquarters in Beijing for administration, with hearings to take place in Shenzhen or Shanghai (as appropriate). Alternatively, should administration in Shenzhen or Shanghai be favored, parties may agree that disputes shall be submitted to SCIA or SHIAC (as appropriate). Parties are advised to avoid using potentially problematic names such as "China International Economic and Trade Arbitration Commission South China Sub-Commission" or "China International Economic and Trade Arbitration Commission Shenzhen Sub-Commission."


1 Morrison & Foerster Client Alert, SPC Issues Interpretation on Jurisdictional Issues Arising from CIETAC Split (Aug. 4, 2015),

2 Review of company records shows that CIETAC registered its Tianjin Sub-Commission (also known as the Tianjin International Economic and Financial Arbitration Center of CIETAC) and its Southwest Sub-Commission as companies (rather than public sector organizations) in 2008 and 2009, respectively.

3 See CIETAC Press Release, China International Economic and Trade Arbitration Commission Announcement On the Reorganization of CIETAC South China Sub-Commission and CIETAC Shanghai Sub-Commission (Dec. 31, 2014),

4 If the administering arbitration commission is unclear or ill-defined, such as "the arbitration commission in Shenzhen," PRC courts may find the arbitration agreement to be invalid, as no specific arbitration commission is identified.

5 See August 2014 Notice, Notice of the Guangdong Provincial Department of Justice Regarding Registration of Establishment of Arbitration Commissions (Aug. 2014),

6 For the Chinese version of the August 3, 2015 Letter and a relevant news report in Chinese language, see

7 Article 2(3) of CIETAC Rules 2015 provides that "CIETAC is based in Beijing. It has sub-commissions or arbitration centers (Appendix I). The sub-commissions/arbitration centers are CIETAC's branches, which accept arbitration applications and administer arbitration cases with CIETAC's authorization."

8 See Article 2 of the SPC Notice on the Handling of Issues Concerning Foreign-Related Arbitration and Foreign Arbitration by People's Courts (in relation to refusal of enforcement of foreign or foreign-related awards) (as amended in 2008) and Articles 1 and 2 of the SPC Notice Regarding Matters Relating to People's Courts Setting Aside Foreign-Related Arbitral Awards (in relation to set aside of foreign-related awards).

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Timothy Blakely
Craig I. Celniker
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.