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CIETAC, SHIAC, SCIA: who will win?

Terence Wong

09 February 2015
Several controversial decisions made by the Chinese courts have attempted to address a lacuna left by the 2012/2013 breakaway of the CIETAC Shanghai and Shenzhen sub-commissions. However, recent developments at CIETAC indicate that CIETAC is unlikely to give up the fight for jurisdiction over such claims quite yet.

Read our 2013 ARBlog entry for the background on the breakaway sub-commissions here.  In essence, following a dispute with CIETAC Beijing, the CIETAC Shanghai and Shenzhen sub-commissions broke away and established themselves as independent arbitration institutions with their own sets of rules and procedures.  The breakaway sub-commissions were  re-established as the Shanghai International Economic and Trade Arbitration Commission (上海国际经济贸易仲裁委员会) or "SHIAC" (上海国际仲裁中心) and the South China International Economic and Trade Arbitration Commission (华南国际经济贸易仲裁委员会), also known as the Shenzhen Court of International Arbitration or SCIA (深圳国际仲裁院).

The Court rulings

On 31 December 2014, the Shanghai No.2 Intermediate People's Court handed down a decision¹ confirming that the newly established SHIAC had jurisdiction to arbitrate a case that had named the CIETAC Shanghai sub-commission in the salient arbitration clause.  The Court found that the case should be heard at SHIAC rather than CIETAC Beijing, and recognized the legitimacy of SHIAC's establishment.  An English summary of the decision can be found here.

Further, according to the SHIAC website, a series of 12 rulings addressing the same issue was subsequently handed down by the Shanghai No.2 Intermediate Court, on 8 and 9 January 2015.

On 6 January, the Guangdong Shenzhen Intermediate People's Court made a similar ruling, finding that the newly established SCIA had the power to arbitrate a case that named the CIETAC Shenzhen sub-commission in its arbitration clause.

Guidance from above

In 2013, the Supreme People's Court (China's highest court)("SPC"), issued a notice that required all disputes concerning jurisdiction due to the split of the CIETAC sub-commissions to be referred up to the SPC for its formal response.

The December decision in respect of SHIAC made reference to the 2013 notice but made no express mention of a formal response.  However, a reply from the SPC to the Guangdong Provincial High Court has been published, confirming inter alia that SCIA is "an arbitration body established according to law and therefore has the right to accept cases and make awards according to arbitration agreement between and by the parties thereto. The claim that SCIA has no arbitration power and its award should not be enforced, which is filed by Zhaoqing Guolian Metal Products Co., Ltd., is groundless".

These decisions are surprising as they effectively handed jurisdiction over a dispute that named a CIETAC sub-commission in its arbitration clause to an arbitration institution with no current affiliation to CIETAC.  However, while we can be certain that SHIAC and SIAC are now definitively recognized as properly established arbitral institutions empowered to render award, it is not yet clear that these rulings would apply in all cases, in particular given the reorganization of the new CIETAC Shanghai and Shenzhen sub-commissions (see below).

CIETAC fights back

In direct contradiction to the Court's approach, CIETAC has taken steps to re-claim jurisdiction:

The latest revisions to the CIETAC Arbitration Rules, which were released in November and came into effect on 1 January 2015, address the issue of the breakaway sub-commissions (read our ARBlog entry here).  They introduced a new provision that "where the sub-commission/arbitration center agreed upon by the parties does not exist or its authorization has been terminated, or where the agreement is ambiguous, the Arbitration Court shall accept the arbitration application and administer the case. In the event of any dispute, a decision shall be made by CIETAC."

In addition, CIETAC issued an announcement on 31 December 2014, confirming that the reorganized CIETAC South China sub-commission and CIETAC Shanghai sub-commission shall administer the arbitration cases where the parties have agreed to submit disputes to CIETAC South China sub-commission and CIETAC Shanghai sub-commission for arbitration.  Furthermore, "Without CIETAC’s authorization, no other institutions shall have the right to accept or administer the afore-mentioned arbitration cases".

Conclusion

Despite the court rulings and the notice from the SPC, it seems that CIETAC in Beijing has not given up yet.  We will continue to monitor for further updates.

¹ Ni Laibao and Liu Donglian v Soudal Investments Limited

Terence Wong

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