CIETAC Hong Kong Arbitration Centre Opens

On 24 September 2012, CIETAC opened its new sub-commission in Hong Kong, the CIETAC Hong Kong Arbitration Centre. This is the first arbitration centre set up by CIETAC outside Mainland China. CIETAC's headquarters are in Beijing and its other sub-commissions are in Shenzhen, Shanghai, Tianjin and Chongqing (respectively known as the CIETAC South China Sub-Commission, Shanghai Sub-Commission, Tianjin International Economic Financial Arbitration Centre (Tianjin Sub-Commission) and Southwest Sub-Commission).

The establishment of the CIETAC Hong Kong Arbitration Centre was motivated by the fact that a large number of arbitrations handled by CIETAC involve parties in Hong Kong. In many of these cases, the parties to the foreign contract would prefer to have their disputes resolved in Hong Kong, taking advantage of its well-established arbitration system (including the new, user-friendly and comprehensive Arbitration Ordinance (Cap. 609), which came into effect 1 June 2011), its proximity with the procedural jurisdiction of the dispute ["就近管理案件程序"] and the various choices of arbitration services available in Hong Kong.

It is understood that the CIETAC Hong Kong Arbitration Centre will soon publish its rules, which will be based on the CIETAC Rules, with adaptations to suit the local practice, including fee scale. It will be interesting to see whether an award issued by the CIETAC Hong Kong Arbitration Centre will be regarded by the PRC Courts as a Hong Kong or PRC award.

There has been continued controversy between CIETAC and its sub-commissions in Shenzhen and Shanghai in relation to the latters' attempt to set up their own commission. As a consequence, on 1 August 2012, CIETAC made a public statement that it was suspending its authorisation to the two sub-commissions for accepting and administering arbitrations, thereby casting doubt on the enforceability of arbitral awards obtained from those sub-commissions. The implications of this remain to be seen. If one opts for a CIETAC administered arbitration, it appears that one should refrain from naming a particular sub-commission under CIETAC in the arbitration agreement in order to avoid the risk of the arbitral award obtained being adjudged unenforceable by the courts in the PRC.

The opening of the CIETAC Hong Kong Arbitration Centre will no doubt further enhance Hong Kong's position as a leading international arbitration venue.

Key Contacts

Kwok Kit (KK) Cheung

Partner | Litigation and Dispute Resolution

Email or call +852 2825 9427