Arbitration Awards Made By The Shanghai And Shenzhen Subcommissions May Not Be Enforceable

On August 1, 2012, the China International Economic and Trade Arbitration Commission ("CIETAC") issued an announcement suspending its Shanghai and Shenzhen subcommissions. Subsequently, the Shanghai and Shenzhen subcommissions jointly declared their independence of CIETAC and further stated that the CIETAC announcement did not bind them. This situation represents an escalation of a dispute between CIETAC and its Shanghai and Shenzhen subcommissions that began earlier this year. As a result, arbitration awards made by the Shanghai and Shenzhen subcommissions after August 1, 2012, and potentially earlier, may not be enforceable.

Background

CIETAC is a private association providing arbitration services mainly to companies engaged in cross-border business. It is the most commonly used arbitration commission in China. CIETAC was originally founded in 1956 with its headquarters in Beijing and later set up four subcommissions in Shenzhen (established in 1989), Shanghai