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China – Breakaway Arbitral Centres Claim They Are “Independent” And Can Hear Cases.

23 February, 2013

 

 

The Chinese arbitration centres involved in a dispute with the country’s main international arbitration body have reiterated their independence and ability to hear cases


In a joint statement, the former Shanghai and Shenzhen offices of the China International Economic and Trade Arbitration Commission (CIETAC) said that announcements made by CIETAC had “no binding effect” and would not affect “the acceptance and management of cases or the normal operation”.

CIETAC banned its former offices from hearing cases in its name at the end of last year following a period of suspension. The two bodies declared themselves independent from CIETAC in May last year after disagreeing with changes to CIETAC’s arbitral rules. The former CIETAC Shenzhen office, or ‘sub-commission’, has since renamed itself the Shenzhen Court of International Arbitration and South China International Economic and Trade Arbitration Commission.

In its December statement, CIETAC said that the two sub-commissions could no longer use its name and logo to conduct future arbitration hearings. Parties who specify CIETAC Shanghai or South China as the relevant arbitral body in their contracts have been told to submit requests for arbitration directly to CIETAC. However, the two offices insist that parties can “continue to apply for arbitration … according to their arbitration agreements”.

“In order to respect the autonomy of the parties in selecting arbitration institutions and protect their legitimate rights and interests, CIETAC Shanghai and CIETAC South China, as independent arbitration institutions and subject to the Arbitration Law, will overcome all the improper disturbances from CIETAC, continue to accept and manage arbitration cases as agreed upon by the parties,” the statement said.

“The so-called Administrative Announcement has no binding effect on the CIETAC Shanghai, CIETAC South China and the parties, and will not affect the acceptance and management of cases or the normal operation,” it said.

Established in 1956, CIETAC is the best known centre in China for arbitrations with an international element. It administered over 1,000 cases last year, and has offices in Chongqing and Tianjin as well as Beijing.

The dispute was prompted by changes to CIETAC’s arbitration rules, which came into force on 1 May. Under changes to Article 2 of the rules sub-commissions became ‘branches’ of the body, with the power to accept and administer arbitrations “with CIETAC’s authorisation”. In the previous version of the rules, which took effect in 2005, sub-commissions were described as an integral part of CIETAC with the power to administer cases under the direction of their respective secretariats.

The two breakaway bodies insisted in their statement that they were established as “independent arbitration institutions” under China’s Arbitration Law. Each was “sponsored, approved and organised”, by municipal governments in Shanghai and Shenzhen respectively, in the 1980s, according to the statement.

In 1994, CIETAC took on responsibility for the maintenance of integrated panel lists of arbitrators and began making joint arbitration rules, according to the statement. However, this work was carried out in order to “jointly promote the brand of China’s foreign-related arbitration”, it said. When it “unilaterally” changed the rules, CIETAC “[broke] the foundation of business cooperation among the three institutions”, the statement said.

“By amending the arbitration rules and the articles of association, CIETAC has violated the principle of ‘party autonomy’ and damaged the legitimate rights and interests of the parties, in order to achieve its own self-centred interest,” the statement said.

For further information, please contact:
 
John Bishop, Partner, Pinsent Masons
 

 

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