In the first part of this series, we outlined the key developments in Hong Kong arbitration leading into 2015. In this edition, we present some highlights for China arbitration.
CIETAC and BAC arbitration rules updated
Both the China International Economic and Trade Arbitration Commission (CIETAC) and the Beijing Arbitration Commission (BAC) have recently updated their arbitration rules (CIETAC and BAC). Both sets of rules have adopted a number of provisions from leading international arbitration rules, and are to be welcomed.
Two key changes are:
- both contain new or extended provisions dealing with the appointment of emergency arbitrators and joinder/consolidation of arbitrations; and
- in the case of CIETAC, special provisions for arbitrations administered by the CIETAC Hong Kong Arbitration Centre.
Click here for a detailed discussion of CIETAC’s new rules.
But…still a lack of clarity on the CIETAC-SHIAC/SCIA dispute
As has been widely reported, in 2012, CIETAC’s Shanghai and South China (Shenzhen) sub-commissions split off from CIETAC headquarters, to form the Shanghai International Arbitration Centre (SHIAC) and the Shenzhen Court of International Arbitration (SCIA) respectively. This led to conflicting court decisions over whether CIETAC or SHIAC/SCIA had jurisdiction where parties had agreed to arbitrate before CIETAC Shanghai and CIETAC South China/Shenzhen.
In the most recent development, on 31 December 2014, CIETAC has announced that it has reconstituted its Shanghai and South China sub-commissions. In theory, therefore, it is now possible for parties, once again, to have their disputes administered by CIETAC’s sub-commissions based in Shanghai and Shenzhen.
However, on the same day, the Shanghai No.2 Intermediate People’s Court confirmed1 that SHIAC, instead of CIETAC, had jurisdiction over a dispute arising from a 2010 contract where the parties had agreed to arbitrate before the “CIETAC Shanghai sub-commission”. Earlier this month, SCIA also published a decision2 by the Shenzhen Intermediate People’s Court confirming that SCIA had jurisdiction where parties agreed to refer arbitration to the “CIETAC South China sub-commission”. There is reason to believe that these decisions may have been endorsed3 by the highest court in China, the Supreme People’s Court (SPC), in which case it suggests that the ongoing confusion continues.
For the time being, parties who agree to CIETAC arbitration should continue to avoid designating CIETAC Shanghai/South China sub-commission in their contracts.
Opening the door to ICC arbitrations seated in China?
Historically, foreign parties have been cautious about agreeing to arbitration in China under the auspices of a foreign arbitral institution, such as the ICC. This is due to certain perceived restrictions under the PRC Arbitration Law.
However, the recently published Longlide decision4 by the SPC sends a positive signal that foreign arbitral institutions (such as the ICC) may be permitted to administer arbitrations seated in China. In Longlide, the SPC upheld the validity of an arbitration agreement that provided for ICC arbitration in Shanghai.
However, the Longlide decision does not answer what is arguably the more significant question as to how such an award can be enforced in China5. Therefore, whether the Longlide decision truly opens the floodgates to foreign arbitral institutions administering arbitrations in China remains to be seen.
For present purposes, our recommendation remains that parties should avoid specifying a foreign arbitral institution to administer arbitrations in China.