05 December 2014

Client Question: Ensuring disputes are referred to CIETAC Beijing

Article written by Lily Ma

In the event that parties have agreed on a CIETAC arbitration clause without further specifying where disputes will be referred to, the arbitration will be administered by CIETAC Beijing. As a result of this change brought about by the 2012 CIETAC Rules,  CIETAC Shanghai and CIETAC South China have declared their independence from CIETAC and changed their names to the Shanghai International Arbitration Commission (“SHIAC”) and Shenzhen Court of International Arbitration (“SCIA”) respectively.

Chinese courts have since issued a number of inconsistent decisions on the enforceability of arbitration agreements and awards involving the Shenzhen and Shanghai bodies.

On 4 September 2013, the Supreme People’s Court (“SPC”) issued the Notice on Certain Issues Relating to Correct Handling of Judicial Review of Arbitration Matters” (“4 September Notice”). The 4 September Notice requires that a lower court must report an intended decision relating to the CIETAC schism to all levels of court between it and the SPC before issuing a ruling.

The lower courts should not make any rulings until the SPC has given its opinion. It remains to be seen how the SPC may rule on a pre-split arbitration agreement providing for CIETAC arbitration and the enforcement of an arbitral award based on such agreement.

So far the Chinese courts have generally adopted a pro-enforcement approach and have upheld the validity of the arbitration agreement and the enforceability of awards issued by CIETAC’s former sub-commissions.

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