SPECIAL ALERT: A Big Battle among China Most Important Arbitration Institution ‘CIETAC’

The China International Economic and Trade Arbitration Commission (CIETAC) is not only the most important Arbitration Commission in China, but also a leading arbitration institution in whole Asia. Moreover, it is considered one of the biggest permanent arbitration institutions in the world dealing not only with domestic cases, but also with international and foreign-related ones.

CIETAC´s headquarter is in Beijing with branches formed by sub-commissions around mainland China.

Early this year, CIATEC modified its Arbitration Rules which has brought some criticism and disapproval within its branches. On this regard, two of CIETAC´s Sub-Commissions, Shanghai and South China (Shenzhen), have refused to adopt the new 2012 CIETAC Arbitration Rules and have declared themselves independent arbitral institutions with a separate committee and regulation different from CIETAC’s. Additionally, the Sub-Commission of Tianjin has also refused to apply the new rules although has not declared its independency from CIETAC yet[i].

At the moment, both Shanghai and Shenzhen Sub-Commissions are not recognized by CIETAC as legitimate forums and the authorization to accept and administrate arbitration cases has been revoked.

Therefore, it is advisable that in any arbitration clause where CIETAC has been chosen as the arbitration institution to make clear where the parties wish the arbitration to take place (Shanghai, Shenzhen, Beijing, etc) as well as what set of rules (2005 CIETAC´s rules, 2012 CIETAC´s rules or any other) they agreed to be applied in case a controversy arises.

We recommend the parties of a contract where an arbitration clause refers to CIETAC to seek professional advice from your China law practitioner to discuss the impact of the current situation as well as to revise the terms and conditions of such clause[ii].

[i]China Briefing News, ´Dispute Resolution in China- The Disintegration of CIETAC´ (10 July 2010), http://tinyurl.com/br4m34a

[ii] CIETAC Statement (01 May 2012), available at: http://tinyurl.com/d87ttyq (last accessed 08 August 2012). See also, China Briefing News, ‘Shanghai and South China Sub-Commission declared independent from CIETAC’, available at: http://tinyurl.com/d4jbmhr (last accessed 08 August 2012).

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