Internal CEITAC Dispute Causes Confusion

             My May 18, 2012 post covered the new procedural rules of CEITAC, which went into effect on May 1, 2012.  Since then, a dispute has arisen between the head office of CEITAC and its Shanghai Sub-commission and its South China Sub-commission (earlier known as the Shenzhen Sub-Commission).  Last month the head office of CEITAC announced that because these two sub-commissions have not abided by the new rules, they are not permitted to take on or administer any CEITAC arbitrations.  The disputes are to be submitted instead to the CEITAC secretariat for it to administer.  The arbitration hearings will still take place in Shanghai and Shenzhen, as per the parties’ arbitration agreement.

It is said that the sub-commissions have taken exception to a new rule that says that where the arbitration agreement does not clearly specify the sub-commission, the choice of sub-commission will be made by the CEITAC secretariat.   The previous rule said it is the party commencing the arbitration who makes that decision.  

The sub-commissions have stated that they will continue to accept disputes for arbitration, and have established their own rules.  However, parties whose arbitration clauses require a CEITAC arbitration must consider whether arbitration by one of these sub-commissions absent CEITAC approval might undermine the validity and enforceability of the award.