CIETAC declares CIETAC Shanghai and Shenzhen no longer CIETAC Beijing sub-commissions

After three months, and significant speculation, CIETAC Beijing has made an official announcement addressing the decision by its Shanghai and South China (Shenzhen) sub-commissions to split from the Beijing headquarters. 

CIETAC has declared that, effective 1 August 2012, it has suspended authorisation to the Shanghai and South China sub-commissions to accept and administer arbitrations. 

CIETAC Beijing also said that parties who have agreed to arbitrate before the CIETAC Shanghai or CIETAC South China sub-commissions are now required to submit their disputes to CIETAC Beijing, which will administer them.  The seat and hearing of these arbitrations will be in Shanghai or Shenzhen, as applicable (unless the parties agree otherwise).

CIETAC Beijing's announcement is significant. The sub-commissions in Shanghai and Shenzhen effectively no longer exist as official CIETAC entities (and therefore have no official status in China as arbitration commissions).  Consequently, there is a real risk that arbitration clauses, or new arbitration proceedings, referring disputes to CIETAC Shanghai or Shenzhen could be subject to challenge. (Parties can still conduct hearings in any location they choose, including Shanghai or Shenzhen.)

In light of this development, and absent further guidance from CIETAC Beijing or the PRC courts, it is essential that parties who draft clauses referring disputes to CIETAC clearly and expressly refer disputes to CIETAC Beijing.  Parties whose existing clauses refer to CIETAC Shanghai or CIETAC South China/Shenzhen should make sure they take legal advice before commencing arbitration under the clause.

Despite the latest development in respect of CIETAC Shanghai and Shenzhen, CIETAC Chongqing and CIETAC Tianjin remain official sub-commissions of CIETAC Beijing.