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Joint Statement of CIETAC Shanghai Commission and CIETAC South China Commission on CIETAC’S Administrative Announcement
On August 1, 2012, the China International Economic and Trade Arbitration Commission (CIETAC) released the “Announcement on the Administration of Cases Agreed to be Arbitrated by CIETAC Shanghai Commission and CIETAC South China Commission” (the “Administrative Announcement”), saying that “as from 1 August 2012, CIETAC’s authorization to the CIETAC Shanghai Commission and CIETAC South China Commission for accepting and administering arbitration cases is hereby suspended” and that “as from 1 August 2012, where parties have agreed to arbitrate their disputes by the CIETAC Shanghai Commission or the CIETAC South China Commission (the CIETAC Shenzhen 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 afore-mentioned arbitration cases”. The Administrative Announcement has caused unnecessary confusion to and exerted negative influence on the public and the parties concerned, and the confusion and negative influence are inclined to spread. In order to fully respect the principle of “party autonomy” and effectively protect the legitimate rights and interests of the parties, CIETAC Shanghai Commission (CIETAC Shanghai) and CIETAC South China Commission (CIETAC South China) hereby make the following joint statement:
I Nature of CIETAC Shanghai and CIETAC South China
Both CIETAC Shanghai and CIETAC South China are independent arbitration institutions, which were sponsored, approved and organized by the Shanghai Municipal Government and the Shenzhen Municipal Government respectively, and are independent legal persons. Both institutions have completed their judicial registrations respectively with the Shanghai Municipal Bureau of Justice and Department of Justice of Guangdong Province according to the Arbitration Law of the People’s Republic of China (the “Arbitration Law”).
During the early years of reform and opening in the 1980s, in order to improve the investment and foreign trade environment and protect the legitimate rights and interests of domestic and foreign parties, the governments of Shenzhen and Shanghai respectively established arbitration institutions to deal with foreign-related arbitration cases. They cooperated with CCPIT in the business to jointly promote the brand of China’s foreign-related commercial arbitration. Nevertheless, as independent arbitration institutions, CIETAC Shanghai and CIETAC South China have been lawfully accepting and managing arbitration cases, and rendering arbitration awards in their own names. The intermediate and high people’s courts in the cities where the two arbitration institutions are located have been exercising judicial review power and the awards rendered by both institutions have been recognized and enforced by both domestic and foreign courts.
II Application of Arbitration Rules
In 1994, to jointly promote the brand of China’s foreign-related arbitration, CIETAC Shanghai, CIETAC South China and CIETAC integrated the panel lists of their arbitrators, consolidated their operations and jointly made the arbitration rules. From 2009, however, CIETAC unilaterally initiated the so-called “reform” by amending the arbitration rules and the articles of association, thus breaking the foundation of business cooperation among the three institutions. The core nature of the “reform” is to change the nature of CIETAC Shanghai and CIETAC South China and to revoke the independent jurisdiction of the two institutions over arbitration cases. 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-centered interest. Therefore, after consulting with the law society and industrial and commercial circles, CIETAC Shanghai and CIETAC South China expressed their clear objection to CIETAC on several occasions. However, CIETAC violated both the rules of procedure and voting mechanism and unilaterally forced the “adoption” of the 2012 arbitration rules and articles of association by way of “applause”. As the abovementioned amendment violated the relevant procedures and the Arbitration Law, as well as went contrary to the generally accepted practice of international commercial arbitration, CIETAC Shanghai and CIETAC South China did not recognize or use the 2012 arbitration rules and articles of association from the very beginning. In order to protect the legitimate rights and interests of domestic and foreign parties, at the second session of CIETAC Shanghai it was decided that all cases accepted by it after May 1, 2012 shall use its own new rules. Similarly, at the second session of CIETAC South China it was decided that, before the release of its own new rules, all the cases accepted by it after May 1, 2012 shall continue to use the existing 2005 arbitration rules. Meanwhile, CIETAC Shanghai and CIETAC South China decided that if the parties agreed to apply the rules of other arbitration institutions, CIETAC Shanghai and CIETAC South China would recognize and respect their choice accordingly.
III CIETAC’s So-called “Authorization” and its Nature
As is well known to all, the foundation of the arbitration system lies with the right of autonomous choice of the parties. The selection of an arbitration institution through negotiation is a fundamental right of the parties; the jurisdiction of an arbitration institution over arbitration cases originates from the agreement of the parties, it is also one of the basic principles of modern commercial arbitration. According to the Arbitration Law, as duly established arbitration institutions, the respective jurisdiction of CIETAC Shanghai and CIETAC South China come from the agreement of the parties, rather than the “authorization” from any other institutions, not to mention the so-called “suspension of authorization”. Nowhere in the Arbitration Law ever provides that an arbitration institution may grant so-called authorization with regard to jurisdiction over cases. However, CIETAC fabricated a theory of “authorization” and “suspension of authorization” in its Administration Announcement, trying to distort the selection of an arbitration institution already made by the parties. The action has harmed the rights and interests of the parties and is detrimental to the image of China’s arbitration institutions.
CIETAC violated Article 6 of the Arbitration Law which provides that “the arbitration commission shall be selected by agreement of the parties concerned”, and betrayed the basic principle of “party autonomy” in the arbitration system. By forcing the parties to apply for arbitration with CIETAC in Beijing in disregard of the arbitration agreements under which the parties have already selected CIETAC Shanghai or CIETAC South China as the arbitration institution, CIETAC has harmed the right of the parties to select a nearby arbitration institution at their own will. By forcing parties to go to Beijing, CIEATC has imposed higher costs on the parties, and thus deprived the parties of their right to seek judicial remedy with a court where their selected arbitration institution is located. All this brings great legal risks to the parties with respect to arbitration procedures, legality of the award and their substantive rights and interests.
As its non public-interest purpose cannot be realized through legal and normal means, CIETAC does not hesitate to infringe upon the legitimate rights and interests of the parties and to sacrifice public interest. Consequently, CIETAC pushed its conflict with its cooperative institutions to the society and gravely harms the interests of parties. By making the Administrative Announcement, CIETAC has further damaged the goodwill of China’s arbitration institutions and brought unstable factors to the economic and social development.
IV Statement on Acceptance and Management of Arbitration Cases
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 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. The parties can continue to apply for arbitration with CIETAC Shanghai and CIETAC South China according to their arbitration agreements.
As a product of China’s reform and opening and of the modernization process of arbitration, CIETAC Shanghai and CIETAC South China will, as always, by pushing aside all kinds of interference, give full respect to the autonomy of the parties, strictly adhere to the independent, fair and professional adjudication standards, and provide high-quality and efficient arbitration services to the parties. CIETAC Shanghai and CIETAC South China will stick to reform and innovation, and with the support from people in various circles and together with the arbitrators and other arbitration institutions, will continue to promote the modernization and globalization of China’s arbitration, improve the international image of China’s arbitration, and contribute to the constant improvement of rule of law and economic and social stability.
If you have any questions, please feel free to contact us by the information below:
CIETAC Shanghai
Tel: 86-21-6387 5588; Fax: 86-21-6387 7070
Email: info@cietac-sh.org
Address: 7/F, Jinling Mansion, No. 28, Jinling Road (W), Shanghai
Postcode: 200021.
CIETAC South China
Tel: 86-755-83501709，83501710；Fax:86-755-82468591
Email: info@sccietac.org
Address: 19/F, BOC Tower, No. 5015 Caitian Road, Futian District, Shenzhen
Postcode: 518026
China International Economic and Trade Arbitration Commission Shanghai Commission
China International Economic and Trade Arbitration Commission South China Commission (Shenzhen International Arbitration Court)
August 4, 2012
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