SCIA AND SAC ARBITRATION INSTITUTIONS MERGE TO FORM NEW ARBITRATION CENTRE IN SHENZHEN

On 8 January 2018, the South China International Economic and Trade Arbitration Commission, also known as the Shenzhen Court of International Arbitration (SCIETAC/SCIA) and the Shenzhen Arbitration Commission (SAC) announced that they have merged to form one arbitration institution known as the "Shenzhen Court of International Arbitration (Shenzhen Arbitration Commission)" (SCIA-SAC). The merger took effect 25 December 2017.

It is the first time that two international arbitration centres have merged in China. The SCIA-SAC merger reflects the institutions' joint ambition to become a leading international arbitration centre, and their common goal of facilitating Chinese outbound investment.

Background

While the SAC was established by the Shenzhen government in 1995, SCIETAC/SCIA was originally established by CIETAC, which is headquartered in Beijing. On 22 October 2012, CIETAC's South China (Shenzhen) sub-commission declared independence from CIETAC, and re-branded itself SCIETAC/SCIA. It enacted its own arbitration rules and panel of arbitrators. CIETAC subsequently relaunched its Shenzhen sub-commission, with different premises and personnel.

Following this "CIETAC split", there was a period of uncertainty regarding the validity of arbitration agreements that referred to "CIETAC Shenzhen", including which institution would have jurisdiction over any dispute that arose. On 15 July 2015, the Supreme People's Court of the PRC (SPC) issued a binding judicial interpretation, to clarify the jurisdictional issues that arose from the CIETAC split. The interpretation stipulated which disputes would remain within the jurisdiction of CIETAC, and which would be referred to SCIETAC/SCIA:

• arbitration agreements concluded on or before 22 October 2012 that refer to disputes to CIETAC Shenzhen or CIETAC South China: SCIETAC/SCIA will have jurisdiction over the dispute;
• arbitration agreements concluded on or after 23 October 2012 and before 16 July 2015 that refer disputes to CIETAC Shenzhen or CIETAC South China: CIETAC Beijing will have jurisdiction over the dispute;
• arbitration agreements concluded on or after 17 July 2015 that refer to CIETAC Shenzhen or CIETAC South China, CIETAC Shenzhen will have jurisdiction over the dispute.

(See our post of 17 July 2015)

Effect of the Merger  

The newly merged SCIA-SAC will have jurisdiction over disputes submitted under arbitration agreements that refer to any of the following institutions:

Which institution will have jurisdiction?

• SCIA-SAC;
• SCIETAC/SCIA;
• CIETAC Shenzhen or CIETAC South China, provided the arbitration agreement was concluded before 22 October 2012; and
• SAC

Arbitration agreements concluded on or after 23 October 2012 that refer to CIETAC Shenzhen or South China will continue to be referred to CIETAC Beijing or CIETAC Shenzhen, as the case may be.

Which rules will apply?

Pending the enactment of SCIA-SAC's own rules, the newly-merged institution will continue to apply the arbitration rules of the institution designated in the arbitration agreement. Likewise, it will appoint arbitrators from that institution's panel.

The position is summarised below.

The SCIA-SAC Council has indicated that it will take "further decisions on the application of arbitration rules or panel of arbitrators and other relevant issues" relating to the newly formed SCIA-SAC centre. We will continue to monitor this development and update readers accordingly.