How to resolve the CIETAC dispute: rebranding
April 26, 2013 | BY
clpstaffThe bitter dispute between CIETAC and its sub-commissions that has cast a shadow over dispute resolution in China may finally be over with the establishment of the Shanghai International Arbitration Centre
It has almost been a year since CIETAC's amended Arbitration Rules came into effect on May 1 2012. After those new Rules came out, the Shanghai sub-commission of CIETAC declared that it was an independent arbitration body and would follow its own rules and appoint its own panel of arbitrators.
The South China sub-commission in Shenzhen followed Shanghai, creating a public battle involving China's oldest arbitration institution. Financial gains, independence and objections to the amended Arbitration Rules were all given as reasons for the breakaway.
Following three months of announcements and counter-announcements, CIETAC Beijing suspended authorisation of both commissions. At the end of 2012, in an announcement dated December 31, it terminated this authorisation, forbidding the Shanghai and Shenzhen sub-commissions from using the CIETAC name and logo.
“It appears that, over this period, CIETAC Beijing also established its own sub-commissions in these cities, meaning that, for a time at least, there were in existence rival CIETAC sub-commissions in those locations, each claiming legitimacy and the support of different judicial bodies,” said Matthew Townsend of Fullbright & Jaworski in Beijing.
|SHIAC
According to an announcement on its website, as of April 11, the former CIETAC Shanghai sub-commission has rebranded and renamed itself as the Shanghai International Arbitration Centre (SHIAC). SHIAC will also be known as the Shanghai International Economic and Trade Arbitration Commission (SIETAC).
However, the abbreviation SIETAC is not formally in use, as it is thought to be too similar to CIETAC. “We have heard nothing to lead us to believe that this Shanghai International Economic and Trade Arbitration Commission entity is separate or distinct from the newly rebranded SHIAC,” Townsend told China Law & Practice.
SHIAC's own Arbitration Rules will enter into force on May 1, along with its panel of arbitrators. While CIETAC no longer has a sub-commission in Shanghai, it still has a secretariat that administers CIETAC cases.
“CIETAC may decide to take the brand CIETAC Shanghai sub-commission back entirely or to open a new sub-commission in Shanghai, especially as the name and brand is no longer an issue. Shanghai is an important market for CIETAC and it is foreseeable that they will make great efforts in it,” said Xu Guojian, a dispute resolution lawyer with Boss & Young in Shanghai.
The move by SHIAC mirrors steps taken by CIETAC's former Shenzhen commission, which has rebranded itself as the South China International Economic and Trade Arbitration Commission or Shenzhen Court of International Arbitration.
But the rebranded arbitration centre will be starting from scratch in terms of its credibility and reputation. “CIETAC is quite famous and has a long history with a solid reputation and client trust. SHIAC is really a totally new arbitration commission. It will take a lot of work to build up its reputation and that is a big challenge,” said Xu.
But SHIAC does have support. Shanghai is becoming more important in terms of world economics and the Shanghai Municipality has given its full support to the new centre. This will be advantageous considering that parties in Shanghai have three choices for their dispute resolution needs.
|Confusion remains
While many had hoped the announcement of the rebranded SHIAC had resolved the dispute, confusion remains as the centre's Arbitration Rules state that it will accept cases where parties have stipulated CIETAC Shanghai as the place of arbitration.
“Parties with arbitration clauses specifying administration by 'CIETAC Shanghai' will continue to fear for the certainty and finality of the arbitration process where there remain two entities – in this case CIETAC Beijing's new Shanghai sub-commission and the recently re-branded SHIAC – which each claim the right to administer the resulting arbitral proceedings” said Townsend.
This will prove problematic as one party may choose CIETAC and the other SHIAC, two different arbitration destinations. “Clients must be careful and ensure they are very clear on defining which arbitration institution they wish to administer arbitration,” said Xu.
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