On July 15, 2015, the PRC Supreme People’s Court (SPC) issued an interpretation clarifying various jurisdictional issues arising from the mid-2012 decision of the former South China and Shanghai Sub-Commissions of the China International Economic and Trade Arbitration Commission (CIETAC) to become independent arbitration commissions. Commentators had hoped that the SPC’s interpretation had put to rest many of the thorny jurisdictional issues arising from the CIETAC split. In August 2015, however, the Guangdong Provincial Department of Justice (the “Guangdong DOJ”) issued a letter to CIETAC demanding that it immediately cease the “illegal arbitration activities” of its newly formed sub-commission in Guangdong under the names of “CIETAC South China Sub-Commission” and “CIETAC Shenzhen Branch.” CIETAC has denied that it is operating illegally in Guangdong and has asserted that its sub-commission is merely acting on its behalf. This development adds yet another twist to the long-running disputes and uncertainties flowing from the CIETAC split.

BACKGROUND TO THE CIETAC SPLIT -

Today, there are more than 200 arbitration commissions in China, which administer over one hundred thousand cases every year. PRC law requires that PRC-seated arbitrations be administered by registered PRC arbitration commissions and does not recognize ad hoc arbitration. Article 3 of the Interim Measures for Registration of Arbitration Commissions stipulates that the establishment of an arbitration commission must be registered with the government authority responsible for registration; if the establishment of an arbitration commission is not registered, any arbitral awards rendered by such commission shall not be legally binding. Article 10 of the PRC Arbitration Law provides that registration of arbitration institutions is the responsibility of judicial administration offices at the provincial, autonomous regional or directly administered municipal level.