Chinese breakaway arbitration centres banned by CIETAC from hearing cases

The China International Economic and Trade Arbitration Commission (CIETAC) said in a statement that the Shanghai and South China offices, or 'sub-commissions', had acted "without any legal basis" when they declared themselves independent from the central body.

"Authorisation to the CIETAC Shanghai Sub-Commission and the CIETAC South China Sub-Commission for accepting and administering arbitration cases is hereby terminated," CIETAC said.

The two breakaway sub-commissions have also been banned from using the CIETAC name and logo to conduct future arbitration committees. Parties who specify CIETAC Shanghai or South China as the relevant arbitral body in their contracts have been told to submit requests for arbitration to CIETAC. Cases will be heard in Shanghai or Shenzhen respectively "unless otherwise agreed by the parties", CIETAC said.

The announcement follows CIETAC's decision in August to suspend Shanghai and South China's authorisation to hear cases.

Established in 1956, CIETAC is the best known arbitration centre in China for arbitrations with an international element, with 1.282 cases administered in 2011. In addition to the Shanghai and South China sub-commissions, the latter of which is based in Shenzhen, it also has offices in Chongqing and Tianjin.

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 directive of their respective secretariats.

According to CIETAC, the breakaway submissions had "decided without authorisation not to accept the lawfully revised" rules, which were published after extensive consultation. They declared themselves "independent arbitration commissions" with their own arbitration rules and panels of arbitrators, and "refused to remain under the leadership of CIETAC", the body said.

The South China sub-commission had also "changed its name without authorisation and lawful procedure", CIETAC said. It has set itself up as the Shenzhen Court of International Arbitration and South China International Economic and Trade Arbitration Commission, and has dropped all references to being a CIETAC sub-commission.

CIETAC said that cases accepted and administered by the two sub-commissions before their suspension on 1 August 2012 could be concluded "in accordance with the CIETAC Arbitration Rules and under the uniform leadership of CIETAC".