PRC’s Supreme People’s Court Issues Guidance Regarding CIETAC Split.

8 September, 2015

 

In August 2012, the Shanghai and South China (Shenzhen) Sub-Commissions of CIETAC declared that they had separated from the CIETAC headquarters in Beijing. In response, CIETAC Beijing issued a notice stating that:-

 

As from 1 August 2012, CIETAC’s authorization to the CIETAC Shanghai Sub-Commission and CIETAC South China Sub-Commission for accepting and administering arbitration cases was suspended.

As from 1 August 2012, where parties have agreed to arbitrate their disputes by the CIETAC Shanghai Sub-Commission or CIETAC South China Sub-Commission, the parties shall submit their applications for arbitration to CIETAC and the CIETAC Secretariat shall accept such arbitration applications and administer such cases. Without CIETAC’s authorization, no institutions shall have the right to accept and administer the aforementioned arbitration cases.

 

When the CIETAC Secretariat accepts and administers the above-mentioned cases, unless otherwise agreed by the parties, for cases agreed to be arbitrated by the CIETAC Shanghai Sub-Commission, the place of arbitration and the place of oral hearing shall be Shanghai; for cases agreed to be arbitrated by the CIETAC South China Sub-Commission, the place of arbitration and place of oral hearing shall be Shenzhen.

 

The South China Sub-Commission changed its name (on 22 October 2012) to the Shenzhen Court of International Arbitration (SCIA) and the Shanghai Sub-Commission changed its name (on 8 April 2013) to the Shanghai International Arbitration Commission (SHIAC).

 

As a result of the above, there was confusion in relation to the validity of arbitration agreements referring to the two former Sub-Commissions as the administering institution and whether the PRC or overseas Courts would recognise arbitration awards rendered by SHIAC or SCIA.

 

On 15 July 2015, the PRC Supreme People’s Court issued guidance to clarify the position where parties have agreed to submit their disputes to “CIETAC Shanghai sub-commission” or “CIETAC South China sub-commission” (“Reply of the SPC to the questions of Shanghai Higher People’s Court etc on Judicial Review over Arbitral Award of CIETAC and its original sub-commissions” )(the Reply), as follows:-

 

1.  What is the position where the arbitration agreement designates either CIETAC South China Sub-Commission” or CIETAC Shanghai Sub-Commission” as the administering institution?

 

Either SHIAC or SCIA, as the case may be, will have jurisdiction over the dispute, if the arbitration agreement was made before the Sub-Commissions changed their respective names.  

 

CIETAC will have jurisdiction over the dispute if the arbitration agreement was made (i) on or after the sub-commission changed its name and (ii) prior to the effective date of the Reply (i.e. 17 July 2015). However, if one party files an arbitration at SHIAC or SCIA and the other party did not raise any objection to SHIAC’s or SCIA’s jurisdiction (as the case may be) during the arbitral proceedings, then any application to set aside the award or resist its enforcement based on SHIAC’s or SCIA’s lack of jurisdiction would not be supported by the PRC People’s Courts.

 

CIETAC will have jurisdiction over the dispute if the arbitration agreement was made on or after the effective date of the Reply (17 July 2015) and designates “CIETAC South China Sub-Commission” or CIETAC Shanghai Sub-Commission” as the administering institution.

 

2.  What is the position in respect of cases already accepted by CIETAC, SHIAC or SCIA before the Reply i.e. before 17 July 2015?

 

Where CIETAC, SHIAC or SCIA has accepted a case before 17 July 2015, without complying with (a) to (c) above, the PRC People’s Courts will not support an application to set aside an award or resist its enforcement on the basis of lack of jurisdiction of the arbitral institution in question.

 

3.  Court  Assistance 

 

The Reply clarifies that the court will accept a Respondent’s application to determine the validity of an arbitration agreement (in view of the CIETAC split) even after the relevant arbitration commission has confirmed its validity and decided on jurisdiction, provided the Respondent makes such application before the first arbitral hearing. 

 

The long awaited clarification of the Supreme People’s Court is welcomed. However, parties seeking to enforce PRC arbitral award should note that in order to enforce a PRC arbitral award in Hong Kong relying on the arrangement for reciprocal recognition and enforcement of PRC arbitral awards in Hong Kong, the award must be rendered by recognised arbitration commissions in Mainland China. The list of recognised arbitration commissions have yet to be updated to include SHIAC and SCIA. Unless the Hong Kong Court accepts that SHIAC and SCIA are the predecessors of CIETAC Shanghai and South China Sub-Commissions respectively, the applicant will need to rely on section 84 of the Arbitration Ordinance which empowers the Court to enforce awards made in or outside Hong Kong generally.