China’s Supreme Court Talks about Recognition and Enforcement of Foreign Arbitral Awards in China

Du Guodong
Sep 4, 2018 · 4 min read

Judge Gao Xiaoli (高晓力), Deputy Director of China’s Supreme People’s Court (SPC)’s 4th Civil Division, wrote an article titled “The Positive Practice by Chinese Courts in Recognizing and Enforcing Foreign Arbitral Awards” (中国法院承认和执行外国仲裁裁决的积极实践). She summarizes the practices by Chinese courts in the recognition and enforcement of foreign arbitral awards, and demonstrates the SPC’s attitude towards certain relevant issues.

1.Background

(1) China recognizes and enforces foreign arbitral awards in accordance with the New York Convention, or the principle of reciprocity (in case of applications by parties from non-Contracting State).

(2) Definition of “Foreign Arbitration Award” by Chinese Courts. The nationality of the arbitral award should be consistent with “the seat of the arbitration”, rather than with the nationality of the arbitral institution.

(3) The SPC is studying how to recognize and enforce arbitration awards related to investment disputes.

(4) The SPC attempts to recognize foreign arbitral awards as far as possible.

2. How do Chinese courts review foreign arbitral awards?

(1) Whether there is a valid arbitration agreement?

The SPC believes that if the parties do not reach the arbitration agreement on a voluntary basis, an arbitral award, which is rendered by the arbitral institution in accordance with the arbitration agreement unilaterally formulated by one party, may not be recognized and enforced by Chinese courts.

(2) Whether the parties concerned are not given proper notice or unable to present the case?

Where the arbitral tribunal posted the arbitration documents by registered mail and the postal company has certified that it “has delivered to the legal recipients”, Chinese courts shall consider that the arbitral tribunal has given proper notice to the parties.

(3) Whether the award contains decisions on matters beyond the scope of the submission to arbitration?

In general, the term “beyond the scope of the submission to arbitration” in China refers to two situations; one is beyond the scope of the arbitration agreement, the other is beyond the scope of the applicant’s request(s) for arbitration. When the respondent opposed recognition and enforcement of the arbitral award, “beyond the scope of submission to arbitration” is the most commonly used justification. In some cases, Chinese courts have already supported such claims.

(4) Whether the arbitral procedure is not in accordance with the arbitral rules and the law of the seat of arbitration?

Respondents often apply to Chinese courts to render a ruling against recognition and enforcement of the arbitral award on the ground that the arbitral procedure violates the arbitral rules and the law of the seat of arbitration. This claim can be supported by Chinese courts.

(5) Whether the arbitral award is final?

At present, there are no respondents opposing recognition and enforcement of foreign arbitral awards on this ground. Therefore, Chinese courts have not yet tried such cases.

(6) Whether the subject matter of the difference is not capable of settlement by arbitration?

So far there is only one case, where a Chinese court refused to recognize and enforce a foreign arbitral award on this ground, that is, a succession case mentioned in the SPC’s reply (2009) Min Si Ta Zi №33 ((2009)民四他字第33号). According to Article 3 of the PRC Arbitration Law, succession disputes may not be arbitrated.

(7) Whether the arbitral award is contrary to the public policy of China?

Chinese courts take a very cautious approach to the public policy exception. So far, Chinese courts have refused to recognize and enforce foreign arbitral awards in only one case on the ground of public policy.

3. The SPC endeavors to promote uniformity in the application of the New York Convention among Chinese courts at all levels through the following measures.

(1) Promulgating the Implementation Circular.

After China acceded to the New York Convention at the end of 1986, on 10 April 1987 the SPC promptly promulgated “the Circular on the Implementing Convention on the Recognition and Enforcement of Foreign Arbitral Awards Entered by China” (Fa (Jing) Fa [1987] №5) (法(经)发[1987]5 号《关于执行我国加入的〈承认及执行外国仲裁裁决公约〉的通知》), and it provides guiding principles on several noteworthy issues in the implementation of the New York Convention.

(2) Establishing a reporting system

The SPC hopes to strictly supervise the cases where Chinese courts at various levels refuse to recognize and enforce foreign arbitral awards, and to minimize the number of the cases of refusal to recognize and enforce foreign arbitral awards. At the end of 2017, the SPC issued the “Provisions on Issues Concerning the Reporting and Approval in the Judicial Review of Arbitration Cases” (关于仲裁司法审查案件报核问题的有关规定), which further confirms and refines the reporting system, and extends the application of the system further to the review of foreign-related commercial arbitration awards made by mainland Chinese arbitration institutions.

(3) Clarifying the review procedures

At the end of 2017, the SPC issued the “Provisions on Several Issues Concerning the Trial of Judicial Review of Arbitration Cases” (关于审理仲裁司法审查案件若干问题的规定) to further specify the procedures of judicial review, therefore the procedures are more operational.

(4) Issuing Replies regarding particular cases

Through the aforementioned reporting system, the SPC reviewed numerous requests from the local courts that intend not to recognize and enforce foreign arbitral awards. The SPC responded to these local courts and publish its “replies” (批复) in the periodical edited by its 4th Civil Division, so as to clarify the judicial attitude of the SPC. Though only binding on the lower courts regarding particular cases, the SPC’s replies set out the principles that are highly persuasive to all courts nationwide.

(5) Information construction

(6) Judge training

For full text, please click here.

China Justice Observer

We are committed to present the real Chinese judicial system.

Du Guodong

Written by

China Justice Observer

We are committed to present the real Chinese judicial system.

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