new changes for International Arbitration In China
1. Q: What are the new changes for International Arbitration in China?
A: Two principal sub-commissions of China International Economic and Trade Arbitration Commission (CIETAC), which are South China sub-commission( located in Shenzhen) and Shanghai sub-commission announced their independence from the parent institution respectively on October 22nd 2012 and April 18th 2013. The south-China officially renamed itself South China International Economic and Trade Arbitration Commission, also known as the Shenzhen Court of International Arbitration (SCIA) and Shanghai sub-commission changed its name as Shanghai International Economic and Trade Arbitration Commission/Shanghai International Arbitration Center (SHIAC).
2. Q: What cause such changes?
A: The reason of the secession of the two sub-commissions was the new set of arbitration rules which went into effect on May 1, 2012 (the 2012 Rules). According to the new rule, all arbitrations would be administered by the CIETAC headquarters in Beijing in the absence of an arbitration agreement which specifically named one of the sub-commissions as the arbitration administrator . However in previously, if the arbitration agreement simply stated that the dispute would be submitted to CIETAC or that the CIETAC rules would apply, the claimant was free to submit the case to one of the sub-commissions as well as CIETAC Beijing. The two sub-commissions were dissatisfied with such rule and questioned its legitimacy and declared themselves were no longer affiliated with CIETAC.
3. Q: What’s the CIETAC’s response to its sub-commissions secession?
A: CIETAC suspended its authorizations to the sub-commissions to accept and administer CIETAC arbitrations, directing all parties with agreements to arbitrate their disputes before CIETAC Shanghai or CIETAC Shenzhen to submit their cases to CIETAC headquarters for administration on August 1st, 2012. Additionally, CIETAC forbid CIETAC Shenzhen and Shanghai to continue in any way or form to use the name, brand and logo of CIETAC. It also reiterated that, where parties have agreed to arbitrate their disputes before CIETAC Shanghai or CIETAC Shenzhen, the parties should submit their requests for arbitration to the CIETAC Secretariat and that only CIETAC had the authority to accept and administer such cases, although Shanghai and Shenzhen could still serve as the geographic seat and venue of the arbitration.
4. Q: What’s the effect of such changes?
A: These changes will definitely cause a period of uncertainty and risk for the International Arbitration in China. And for the parties who have clauses which provide for arbitration to be administered by CIETAC Shanghai or CIETAC Shenzhen should consider amending such clauses to specify CIETAC Beijing as the arbitration administrator to remove any potential ambiguity which could render the clause invalid. Likewise, when negotiating a new arbitration clause, parties who wish to submit their disputes to CIETAC but want to conduct such arbitration in Shanghai or Shenzhen should explicitly state that CIETAC Beijing shall be the case administrator and that Shanghai or Shenzhen shall be the seat and venue of the arbitration.