Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

Thursday, July 4, 2013

Another shoe drops in the Chinese arbitration mess

Some readers may know that the Chinese international arbitration system is in a confused mess following the declarations of independence from CIETAC of its Shanghai and Shenzhen branches. (The whole thing is admirably summarized in this May 2013 post from the China Law Blog.) The basic problem is whether courts will recognize and enforce awards from the now independent Shanghai and Shenzhen entities. A Suzhou court has said no - but on the grounds that Shanghai entity that conducted the arbitration, having declared independence from CIETAC, wasn't the arbitration body the parties had agreed to. There still remains an unanswered question: since China doesn't recognize ad hoc arbitration, it's still not clear whether an unambiguous agreement on arbitration at one of the new entities will be uniformly enforced. Will courts recognize them as properly authorized arbitration organs? A Shenzhen court has said yes (see the linked report above), but other courts don't have to follow suit.

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It illustrates beautifully the hazard of advising foreign clients to arbitrate in Mainland China. Totally unreliable system. If in doubt, avoid it.

Posted by: Frankie Fook-lun Leung | Jul 9, 2013 9:39:57 AM

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