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4 China

Jingzhou Tao

From: Choice of Venue in International Arbitration

Edited By: Michael Ostrove, Claudia Salomon, Bette Shifman

Content type:
Book content
Product:
International Commercial Arbitration [ICMA]
Published in print:
09 January 2014
ISBN:
9780199655717

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

Subject(s):
Judges — Arbitral rules — Recognition and enforcement — Awards — Place of arbitration

(p. 93) 4  China

4.1  Background

4.1.1  Historical development of arbitration in China

4.01  China has a long history of using amicable dispute resolution, the rise of which is closely associated with traditional Chinese culture. Deeply influenced by Confucian philosophy, people in ancient China regarded a dispute as an evil, disturbing the harmony that governed the social order. Litigation was also considered negative, particularly given that China’s traditional judicial system did not make a distinction between civil and criminal law, so a person involved in any kind of litigation would be considered as having done bad deeds.1 Going to court was long considered the last resort of parties to a dispute. In this cultural context, early (p. 94) alternative dispute resolution, such as mediation or conciliation,2 gradually arose in China. One popular type of mediation in ancient China was conducted by town officials, who were appointed by the relevant local governments. For example, during the Zhou Dynasty (circa bc1100–256), the town official in charge of mediation was known as tiaoren (which means ‘mediator’). The duty of tiaoren as described in a book from the Zhou Dynasty was ‘resolving the difficulties of thousands of people through conciliation and mediation’.3 However, mediation by town officials in ancient China was substantially different from the modern concept of mediation, because the town officials were endowed with powers of administration, by which they probably imposed decisions upon disputants.4

4.02  China did not, however, have a concept of ‘arbitration’ in its language until it began to adopt Western-style legislation in the early 1900s. In 1912, the government of the Qing Dynasty promulgated the Constitution for Business Arbitration Office, followed in 1913 by the Working Rules for Business Arbitration Office, which permitted parties to submit their disputes to the Business Arbitration Office for settlement. Under the rules, an arbitration award would not become legally binding without the consent of the disputing parties; if consent could not be obtained, a disputing party could choose to file civil proceedings in court. The Business Arbitration Offices accepted both disputes between Chinese parties and disputes involving foreigners. In 1930, the then Chinese government promulgated the Law for Settling Disputes between Labor and Management, setting forth conciliation and arbitration procedures for employment disputes.5

4.03  Following the founding of the People’s Republic of China (the ‘PRC’) in 1949, China gradually established a dual-track arbitration system, under which domestic disputes and foreign-related disputes were distinguished and treated differently. As a result, two arbitration systems—domestic and foreign-related—have evolved and developed in parallel.

4.1.2  Arbitration law prior to 1994 legislation6

Domestic arbitration system

4.04  China’s modern domestic arbitration system originated in the early 1950s, when arbitration and conciliation were promoted by the government as a preferred way for resolving domestic commercial disputes. From the early 1960s, various rules and regulations were adopted requiring arbitration as a preliminary mandatory step before the litigation of economic contractual disputes.7 During that period, the domestic arbitration system consisted of various (p. 95) arbitration commissions,8 which exercised their jurisdiction over disputes between Chinese legal and/or natural persons9 arising from economic contracts, labour matters, patents, technology transfer contracts, urban property rights, and other matters. The then-existing commissions had little independence in that they were subordinate to or affiliated with governmental administrative authorities such as the Administration for Industry and Commerce (the ‘AIC’), and the arbitrators were mainly drawn from the government.10 The commissions accepted arbitration applications based on administrative law and regulations rather than an arbitration agreement voluntarily signed by the parties, and the parties were not allowed to select the arbitration commission of their own choice. The principle of party autonomy was not adequately recognized in China at the time. Another main feature of China’s domestic arbitration regime was that domestic arbitration awards did not have a binding effect on the parties. A dissatisfied party could appeal against the arbitral award before a higher arbitration body, and initiate civil proceedings with the people’s court.11

4.05  From 1966 to 1976, during the chaos of the Cultural Revolution, domestic arbitration practice almost completely ceased. However, a revival followed in the wake of the Open Door and Reform Policy launched in 1979. From then on, many of the key elements of the domestic arbitration system were gradually restored and further developed.

4.06  In 1983, the Economic Contract Law of the PRC 1981 (the ‘Economic Contract Law’) was promulgated,12 establishing the basic legal framework for contractual relationships among domestic PRC entities within China’s socialist system.13 This was the statutory underpinning for the pre-1994 domestic arbitration regime. It stipulated that parties to any dispute arising from an economic contract should first consult with each other to resolve the dispute. It further provided that where the parties failed to reach a resolution of their dispute via consultation, a disputing party could apply to the competent contract administrative authorities for conciliation or arbitration, or alternatively file a lawsuit directly before the people’s court. This provision furnished parties with the choice between arbitration and litigation and, as a result, arbitration was no longer a compulsory preliminary step. However, if a party refused to accept the arbitral award, it had the right to challenge it on the merits before the people’s court within 15 days of receipt. Domestic arbitral awards therefore still lacked binding effect and could be undermined by the initiation of a lawsuit.

4.07  In summary, during the period 1978–94, arbitration was widely and almost compulsorily used for the resolution of domestic commercial disputes in China. However, arbitration (p. 96) practice at that time was different from the modern concept of arbitration in the Western world in many aspects, given the absence of many internationally recognized principles, such as independence, party autonomy, and the binding effect of arbitral awards.

Foreign related arbitration system

4.08  Chinese modern foreign-related arbitration had its beginning with the Protocol for General Conditions of Delivery of Goods between China and the Soviet Union in April 1950, under which any dispute arising from a contract was to be submitted for arbitration. If the respondent was a Chinese enterprise or organization, the arbitration would take place in China. The implementation of the Protocol called for the establishment of a dedicated arbitration body dealing with foreign-related disputes, separate and distinct from the domestic arbitration commissions.14

4.09  In May 1954, the China Council for the Promotion of International Trade (CCPIT)15 was authorized under a Decision of the PRC State Council16 to establish the Foreign Trade Arbitration Commission (FTAC), which in 1988 became the China International Economic and Trade Arbitration Commission (CIETAC). The FTAC (or CIETAC) was empowered to exercise jurisdiction based on the agreement of the parties, and the parties could appoint a sole arbitrator or the two co-arbitrators in a three-member arbitral tribunal. The Decision also provided that the Chinese courts were to treat awards made by the FTAC as final and enforceable.

4.10  In 1958, the Maritime Arbitration Commission (MAC), another special arbitration commission handling foreign-related disputes, was established. It was renamed in 1988 as the China Maritime Arbitration Commission (CMAC). At that time, CIETAC and CMAC were the only two arbitration institutes empowered to accept foreign-related disputes; they were not allowed to handle domestic disputes until this monopoly over foreign-related disputes was abolished by the Arbitration Law 1994.

4.11  In fact, from 1949 to the late 1970s only a small number of cases were handled by the two foreign-related arbitration commissions, because of China’s limited commercial interaction with other countries. In the 1980s, however, following the adoption of the Open Door and Reform policy, the foreign-related arbitration regime underwent rapid growth, as various laws dealing with foreign-related dispute resolution were enacted. In July 1979, China adopted the Sino-Foreign Equity Joint Venture Law, which provided that if the board of an equity joint venture17 failed to resolve a dispute between the parties to the venture through (p. 97) consultation, the dispute could be resolved by mediation or arbitration. In March 1982, the Civil Procedure Law of the PRC (for Trial Implementation) (the ‘Trial Civil Procedure Law’) was adopted,18 which included a chapter entitled ‘Arbitration’, specifically addressing foreign-related arbitration. In March 1985, the Foreign Economic Contract Law of the PRC19 was adopted, serving as the primary legislative instrument governing contracts with foreign elements. It stipulated in its article 37 that if the parties failed to settle their dispute via consultation or mediation, they could submit it to a Chinese arbitration institution or other arbitration institution. In September 1986, China acceded to the 1958 New York Convention20 with both the reciprocal and commercial reservations,21 and the Convention became effective in the PRC as of 22 April 1987. In order to implement the Convention, on 10 April 1987, the Supreme People’s Court (the ‘SPC’) issued the Notice of the Supreme People’s Court Regarding the Implementation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards acceded to by China, which detailed the reservations and defined the extent of judicial jurisdiction over recognition and enforcement applications. In 1991 and 1992, the Civil Procedure Law of the PRC (the ‘Civil Procedure Law’)22 and the SPC Opinions relating to the Civil Procedure Law were adopted, replacing the Trial Civil Procedure Law. They laid down many important provisions in relation to foreign-related arbitration concerning the consensual nature of China’s foreign-related arbitration, the jurisdiction of courts, the property and evidence preservation procedures in connection with ongoing arbitration proceedings, the finality of arbitration awards, and their enforcement.23

4.12  This legislation set up a foreign-related arbitration regime more in line with international practice than the Chinese domestic arbitration system. For example, the principle that arbitration is a consensual process based on the agreement of the parties was emphasized, and the arbitration could be conducted in China or elsewhere, provided that the place of arbitration was agreed upon by the disputing parties.24

(p. 98) 4.1.3  Arbitration law after 1994

Unification of domestic arbitration system

4.13  Prior to the entry into effect of the Arbitration Law 1994 on 1 September 1995, both the domestic and the foreign-related arbitration systems were regulated by diverse legal documents, in the absence of a uniform arbitration law. It is estimated that by 1994, provisions regarding arbitration had been introduced in 14 laws, 82 administrative rules and regulations, and 190 local regulations.25 One of the most important purposes of the Arbitration Law 1994 was therefore to unify the commercial arbitration legal framework.26

4.14  The new legislation released the domestic arbitration commissions from direct government control and thus arbitration became, to a certain extent, a service offered by arbitration commissions. Article 8 of the Law emphasizes the independence of arbitration, stipulating that arbitration shall be carried out independently according to law and shall be free from interference by administrative authorities, social organizations, or individuals. Article 14 requires arbitration commissions to be independent from, or not to subordinate to, any administrative authorities or other arbitration commissions. Article 77 expressly exempts from the law’s scope of application the arbitration of labour disputes27 and disputes arising from farm contract work within collective agricultural organizations.28

4.15  For the implementation of the Arbitration Law 1994, article 79 required that the previously established arbitration commissions be organized in accordance with the law, and that arbitration commissions that were not reorganized were to terminate within one year from the effective date of the Law. The then-existing institutions established within the AIC, and other administrative organs of the local governments, were therefore automatically dissolved on 1 September 1996. Since then, around 215 domestic arbitration commissions have been reorganized or established throughout China.29 The majority of arbitration commissions were established through consolidation of the then-existing institutions, the only exceptions being labour dispute arbitration commissions and farming dispute arbitration commissions.30 Thus, the current domestic arbitration system in China consists of three types of (p. 99) arbitration: commercial arbitration under the Arbitration Law 1994, labour arbitration, and the arbitration of farming disputes.

Introduction of international practices

4.16  The Arbitration Law 1994 consists of 80 articles divided into eight chapters, successively dealing with general provisions (Chapter I), arbitration commissions and arbitration associations (Chapter II), arbitration agreements (Chapter III), arbitration proceedings (Chapter IV), applications for setting aside arbitral awards (Chapter V), enforcement (Chapter VI), special provisions on foreign-related arbitration (Chapter VII), and supplementary provisions (Chapter VIII). To bring domestic arbitration into line with international practice, the Arbitration Law 1994 embodies many of the internationally recognized principles of modern arbitration. For example, a valid arbitration agreement excludes the jurisdiction of courts,31 and without the prima facie existence of an arbitration agreement, the arbitration commission will refuse to accept the case.32 Arbitration must be conducted independently,33 and an arbitral award is final and binding on both parties, has res judicata effect,34 and is enforceable by the courts.

Distinction between domestic and foreign-related arbitration

4.17  Before adoption of the Arbitration Law 1994, foreign-related arbitration in China was monopolized by CIETAC and CMAC, with domestic cases restricted exclusively to domestic arbitration institutions, and foreign-related cases to the two foreign-related arbitration institutions. Although not expressly stipulated in the law, the Arbitration Law 1994 has in fact blurred the historical distinction between domestic arbitration and foreign-related arbitration. According to the Notice of the General Office of the State Council of 8 June 1996, which clarified certain issues around implementation of the Arbitration Law 1994, domestic arbitration commissions are entitled to handle foreign-related cases if so entrusted by the parties. Subsequently, in its Arbitration Rules 2000 (effective as of 1 October 2000), CIETAC extended its jurisdiction to domestic cases that the parties submit by agreement, based on the autonomy of the parties and the practical needs of the business community. As a result, China has now abolished the rigid separation between domestic and foreign-related arbitration, and parties can choose a domestic arbitration commission to administer foreign-related arbitration, and CIETAC to administer domestic arbitration.

4.18  Nevertheless, differences between domestic and foreign-related arbitration remain under the Arbitration Law 1994, which contains a Chapter VII entitled ‘Special Provisions on Foreign-related Arbitration’. Under the Law, different sets of rules are provided for domestic arbitration and foreign-related arbitration. The qualifications necessary empanelment with any arbitration commission is provided for by article 13 for domestic arbitration, and for foreign-related arbitration by article 67. The application for preservation of evidence in domestic disputes is set forth in article 46, and in article 68 for foreign-related disputes. Articles 58 to 64 apply to setting aside or refusing to enforce an award made in a domestic dispute, and articles 70 and 71 apply to awards made in a foreign-related dispute. The Chinese courts exercise wider control and supervision over awards made in a domestic dispute than (p. 100) they do over awards made in a foreign-related dispute. In other words, it is easier to set aside or resist the enforcement of a domestic award than a foreign-related award,35 as the grounds for refusing to enforce foreign-related awards are broadly similar to the New York Convention grounds.

4.1.4  Recent developments in arbitration in China

CIETAC and its Arbitration Rules 2012

4.19  CIETAC is certainly the most well-known arbitration body in China, and also one of the busiest arbitration centres in the world. In 2010 alone, CIETAC handled 1,352 cases, of which 418 were foreign-related.36 It has its headquarters in Beijing, and four sub-commissions in Shanghai, Shenzhen, Chongqing, and Tianjin.37

4.20  After its establishment in 1956, CIETAC’s arbitration rules were amended and supplemented several times. The 2005 amendments to its arbitration rules introduced many significant changes to CIETAC, which bring its practice into line with international standards. Among other things: (1) the parties may select arbitrators outside the CIETAC panel; (2) the parties may agree on a seat of arbitration outside China; (3) the tribunal can conduct either inquisitorial or adversarial proceedings; and (4) arbitrators are—for the first time—required to disclose any facts that may affect their independence and impartiality.

4.21  As from 1 May 2012, a new set of arbitration rules came into force for arbitrations administered by CIETAC, which replaced the 2005 Rules (the ‘CIETAC Rules 2012’). The main new developments in the CIETAC Rules 2012 include the following:

  1. (1)  CIETAC is empowered to designate the place of arbitration when the parties fail to do so. This is highly controversial, since Shanghai and other branches were very reluctant to give such power to CIETAC headquarters.

  2. (2)  If the claimant fails to comply with the formality requirements when filing the request for arbitration and further fails to rectify the problem in due course, it will be deemed not to have submitted a request for arbitration.

  3. (3)  The Secretariat of CIETAC is empowered to decide whether to grant extensions to parties for their submissions when the arbitral tribunal has not yet been constituted.

  4. (4)  A mechanism of consolidation of arbitration was introduced. Article 17 of the CIETAC Rules 2012 reads:

    1. 1.  At the request of a party and with the agreement of all the other parties, or where CIETAC believes it necessary and all the parties have agreed, CIETAC may consolidate two or more arbitrations pending under these Rules into a single arbitration.

    2. 2.  In deciding whether to consolidate the arbitrations in accordance with the preceding Paragraph 1, CIETAC may take into account any factors it considers relevant in respect of the different arbitrations, including whether all of the claims in the different arbitrations are made under the same arbitration agreement, whether the different arbitrations (p. 101) are between the same parties, or whether one or more arbitrators have been nominated or appointed in the different arbitrations.

    3. 3.  Unless otherwise agreed by all the parties, the arbitrations shall be consolidated into the arbitration that was first commenced.

  5. (5)  The arbitral tribunal is empowered to grant interim measures in the form of a procedural order or interim award.

  6. (6)  The procedure of suspension of arbitration was introduced by article 43 of the CIETAC Rules 2012, which reads:

    1. 1.  Where parties request a suspension of the arbitration proceedings, or under circumstances where such suspension is necessary, the arbitration proceedings may be suspended.

    2. 2.  The arbitration proceedings shall resume as soon as the reason for the suspension disappears or the suspension period ends.

    3. 3.  The arbitral tribunal shall decide whether to suspend or resume the arbitration proceedings. Where the arbitral tribunal has not yet been formed, the decision shall be made by the Secretary General of CIETAC.

  7. (7)  The parties may choose to conduct conciliation before the arbitral tribunal, or enter into a settlement themselves; the latter will no longer be deemed to be conciliation conducted by the arbitral tribunal.

4.22  In general, the CIETAC Rules 2012 have taken further steps forward in following predominant international arbitration practice, which reflects China’s determination and efforts to become an international arbitration centre.

CIETAC Shanghai and Shenzhen’s split

4.23  On 1 May 2012, the same day when the CIETAC Rules 2012 came into force, the CIETAC Shanghai sub-commission announced that it had split from CIETAC Beijing, declaring itself an independent arbitral institution. CIETAC Shanghai then published a new set of arbitration rules and formed its own panel of arbitrators, separate from those of CIETAC Beijing. Following Shanghai’s announcement, CIETAC Shenzhen also declared its independence and the application of its own arbitration rules as of 1 December 2012. It also changed its name from CIETAC South China Commission to the South China International Economic and Trade Arbitration Commission (the ‘SCIETAC’) and gave itself a second official name, the Shenzhen Court of International Arbitration (the ‘SCIA’).

4.24  CIETAC Shanghai, as one of the four CIETAC sub-commissions, decided to split from CIETAC Beijing because the new CIETAC Rules largely centralized CIETAC’s powers in its Beijing headquarters. In particular, article 2.3 of the new Rules describes the sub-commissions as ‘CIETAC’s branches’. Moreover, article 2.6 provides that the Secretariat of CIETAC (Beijing) will administer the case whenever a general reference to ‘CIETAC arbitration’ is made or the parties’ agreement is ambiguous. As a consequence, the number of cases handled by the sub-commissions would be greatly reduced.

4.25  In response to Shanghai’s announcement, CIETAC released its own announcement on the same day, rejecting Shanghai’s intention to break away and accusing it of violating China’s arbitration law and of ‘seriously affecting parties’ exercise of their arbitration rights’.38 On 1 August 2012, CIETAC released another announcement, suspending CIETAC’s (p. 102) authorization of the CIETAC Shanghai sub-commission and the CIETAC South China sub-commission to accept and administer arbitration cases. In response to the announcement, the CIETAC Shanghai sub-commission and South China sub-commission jointly issued another statement, announcing that they had been independent arbitration institutions since their establishment and their rights to accept requests for arbitration were not dependent on CIETAC’s authorization. Currently, the two sub-commissions are continuing to accept and manage cases submitted to them. The main implications concern jurisdictional challenges and enforcement problems regarding cases administrated by the CIETAC Shanghai sub-commission and CIETAC South China sub-commission.

4.1.5  Arbitration and the courts

Judicial interpretation

4.26  The SPC has issued decisions interpreting the Arbitration Law 1994, the Civil Procedure Law, and other relevant laws and regulations that are in fact binding on lower courts. Lower courts are not authorized to engage in judicial interpretation in the constitutional sense. However, in practice some courts, such as the Shanghai Municipal High Court, Beijing Municipal High Court, and Shenzhen Municipal High Court, have made judicial pronouncements concerning the validity of arbitration agreements and the setting-aside of arbitral awards. These interpretations, usually in the form of ‘Provisions’ or ‘Opinions’, are binding only on lower courts within the same jurisdiction, and only as long as they do not contradict the laws, regulations, or interpretations of the SPC.

Court assistance to arbitration

4.27  The courts provide assistance to arbitration in many aspects. Under the Arbitration Law 1994, if the jurisdiction of an arbitral tribunal is challenged, the arbitration institution or a competent court decides the jurisdiction issue. In addition, the courts are empowered to decide on requests for the preservation of evidence and property.

Court supervisory power over arbitral awards

4.28  Although article 9 of the Arbitration Law 1994 establishes the principle of finality of the arbitral award, a party may still request the court to set aside the award or to refuse its enforcement in specific circumstances. In respect of the enforcement of foreign awards, Article V(2) of the New York Convention and accordingly article 274(2) of the Civil Procedure Law 2013, provides that the court may—upon the approval of the SPC—refuse on public policy grounds to recognize an award. Notably, the courts can examine only the procedural aspects of a foreign or foreign-related award. For domestic awards, courts can scrutinize from both procedure and substance perspectives.

4.2  Commencing the Arbitration

4.2.1  Role of courts in commencing the arbitration and resolving jurisdictional issues

4.29  Articles 5 and 26 of the Arbitration Law 1994 establish the principle that a valid arbitration agreement excludes the jurisdiction of the courts. When the parties have concluded an arbitration agreement and a party files a lawsuit in court, the court may not accept the case, unless the arbitration agreement is invalid. If the court has accepted the case without knowing that there was a valid arbitration agreement, the court must dismiss the case, provided (p. 103) the other party submits the arbitration agreement prior to the first hearing. If the other party fails to raise an objection prior to the first hearing, it will be deemed to have waived its right to refer to arbitration, and the court may proceed with the matter.

4.30  Though the Arbitration Law 1994 does not expressly reject the principle of competence-competence of the arbitral tribunal, it can be inferred from the relevant provisions that the principle has not been accepted by Chinese law. Article 5 of the Arbitration Law 1994, which provides that a valid arbitration agreement excludes the jurisdiction of the court, does not lay down who—the court or the arbitral tribunal—has the final say on the validity of the arbitration agreement. Thus, this article does not provide the arbitral tribunal with the power to determine its own jurisdiction under the competence-competence principle.

4.31  The second paragraph of article 19 of the Arbitration Law 1994 stipulates that ‘the arbitral tribunal shall have the power to affirm the validity of a contract’. However, this stipulation is generally interpreted as failing to answer the question of who is competent to determine the validity of the arbitration agreement, given that the separability doctrine regarding the arbitration clause is expressly recognized in the first paragraph of article 19. In view of the doctrine of separability, the arbitral tribunal that is empowered to decide on the validity of the contract does not necessarily have the competence to decide on the validity of the arbitration clause.

4.32  It appears that article 20 of the Arbitration Law 1994 answers the question regarding competence-competence more directly, providing:

If a party challenges the validity of the arbitration agreement, such party may request the arbitration commission to make a decision or apply to the People’s Court for a ruling. If one party requests an arbitration commission to make a decision while the other party applies to the People’s Court for a ruling, the People’s Court shall give a ruling.

A challenge to the validity of an arbitration agreement shall be raised by the parties prior to the first hearing before the arbitration tribunal.

4.33  Article 20 deprives the arbitral tribunal of the competence to decide on the validity of an arbitration agreement, since it provides only for recourse to either the arbitration commission or the court. Moreover, it makes it clear that if one party requests the arbitration commission to decide and the other party applies to the court, the court’s decision will prevail, provided that (a) the concerned party has raised the objection prior to the first hearing of the arbitral tribunal and (b) the arbitration commission has not yet made a decision. If the commission finds that the tribunal has jurisdiction, there is no immediate recourse to the courts, which must refuse any application to rule on arbitral jurisdiction.39

4.34  The Arbitration Law 1994 therefore leaves no room for the competence-competence principle, and the court has the last word on the validity of an arbitration agreement and resulting arbitral jurisdiction. As a result, the court is given the power to intervene at the commencement of arbitration proceedings. The lack of competence-competence calls into doubt the independence of the arbitral tribunal, because it is hard to say that a tribunal is independent from the arbitration commission if it is deprived of the right to decide its own jurisdiction.

(p. 104) 4.2.2  Role of courts in appointing arbitrators

4.35  Under the Arbitration Law 1994, an arbitral tribunal may consist of either a sole arbitrator or three arbitrators.40 If the parties agree to have a sole arbitrator, they jointly appoint the arbitrator or entrust the appointment to the chairman of the arbitration commission. If the parties agree to have a three-member arbitral tribunal, the claimant and respondent each appoint one arbitrator, while the presiding arbitrator is jointly selected by the parties or appointed by the chairman of the arbitration commission.41

4.36  Unlike many jurisdictions that allow the parties to raise objections before the courts to the appointment of an arbitrator or to seek judicial assistance in appointing arbitrators, China’s arbitration law does not give the courts a role in this regard. Pursuant to the Arbitration Law 1994, only the parties and the chairman of the arbitration commission have the power to appoint arbitrators. Although the court can later examine the impartiality of an arbitrator in the context of setting aside or enforcing an arbitral award, it is not allowed to step in during the arbitration proceedings to appoint arbitrators.

4.37  As China has not yet recognized ad hoc arbitration, the fact that the court lacks competence to appoint arbitrators does not cause much practical difficulty. However, if China should decide to introduce ad hoc arbitration in the future, it will be necessary to empower the courts to appoint arbitrators in certain situations.

4.2.3  Role of the court in enjoining arbitration

4.38  The question of whether the court has power to enjoin arbitration is closely related to the arbitrability of the dispute. In some jurisdictions, the court is empowered to enjoin an arbitration or issue an injunction terminating a pending arbitration, if it determines that the dispute was not subjected to arbitration or is not arbitrable. Chinese law had never defined the scope of arbitrability until the enactment of the Arbitration Law 1994, which sets this out in its articles 2, 3, and 77.42

4.39  A question that is not answered under Chinese law is who should decide on the arbitrability of disputes—the court or the arbitral tribunal. It also leaves open the question of whether the court has the power to enjoin arbitration when it considers the dispute to fall outside the scope of arbitrable matters. In spite of this legislative lacuna, the following cases may provide some clues.

4.40  In China National Technical Import & Export Corporation v Swiss Industrial Resources Corporation of 1988,43 the court of appeal concluded that since the dispute between the (p. 105) parties was not of a contractual nature but a tortious dispute, the appellee had the right to raise an action of trespass before the court, rather than being bound by the arbitration clause concluded between the parties. The court of appeal then confirmed the jurisdiction of the court of first instance. Regardless of the hotly-debated issue of whether a tortious dispute was arbitrable under the then Chinese law, the Court’s ruling shows that it had a determining say in whether a dispute was subject to arbitration or not, though it did not issue an order directly to enjoin the arbitration.

4.41  Another case relating to arbitrability is Textile & Other Light Industries Co Ltd of the Commodities Group v Topcapital Holdings Ltd and Prince Development Ltd.44 The court of first instance (the Higher People’s Court of Jiangsu Province) rejected the defendants’ objection to jurisdiction based on the existence of a valid arbitration clause, holding that the parties were not bound by the contractual arbitration clause because the dispute arose in tort. The court of appeal (the Supreme People’s Court) held that disputes of a tortious nature fall within the scope of arbitrable matters under article 2 of the Arbitration Law 1994 and article 2 of the then applicable CIETAC Arbitration Rules. Therefore, the Court, concluding that the parties were bound by the arbitration clause and the people’s court had no jurisdiction over the dispute, reversed the decision of the lower court.

4.42  The people’s courts do, in practice, actually decide on arbitrability. If a court decides that a dispute is non-arbitrable and that it should therefore exercise jurisdiction, the arbitration proceedings will be made impossible or enjoined de facto. More importantly, one of the reasons for the absence of provisions regarding enjoining arbitration is that the principle of competence-competence is not recognized under Chinese law; in practice it is the courts that have the final say on arbitral jurisdiction at the outset of the arbitration. As such, there is no need to empower the courts to enjoin arbitration proceedings.

4.3  During the Arbitration

4.3.1  Role of court during the arbitration

4.43  During the stage from the constitution of the tribunal until the issuance of the award, the tribunal is expected to perform its function to the utmost, which naturally leaves open the question of whether a court should intervene in the arbitration at this stage.

4.44  General international practice restricts court interference during the arbitration under most circumstances, except where this is necessary to guarantee procedural fairness and provide assistance to the parties and the arbitral tribunal, as exemplified by the role of the juge d’appui in the French arbitration regime.45 Following this practice, Chinese legislation allows only minimal court intervention46 during arbitration compared to the practice in jurisdictions (p. 106) with similar cultural backgrounds, such as Hong Kong and Singapore. Except for exclusive jurisdiction over evidence and property preservation measures, no other power to intervene is available to the people’s courts. This is, of course, explained in part by the primacy of the arbitration commissions and their broad powers in supervising arbitration.

Challenge of arbitrator

4.45  The court has no legal basis for removing an arbitrator. The Arbitration Law 1994 sets forth four grounds for removing an arbitrator from a tribunal and two grounds for removing an arbitrator from a commission’s panel,47 and makes the arbitration commission or its chairman the sole decision-maker.48 The courts play no role in arbitrator challenges, and are empowered only to impose liability on arbitrators for illegal private interaction with the parties, acceptance of bribes, deception for personal gain, or intentional misapplication of the law.49

4.46  In comparison with the widely-adopted terms of the UNICITRAL Model Law, according to which the party’s agreement on the conduct of the arbitration prevails over non-mandatory legislative provisions and arbitration rules,50 the Chinese mechanism dilutes the parties’ autonomy in choosing a tribunal, as it provides no legal basis for handling a challenge pursuant to the parties’ agreement. Unlike other venues,51 where the courts are empowered to hear appeals against unsuccessful challenges and to make the decision, in China, it is the arbitration commission that makes the sole and final decision regarding challenge of an arbitrator.52 Because of the commissions’ control over the parties’ choice of arbitrators in China,53 the public tends to believe that commissions are reluctant to remove an arbitrator, for all arbitrators are selected from the commissions’ arbitrator panels and the tribunals are formed indirectly under the will of the commission or appointed by the chairman of the commission. Although the situation has improved and certain commissions like CIETAC now allow parties to choose arbitrators outside the panel, this practice has not yet been adopted by many arbitration commissions and depends on the commission involved.54

Evidence

4.47  With respect to assisting the tribunal in obtaining evidence, the law sets no legal basis for the court to compel testimony or evidence but only to preserve evidence, an area where the court’s intervention renders indispensable support to the arbitral proceedings.55 Pursuant (p. 107) to article 46 of the Arbitration Law 1994, a party may apply to the tribunal seeking an evidence preservation order where evidence the party relies on is at a risk of destruction, loss, or difficulty in later collection. The arbitral commission must submit the application to the people’s court at the place where the evidence is located for review and determination.56 The evidence preservation mechanism for foreign-related arbitration shares the basic criteria and principles used for domestic arbitration, while the competent court is the Intermediate People’s Court at the place where the evidence is located. Hence, preservation applications in foreign-related cases are likely to be handled with greater efficiency and correctness compared to those in domestic arbitrations, due to the fact that the intermediate courts have considerably more experience.

4.48  China’s evidence preservation mechanism in arbitration has long been criticized because initiation of arbitration was a precondition for making an evidence preservation application. The new Civil Procedure Law 2013 dispenses with this precondition, providing in article 81 that where it is likely that evidence may be destroyed, lost, or become difficult to obtain later on, an interested party may, prior to instituting a lawsuit or applying for arbitration, apply to the people’s court at the place where the evidence is located or the domicile of the party against which the application is made, or the people’s court with jurisdiction over the case, to preserve the evidence.

4.3.2  Restrictions/requirements regarding the ability of foreign practitioners to appear in arbitration as counsel or arbitrator

4.49  When entering into an arbitration agreement, the parties should choose an arbitration institution that allows them freedom in appointing arbitrators and choosing counsel; this is fundamental in guaranteeing the parties’ autonomy. The arbitration commissions in China has been making progress in expanding the parties’ choice of arbitrators and counsel, yet restrictions still exist.

4.50  The restrictions on counsel lie mainly with their nationality. Over the years, both Chinese and foreign lawyers were permitted to represent clients in foreign-related arbitrations,57 until a regulation issued in 200258 expressly denied foreign law firms and foreign practitioners59 the right to provide legal advice concerning ‘Chinese legal matters’. This regulatory restriction was further clarified in 2003:60 foreign practitioners are not forbidden from acting as counsel in arbitrations in China that involve Chinese legal matters, but may not issue legal opinions or represent clients on Chinese legal matters. A party with foreign counsel must therefore engage a local practitioner to deal with Chinese law issues. This restriction was originally intended to protect parties from receiving unqualified legal services regarding local (p. 108) law, but is becoming unnecessary, as more and more locally qualified lawyers join foreign law firms.

4.51  In comparison, nationality is not a major barrier when it comes to arbitrators. Both Chinese arbitrators and arbitrators from Hong Kong, Macao, Taiwan, or other countries and regions may be appointed in a foreign-related arbitration in China.61 Furthermore, since May 2008 CIETAC no longer distinguishes between its arbitrator panels for domestic cases and foreign-related cases, so foreign practitioners may act as arbitrators in domestic arbitrations as well. Rather than the practitioners’ nationality, it is the panel system that limits parties autonomy in appointing arbitrators. Although the parties are now allowed to choose outside the panels in CIETAC cases, any such unconventional appointment must be confirmed by CIETAC,62 and only a few commissions in China have followed CIETAC’s lead. It is undeniable that this reform is a positive step in expanding the pool of arbitrators and facilitating the practice of choosing presiding arbitrators of a third nationality, but the parties’ autonomy in appointing arbitrators is still overshadowed by the arbitration commissions’ will.

4.3.3  Other local requirements for the conduct of arbitration hearings

4.52  The Arbitration Law 1994 provides that an arbitral tribunal must hold an oral hearing unless the parties have agreed otherwise.63 Nevertheless, due to the influence of litigation proceedings on arbitration, it is only on rare occasions that a tribunal will decide a case solely on the basis of written submissions and other documents.

4.53  There are limitations on the language used during an oral hearing. The parties may choose a specific language to be used during the arbitral proceedings. If there is no agreement, Chinese was the default language under the 2005 CIETAC Rules,64 while the 2102 CIETAC Rules follow the more common practice of empowering the arbitration commission to decide whether languages other than Chinese may be used and whether the translation of documents is needed.65 Foreign parties are advised to specify a language in their arbitration clauses; Chinese parties often require all documents to be translated into Chinese despite the widespread use of English for conducting business.

4.54  With regard to the introduction of evidence during an oral hearing, the tribunal may require a party to provide evidence either on the tribunal’s own initiative or at the other parties’ request,66 and may even collect evidence on its own where it deems this to be necessary.67

4.55  Several issues regarding witness testimony require attention. For instance, although in theory all evidence, including the testimony of witnesses, must be examined in order to establish a legal basis for the facts of the case,68 in practice, witnesses are rarely cross-examined in (p. 109) China. The arbitral tribunal usually questions witnesses directly. Moreover, while both the tribunal and the parties may call experts,69 the cross–examination of third-party experts is conditioned on the tribunal’s consent.70 Witnesses are not required to swear an oath before giving testimony, but are simply informed of their obligation to tell the truth and the legal consequences of perjury.71

4.56  There is also an important limitation as to choice of law in China. The parties to a foreign-related contract generally have autonomy in selecting the law governing the dispute, yet certain types of foreign-related contracts are compulsorily subject to Chinese law.72 Hence, it is important for foreign investors to have a thorough knowledge of relevant Chinese regulations prior to making an actual investment in China.73

4.3.4  Conciliation during the arbitration

4.57  Despite the foregoing restrictions, the parties’ autonomy is reinforced by the practice of conciliation outside arbitration proceedings, which is a conspicuous feature of arbitration in China. While CIETAC sets the ‘combination of arbitration and conciliation’ as a principle,74 all Chinese commissions allow the combination of the two dispute resolution methods and frequently use them.75 Parties benefit from the flexibility of conciliation, as it may be conducted prior to or in parallel with an ongoing arbitration, with or without the involvement of the tribunal,76 and an enforceable award may be rendered according to the settlement agreement.77 Conciliation is also popular in China due to its high success rate. There are two types of conciliation during arbitration in China: conciliation within arbitration proceedings and conciliation outside arbitration proceedings. In the former case, the arbitrator will act as a conciliator, and assume the position of arbitrator to carry on the arbitration proceeding if the parties fail to reach a settlement; in the latter case, the parties reach a settlement by themselves without an arbitrator serving as conciliator.

4.4  The Award

4.4.1  Introduction

4.58  The tribunal must endeavour to ensure not only the correctness but also the effectiveness and enforceability of its award in accordance with the governing law.78 To fulfil this responsibility, (p. 110) the tribunal must render an award within the time limit, in a proper manner, in accordance with the mandatory format, and containing the necessary content. Where all requirements are met, an arbitral award takes legal effect from the date it is rendered.79

4.59  The tribunal must render an award within the time limit. Under the 2012 CIETAC Rules, except in a summary proceeding,80 a tribunal must render an award within six months following the formation of the tribunal in a foreign-related arbitration,81 and within four months following the formation of the tribunal in a domestic arbitration.82

4.60  The award also must be rendered in accordance with an opinion duly reached within the tribunal. In general, a tribunal should render an award according to the tribunal’s majority opinion, or the opinion of the presiding arbitrator if no majority opinion is reached.83 In addition, an award may also be rendered following a settlement agreement reached between the parties within or outside a tribunal-sponsored conciliation, unless the parties agree otherwise.84

4.4.2  Requirements on the form and content of the award

4.61  An award must meet the form and content requirements in order to be final and binding. Article 54 of the Arbitration Law 1994 provides that an award must be rendered in writing with the arbitrator’s signatures and the arbitration commission’s seal affixed. The signature of an arbitrator holding a dissenting view is not mandatory.85

4.62  The award must cover (a) the arbitration claims, (b) the facts in dispute, (c) the reasoning upon which the award is based, (d) the result of the award, (e) the allocation of arbitration costs, and (f) the date on which and the place where the award was made.86

4.63  One exception set forth in the 2012 CIETAC Rules is that the facts in dispute and the reasons for reaching the decision may be omitted if the parties have so agreed, or if the award is rendered in accordance with a settlement agreement reached between the parties.87 Therefore, in a country that encourages conciliation as China does, reaching agreement or settlement is a practical way to accelerate the process of rendering an award and to highlight arbitration’s advantages in flexibility and party autonomy.

4.64  Three issues concerning the content of an award are worth noting. First, a tribunal may award interest provided the claimant has requested it;88 CIETAC usually follows the rate (p. 111) of loan interest of financial institutions determined by the court.89 Further, the tribunal is empowered to allocate the arbitration costs by ordering the losing party to reimburse the winning party’s reasonable expenses, based on factors such as the outcome and complexity of the case, the workload of the winning party, and the amount in dispute.90 Finally, a dissenting opinion may be included in the award for record-keeping purposes only.91

4.65  The foregoing requirements on format and content largely follow international practices, thereby increasing a Chinese award’s acceptability for the international community. This is especially relevant when the award needs to be enforced by a court outside China.

4.4.3  Correction and supplementation of the award

4.66  There is a remedial measure available with respect to awards in China. If an arbitral award includes any typographical or calculation errors, or omits a decision on any of the issues in dispute, the tribunal must correct the mistakes or supplement the award.92 This may be initiated either upon a party’s written request or the tribunal’s own finding.93 The corrected and the supplemental award must be issued in writing, and constitutes an integral part of the arbitral award.94

4.67  It must be clarified that the correction and supplementation mechanism does not breach the principle of finality of the arbitral award, because the tribunal is not allowed to have a second look at its findings and substantive decisions. The only recourse against an award rendered in China is to request the People’s Court to set it aside or to refuse enforcement.

4.5  After the Award

4.5.1  Introduction

4.68  Upon termination of the tribunal’s mandate, the court plays the main role. Under the Arbitration Law 1994, a party dissatisfied with an award may apply to the court to set it aside,95 or ask the court to refuse the winning party’s application for enforcement.96 The Arbitration Law 1994 provides two types of recourse against a domestic award: setting aside and refusal of enforcement.97 Refusal of enforcement has particular consequences in China: if enforcement is refused, the parties may initiate new litigation or arbitration proceedings with respect to the same dispute. Thus, refusal of enforcement results in the de facto setting aside of the award. In other words, in China, a court’s decision to set aside and a court’s decision to refuse enforcement of a domestic award have the same effect: the (p. 112) annulment of the award within China.98 There has been criticism of this system on the basis that the decision rejecting enforcement, as a procedural order, should simply terminate the enforcement proceedings, rather than eliminate the effectiveness of an award.99 Article 9(2) of the Arbitration Law 1994 also indicates that an arbitration agreement becomes invalid upon the annulment of an award rendered pursuant to it, which has also been criticized for ignoring the independence of the arbitration agreement.100

4.69  The Arbitration Law 1994 establishes a dual-track review mechanism for domestic disputes and foreign-related disputes at the post-award stage. In the case of domestic arbitration, the legislation adopts an overall supervision mechanism,101 whereby article 237 of the Civil Procedure Law 2013 provides seven grounds for refusing an award and mandates that the court review both procedural issues and the merits of the case. The court’s review of the substance may not be excluded by the parties’ agreement. This is similar to the supervision system established by the English Arbitration Act 1950. In contrast, in foreign-related arbitration, article 274 of the Civil Procedure Law 2013 provides four grounds for refusing the enforcement an award, and the court is limited to procedural supervision102 by looking only at due process. This practice, which is also the choice of the UNCITRAL Model Law103 and the New York Convention,104 follows the most widely-accepted modern approach.

4.5.2  Local standards for setting aside an award

4.70  Although foreign-related arbitration used to be an area exclusively reserved for CIETAC and CMAC, domestic arbitral institutions are now also permitted to handle foreign-related arbitrations,105 and the standards and procedures for setting aside foreign-related arbitral awards rendered by domestic arbitral institutions are identical to those applicable to CIETAC and CMAC awards.

4.71  The Arbitration Law 1994 borrows directly from the Civil Procedure Law’s grounds for setting aside a foreign-related award.106 In order to set aside an award, a party must apply to a competent court providing evidence sufficient to prove (a) the non-existence of a valid arbitration agreement; (b) lack of due process; (c) irregularity in arbitration procedure; or (d) exceeding the scope of the arbitration agreement. There is in fact a fifth ground in (p. 113) article 274(2) of the Civil Procedural Law 2013, according to which the court is obliged to set aside a foreign-related arbitral award ex officio if it finds that the award contravenes the social and public interest.107 These five globally recognized grounds are consistent with the UNCITRAL Model Law and the New York Convention, and the Chinese courts have revealed a leaning towards narrow interpretation.

4.72  The examination of the validity of an arbitration agreement falls mainly to the arbitration commission, but the parties may also resort to the competent court. When no specific arbitration commission is expressly provided for or implied by the arbitration agreement, and the parties fail to reach an agreement subsequently, the arbitration clause is considered invalid.108 In a representative case, the arbitration agreement fixed China as the seat of arbitration without naming a specific arbitration commission. After an award was rendered under the auspices of CIETAC, a party applied to the court for setting aside based on invalidity of the arbitration agreement. The court found that a commission could not be selected by implication, and the parties had failed to reach agreement on a commission. The court reported the case to the SPC, and the SPC declared the arbitration agreement invalid and affirmed the lower court’s decision to set aside the award.109 In addition, an arbitration agreement giving a party a choice between litigation and arbitration once a dispute arises is invalid.110 Invalidity of the arbitration agreement can only be invoked as a ground for setting aside if the applicant has raised it prior to the first arbitration hearing.111

4.73  Numerous recent cases involve attempts to set aside a CIETAC award on grounds of lack of due process and procedural irregularity. Judging from past cases, an award is likely to be set aside on these grounds in the following five situations: (a) a party was deprived of sufficient opportunity to present its case by the tribunal’s failure to hold a supplementary hearing; (b) the tribunal incorrectly accepted documents after the deadline for making such submissions; (c) the successful party presented forged documentary evidence to the tribunal, regardless of whether this had any impact on the tribunal’s decision.

4.74  An award may also be set aside if it decides matters that exceed the scope of the arbitration agreement or are beyond the arbitral authority of the arbitration commission.112 The courts’ attitude in two common scenarios can be derived from SPC decisions holding that a tribunal does not exceed the arbitration agreement or its jurisdiction where the award (a) addresses disputes arising from contracts or agreements supplementary to a main contract that contains an arbitration clause, or (b) addresses disputes arising from contracts or agreements subsequently entered into by the parties in contemplation of a contract that contains an arbitration clause or thereby further detailing the duties and obligations pursuant to that contract. In comparison, in a typical case successfully setting aside an award, the SPC held that an award exceeded the arbitration agreement because it addressed disputes arising from (p. 114) a consulting fee agreement between the parties, while the arbitration agreement was limited to disputes related to their joint venture.113 Partial annulment may be available where only part of an award exceeds an arbitration agreement and that part is separable from the rest of the award.114 However, if an award exceeds the arbitration commission’s jurisdiction, the dispute is not arbitrable and the tribunal violates the mandatory law, so the entire award must be set aside.

4.75  The last ground, contravention of public policy, though widely accepted and applied by countries as a ground for refusing enforcement of an award is subject to divergent interpretation.115 Different countries define public policy differently, and the terminology China has adopted, ‘social and public interest’,116 is vague, due to the lack of transparency in legislation and changing Chinese national policies. The SPC’s decisions indicate that this phrase must be interpreted narrowly, and its application limited to a breach of the interests of China’s ‘fundamental legal principles’, which refers to the interests of the Chinese as a whole rather than the interests of part of society or a group of individuals.117 Some SPC judges espouse the view that an award violates public policy if it (a) violates the principles provided or implied by the Constitution or Four Fundamental Principals of China;118 (b) damages the sovereignty or state security of China; (c) violates fundamental rules of Chinese law; or (d) contravenes China’s obligations under international treaties or the fairness or justice recognized in international law.119

4.76  This is a clear indication that public policy is closely entwined with politics in China, which makes it difficult to predict the outcome of setting aside applications. In this situation, the SPC’s judgments help parties to form strategies to attack awards by setting out unsuccessful examples in the past. For instance, the SPC deems that certain kinds of fraud, and mere procedural unfairness or injustice covered by lack of due process or procedural irregularities, are insufficient to constitute conflict with the social and public interest.120 The SPC has also held that a violation of mandatory law does not necessarily contravene the social and public (p. 115) interest, and that the fairness of the award is irrelevant.121 In general, like courts in other jurisdictions, the SPC is cautious in upholding the social and public interest, and rarely sets aside awards on this ground.

4.77  In practice, China’s judicial acuity in setting aside foreign-related awards pursuant to the Arbitration Law 1994 has been questioned, because the lower courts have shown a tendency to set these aside erroneously. This has been attributed to local protectionism, which is a serious challenge to judicial independence. The situation is now improving, due to the establishment of the prior reporting system, discussed in detail in paragraph 4.88.

4.5.3  Local procedures for setting aside an award

4.78  An application to set aside an award must be made to the competent court, which is the Intermediate People’s Court at the location of the arbitration commission.122 The request must be made within six months of the applicant’s receipt of the award,123 which is longer than the three-month time limit in the UNICITRAL Model Law and the limits in effect in most countries.124 Moreover, the court must reach a decision within two months of receipt of the application,125 leading to a potential eight-month period during which the effectiveness of the award remains pending. This not only goes against the basic legal principle of timely justice, but also sabotages parties’ preference for arbitration due to its purported efficiency. This is especially problematic when enforcement proceedings are suspended because of the initiation of the setting aside proceedings.126

4.79  An award enforcement proceeding may be delayed by the setting aside proceeding: if the winning party applies for enforcement of the award, and the losing party applies for setting aside the award before the court renders its enforcement/non-enforcement decision, the enforcement proceeding will be suspended until the court denies the application for setting aside; in the event that the court actually sets aside the award, the court will terminate the enforcement proceeding. The court may refuse to enforce a foreign-related award on the following grounds: (1) lack of a valid arbitration agreement in the parties’ contract or subsequent agreement; (2) failure to provide the respondent notice inviting him to appoint an arbitrator or informing him of the commencement of the arbitration proceeding, or his inability to present his views for other reasons; (3) the composition of the tribunal or arbitration procedure being inconsistent with the applicable arbitration rules; (4) rendering a decision on issues that exceed the scope of the arbitration agreement or are beyond the authority of the arbitration commission; and (5) conflict with the public interest.127 In respect of domestic awards, there are seven grounds for non-enforcement. In addition to the previously-mentioned grounds, the court may refuse to enforce a domestic award based on the impact on the award of forged evidence or a party’s concealing of important evidence, or based on arbitrator corruption, such as accepting bribes.128

(p. 116) 4.80  Instead of setting aside or refusing to set aside an award, the court may decide on its own motion that the dispute should be re-arbitrated. The setting-aside proceeding is suspended in cases of re-arbitration, and may be resumed if the tribunal declines to re-arbitrate.129 No detailed grounds for re-arbitration are provided, but in the case of a foreign-related award, only procedural issues are subject to re-arbitration.130 According to SPC decisions, where the errors in the award are not serious enough for setting aside,131 or are capable of being rectified by means of re-arbitration,132 and initiation of a new arbitration would not unnecessarily burden the parties,133 re-arbitration is likely to be invoked. Re-arbitration is undertaken by the same tribunal that rendered the original award, unless there are special circumstances precluding this.134

4.81  Before the Intermediate People’s Court renders a decision to set aside or to re-arbitrate a foreign-related award, it must file it with the High People’s Court for approval within 30 days following its acceptance of the application.135 If the High People’s Court concurs, it files an Approval Advice with the SPC within 50 days following its receipt of the report from the Intermediate People’s Court for approval. Only after the SPC has confirmed the findings may the Intermediate People’s Court issue its decision.136 This is known as the prior reporting system, a special centralized reporting and review system that applies to court decisions in respect of awards other than domestic awards.137 The prior reporting system is considered the most notable intervention of the SPC in arbitration, and functions as a shield against the influence of local protectionism on lower courts in setting aside awards. There have been comments that this system diminishes the independence of the lower courts by making the SPC the final decision-maker. It is, however, undeniable that it effectively safeguards the rights and interests of a successful party by raising the bar on the annulment of awards and eliminating local influence, and thereby greatly increases foreign investor confidence in arbitration in China.

(p. 117) 4.82  The cost of setting aside an award consists of two parts. The first part is the actual expense incurred, for instance payments to translators or experts. The second part is the application fee, which is calculated according to the monetary value of the case as follows:138

Where there is no monetary value, the cost shall be determined by the court within the range of 50 to 500 CNY.

Where there is a monetary value, the cost is calculated cumulatively based on the following ranges.

  1. i.  The cost is 50 CNY where the amount subject to annulment does not exceed 10,000 CNY;

  2. ii.  Where the amount subject to annulment is between 10,000 CNY and 500,000 CNY, the cost is 1.5%;

  3. iii.  Where the amount subject to annulment is between 500,000 CNY and 5 million CNY, the cost is 1.0%;

  4. iv.  Where the amount subject to annulment is between 5 million CNY and 10 million CNY, the cost is 0.5%;

  5. v.  Where the amount subject to annulment is over 10 million CNY, the cost is 0.1%.

  6. vi.  Where the amount subject to annulment is between 10,000 CNY and 500,000 CNY, the cost is 1.5%.

4.6  Conclusion

4.83  Arbitration has a long history in China, and the establishment of the modern arbitration system with the promulgation of the Arbitration Law in 1994 was a key step in modernizing the dispute resolution system in China. For foreign investors seeking to resolve disputes in China, arbitration is a better choice than litigation. Choosing a Chinese arbitration commission instead of the People’s Court not only provides the common advantages of arbitration, but also better shields the foreign party from the strong local protectionism in the local judiciary and from the professional incompetence of some judges in China.

4.84  More importantly, arbitral awards rendered by arbitration institutions in China are more easily recognized and enforced in other countries than judgments issued by Chinese courts, as China is a signatory to the New York Convention, but has not yet entered into judgment recognition and enforcement treaties with most of the major world economies.139 Unlike many less-developed and developing countries, China has not adopted the UNCITRAL Model Law into its arbitration regime. It has developed certain unique features based on its own culture, such as the encouragement of a combination of arbitration and conciliation, and the establishment of a prior reporting system in setting aside foreign-related and foreign awards in order to prevent local protectionism. Meanwhile, there is still room for improvement in the system. For example, there is a call for the expansion of the arbitrator pool, and the elimination of the current practice limits on foreign counsel in the arbitration proceedings, and of the compulsory application of Chinese Law in certain circumstances.

Footnotes:

1  See JV Feinerman, ‘The History and Development of China’s Dispute Resolution System’ in C Hunter (ed), Dispute Resolution in China: A Practical Guide to Litigation & Arbitration in China (Asia Law & Practice, 1995) 7. See also J Zhou, ‘Arbitration Agreements in China: Battles on Designation of Arbitral Institution and Ad Hoc Arbitration’ (2006) 23(2) J Intl Arb 147.

2  In the context of Chinese law, the method is known as tiaojie, in which a dispute is resolved by a third party designated by the litigants, by reconciling them either before or while they resort to litigation before a court or an arbitral tribunal. Either ‘mediation’ or ‘conciliation’ can be a translation of the Chinese word tiaojie. Conversely, tiaojie can be the Chinese translation of both ‘mediation’ and ‘conciliation’. In this chapter, these two words are not distinguished and are used interchangeably.

3  In the Zhou Dynasty this book was known as Zhouli, Diguansitu, Tiaoren.

4  See Dr JS Mo, Arbitration Law in China (Sweet & Maxwell, 2001) 10–11.

5  See J Tao, Arbitration Law and Practice in China (3rd edn, Kluwer Law International, 2012) 1.

6  The Arbitration Law of the PRC, promulgated at the 9th session of the Standing Committee of the 8th National People’s Congress, 31 August 1994, effective 1 September 1995 (hereinafter the ‘Arbitration Law 1994’).

7  Draft Working Rules for the State-Owned Industrial Enterprises, adopted by the State Council, September 1961; Draft Opinions of the State Economic Commission Concerning the Arbitration of Disputes Arising from Defaulting on Loan Payments Among the State-Owned Industrial Enterprises by the Economic Commissions at Various Levels, adopted by the State Economic Commission, 30 August 1962; Notice Concerning the Strict Implementation of Basic Construction Procedure and the Strict Implementation of Economic Contract, promulgated by the State Council, 10 December 1962.

8  Arbitration commissions under Chinese law are essentially arbitration institutions. In fact, only institutional arbitration is possible in China. Although ad hoc arbitration is not expressly prohibited, the Arbitration Law 1994, art 16(2) specifically requires that an arbitration commission be designated in the arbitration agreement; otherwise, the arbitration agreement may be null and void.

9  Foreign invested enterprises, such as equity joint ventures, cooperative joint ventures, and wholly foreign-owned enterprises, which are established partially or wholly by foreign capital, were deemed to constitute Chinese legal persons under Chinese law, and accordingly, disputes between such entities and other domestic legal and natural persons generally fell within the exclusive ambit of the domestic arbitration system, rather than the foreign-related arbitration regime.

10  See Tao (n 5) 4.

11  See W Wang, ‘Distinct Features of Arbitration in China: A Historical Perspective’ (2006) 23(1) J Intl Arb 62.

12  The Economic Contract Law of the PRC 1981, promulgated by the Standing Committee of the National People’s Congress, 13 December 1981, effective 1 July 1982, repealed by the Contract Law of the PRC, effective 1 October 1999.

13  See Tao (n 5) 2.

14  See Tao (n 5) 8.

15  CCPIT is the national state body charged with the promotion of international trade in China. There are more than 20 administrative departments falling within the charge of CCPIT, including the following: the CCPIT General Office; the Department of Sub-Council Affairs; the Personnel Department; the Department for Exhibitions Abroad; the Economic Information Department; the Department of Media and Press; the Department of Legal Affairs; the China Trademark Agency; the China Patent Agency; CIETAC; CMAC; the Economic and Trade Coordination Committee for the Two Sides of the Straits; and the China Maritime Law Association.

16  The Decision of the Government Administration Council of the Central People’s Government Concerning the Establishment of a Foreign Trade Arbitration Commission within the China Council for the Promotion of International Trade, promulgated by the State Council, 6 May 1954.

17  An equity joint venture is a vehicle allowing a foreign partner to participate in a limited liability company with a Chinese party by contributing a minimum of 25% of the registered capital. Equity joint venture partners share profits and bear risks and losses in proportion to their contributions to the registered capital.

18  The Civil Procedure Law of the PRC was implemented on a trial basis at the 22nd session of the Standing Committee of the 5th National People’s Congress, 1 October 1982. It was subsequently repealed by the Civil Procedure Law of the PRC, promulgated at the 4th Session of the 7th National People’s Congress, 9 April 1991, effective 9 April 1991 (hereinafter the ‘Civil Procedure Law’).

19  The Foreign Economic Contract Law of the PRC, promulgated at the 10th session of the Standing Committee of the 6th National People’s Congress, March 1985, effective 1 July 1985, repealed by the Contract Law of the PRC, promulgated 15 March 1999, effective 1 October 1999 (hereinafter the ‘Contract Law 1999’).

20  Convention on the Recognition of Foreign Arbitral Awards, New York, 10 June 1958, 330 UNTS 38 (the New York Convention).

21  Under the reciprocity reservation, China agreed to apply the New York Convention to the recognition and enforcement of foreign arbitral awards rendered by an arbitration institution in the territory of another contracting state only; under the commercial reservation, China applies the New York Convention only to disputes arising from legal relationships, whether contractual or not, which are considered commercial under Chinese law.

22  The Civil Procedure law was revised by the Decision Regarding the Revision of the Civil Procedure Law of the PRC, promulgated at the 30th session of the Standing Committee of the 10th National People’s Congress, 28 October 2007, effective 1 April 2008. It was then revised by another Decision, promulgated at the 25th session of the Standing Committee of the 11th National People’s Congress, 31 August 2012, effective 1 January 2013 (hereinafter the ‘Civil Procedure Law 2013’).

23  Civil Procedure Law 2013, arts 271–274.

24  eg the Sino-Foreign Equity Joint Venture Law of the PRC, art 14 promulgated at the 3rd Session of the 7th National People’s Congress, 4 April 1990; the Regulations of the PRC on the Exploration of Offshore Petroleum Resources in Cooperation with Foreign Enterprises, art 27; and the Foreign Economic Contract Law of the PRC, art 37.

25  See ‘Illustration Regarding the Arbitration Law of PRC (Draft)’, SCNPC Legislative Affairs Commission, 28 June 1994, available at <http://www.npc.gov.cn/wxzl/gongbao/2001-01/02/content_5003212.htm> (accessed 8 March 2013).

26  Mo (n 4) 27.

27  Labor Law of the PRC, promulgated by the Standing Committee of the National People’s Congress, 5 July 1994, effective 1 January 1995, revised by the Decision of the Standing Committee of the of the National People’s Congress on the Amendment of Some Laws, 27 August 2009, effective 27 August 2009; Labor Contract Law of the PRC, promulgated by the Standing Committee of the National People’s Congress, 29 June 2007, effective 1 January 2008; Law on Labor Dispute Mediation and Arbitration of the PRC, promulgated by the Standing Committee of the National People’s Congress, 29 December 2007, effective 1 May 2008.

28  Interpretation of the Supreme People’s Court on Some Issues Concerning the Trial of Cases Involving Disputes Over Agricultural Contracts, promulgated by the Supreme People’s Court on 28 June 1999, effective 8 July 1999, repealed by Decision of the Supreme People’s Court on Abolishing Relevant Judicial Interpretations (the Seventh Batch) Promulgated before the End of 2007, promulgated by the Supreme People’s Court, 18 December 2008, effective 24 December 2008; Law of the PRC on the Mediation and Arbitration of Rural Land Contract Disputes, promulgated by the Standing Committee of the National People’s Congress on 27 June 2009, effective 1 January 2010.

29  Y Li, Continue to Implement the Arbitration Law and to Further Improve the Arbitration Legal System, Vol 5 (Arbitration & Law, 2000); S Shen and J Shen, ‘Features and Self-innovation of China Commercial Arbitration System’ (2010) 12 Legal Science Monthly 31.

30  C Ying, The Science of Law of Arbitration (House of China University of Politics & Law, 2001).

31  Arbitration Law 1994, art 5.

32  Arbitration Law 1994, art 4.

33  Arbitration Law 1994, art 8.

34  Arbitration Law 1994, art 9.

35  Mo (n 4) 59.

36  A Ross, ‘An Interview with Yu Jianlong’, Global Arbitration Review, 5 September 2011, available at <http://www.globalarbitrationreview.com/journal/article/29794/an-interview-yu-jianlong> (accessed 8 March 2013).

37  The four sub-commissions are, respectively, the CIETAC Shanghai Sub-Commission, the CIETAC South China Sub-Commission in Shenzhen, the CIETAC Financial Arbitration Centre in Tianjin, and the CIETAC Southwest Sub-Commission in Chongqing.

38  The Statement announced by CIETAC is available at <http://cn.cietac.org/notes/notes088.shtml> (accessed 8 March 2013).

39  Reply of the Supreme People’s Court to Several Issues Arising from the Determination of the Validity of Arbitration Agreements, art 3, promulgated 5 November 1998, effective 5 November 1998.

40  Arbitration Law 1994, art 30.

41  Arbitration Law 1994, art 31.

42  Arbitration Law 1994, art 2 lays down a general principle that arbitrable disputes must be of a contractual or non-contractual nature and relate to property rights and interests between citizens, legal persons or other organizations that are equal civil subjects. Art 3 sets out the types of disputes that cannot be submitted to arbitration, including (a) disputes pertaining to marriage, adoption, guardianship, child maintenance, and inheritance and (b) disputes arising from administrative management by the government, between governmental organs inter se, or between governmental organs and other social organizations or individuals. Additionally, art 77 excludes labour disputes and agricultural disputes from being submitted to either the domestic or foreign-related arbitration commissions for arbitration, by stipulating that regulations concerning these two types of dispute shall be formulated separately.

43  China National Technical Import & Export Corp v Swiss Industrial Resources Corp [1989] 1 Gazette of the Supreme People’s Court of the PRC 26, 27 (Intermediate People’s Court of Shanghai Municipality, 1988).

44  Textile & Other Light Industries Co Ltd of the Commodities Group v Topcapital Holdings Ltd and Prince Development Ltd [1998] 3 Gazette of the Supreme People’s Court of the PRC 109-10 (Supreme People’s Court of PRC, 1998).

45  A Redfern, M Hunter, N Blackaby, and C Partasides, Law and Practice of International Commercial Arbitration (4th edn, Sweet & Maxwell, 2004) 353–4 (Chinese version translated by L Yifei and S Lianbin and published in China by Peking University Press, 2005).

46  W Shengchang, ‘CIETAC’s Perspective and Conciliation Concerning China’ in A van den Berg (ed), New Horizons in International Commercial Arbitration and Beyond (ICCA Congress Series no 12, Kluwer Law International, 2005). See also C von Wunschheim, P Tercier, and G Ajani, Enforcement of Commercial Arbitral Awards in China: Business Laws in China (West, 2011) 42–3.

47  Arbitration Law 1994, arts 34 and 38.

48  Arbitration Law 1994, art 36.

49  Arbitration Law 1994, art 58.

50  UNCITRAL Model Law on International Commercial Arbitration (the UNCITRAL Model Law) (1985, 24 ILM 1302), Art 13(1).

51  Examples of countries and regions that allow the court to accept a party’s appeal against the tribunal’s or arbitration institution’s decision on an application for removing an arbitrator include but are not limited to Hong Kong, Singapore, and the UK.

52  Arbitration Law 1994, art 36; CIETAC Rules 2012, art 30(6).

53  In China, the parties must choose the arbitrators from among the panel of arbitrators of the relevant arbitration commission (who must meet certain criteria) and on most occasions are not free to appoint arbitrators not on the list of the panel. See also von Wunschheim, Tercier, and Ajani (n 46) 62; Arbitration Law 1994, arts 31 and 32.

54  G Weixia, ‘The China-Style Closed Panel System in Arbitral Tribunal Formation: Analysis of Chinese Adaption to Globalization’ (2008) 25(1) J Intl Arb 121, 131; F Kun, ‘Arbitration in China: Practice, Legal Obstacles and Reforms’ (2008) 19(2) ICC International Court of Arbitration Bulletin 39.

55  Redfern, Hunter, Blackaby, and Partasides (n 45) 354.

56  Arbitration Law 1994, art 46.

57  Arbitration Law 1994, art 29.

58  Regulations on the Administration of the Operation of the Offices of Foreign Law Firms in China, art 15, promulgated by the State Council, 22 December 2001, effective 1 January 2002.

59  Lawyers employed by foreign law firms in China are not considered Chinese practitioners according to the Regulations on the Administration of the Operation of the Offices of Foreign Law Firms in China, art 16 which provides that ‘Representing offices of the foreign law firms in China are forbidden from hiring licensed Chinese lawyers’.

60  Clarification Issued by the Administrative Office of the Ministry of Justice to Confirm that Representative Offices of Foreign Law Firms and Their Representatives can Serve as Legal Agents in International Arbitration in China, promulgated by the Ministry of Justice of the PRC, 6 January 2003, effective 6 January 2003.

61  Stipulations for the Appointment of Arbitrators Jointly Issued by CIETAC and CMAC, promulgated 1 September 1995, amended 1 September 2000 and 2 March 2005.

62  CIETAC Rules 2005, art 21(2); CIETAC Rules 2012, art 24(2).

63  Arbitration Law 1994, art 39.

64  CIETAC Rules 2005, art 67.

65  CIETAC Rules 2012, art 71.

66  Arbitration Law 1994, art 44.

67  Arbitration Law 1994, art 43(2).

68  Several Provisions of the Supreme People’s Court on the Evidence for Civil Actions, art 47, promulgated at the 1201st session of the Judicial Committee of the Supreme People’s Court, 6 December 2001, promulgated by the Supreme People’s Court, 21 December 2001, effective 1 April 2002 (hereinafter ‘SPC on the Evidence for Civil Actions’). This provision, regulating the introduction of evidence in civil lawsuits before the People’s Court, is an important reference for the introduction of evidence in arbitral proceedings before the tribunal, as it is widely expected that this provision will gradually be adopted into the practice of arbitration in China, and will ultimately be incorporated into the next amendment to the Arbitration Law 1994.

69  Arbitration Law 1994, art 44(2).

70  CIETAC Rules 2005, art 39; CIETAC Rules 2012, art 42(3).

71  SPC on the Evidence for Civil Actions, art 54.

72  Contract Law 1999, art 126.

73  See generally, World Bank Group, ‘Ease of Doing Business in China’ <http://doingbusiness.org/data/exploreeconomies/china/>.

74  CIETAC Rules 2012, art 45; CIETAC Rules 2005, art 40.

75  von Wunschheim, Tercier, and Ajani (n 46) 69.

76  Arbitration Law 1994, arts 49 and 51.

77  Arbitration Law 1994, art 51.

78  Redfern, Hunter, Blackaby, and Partasides (n 45) 405.

79  Arbitration Law 1994, art 57.

80  CIETAC Rules 2012, art 60 and CIETAC Rules 2005, art 56 provide that where summary proceedings are adopted, the time limit is three months commencing from the tribunal’s formation for a document-based arbitral proceeding.

81  CIETAC Rules 2012, art 46.

82  CIETAC Rules 2012, art 69.

83  Arbitration Law 1994, art 63.

84  Arbitration Law 1994, arts 49 and 51.

85  Arbitration Law 1994, art 54.

86  Arbitration Law 1994, art 54.

87  CIETAC Rules 2012, art 47(3); CIETAC Rules 2005, art 43(2).

88  General Principles of the Civil Law of the PRC, art 112(2) provides that the parties may specify in a contract that upon breach of the contract, a breaching party shall pay the non-breaching party a certain amount of damages; they may also specify in the contract the method of assessing the compensation for any losses resulting from a breach of contract.

89  K Ligeng, ‘The Interests in International Arbitration’ (2005) 3 Arbitration and Law 129–130, re-published on the official website of CIETAC <http://cn.cietac.org/TheoryResearch/Theory.asp?stitle=%B9%FA%BC%CA%D6%D9%B2%C3%D6%D0%B5%C4%C0%FB%CF%A2> (accessed 29 July 2012).

90  CIETAC Rules 2012, art 50(2); CIETAC Rules 2005, art 46(2).

91  Arbitration Law 1994, art 53.

92  Arbitration Law 1994, art 56.

93  The rules regarding the correction of an award are set forth in the CIETAC Rules 2012, art 51 and the CIETAC Rules 2005, art 47, while the rules regarding supplementing an award are set forth in the CIETAC Rules 2012, art 52 and the CIETAC Rules 2005, art 48.

94  Arbitration Law 1994, arts 58, 63, 70, and 71.

95  Arbitration Law 1994, arts 58 and 70.

96  Arbitration Law 1994, arts 62 and 71.

97  Arbitration Law 1994, art 9(2).

98  von Wunschheim, Tercier, and Ajani (n 46) 182.

99  Y Xifu, The Judicial Supervision and Assistance in International Commercial Arbitration (1st edn, Intellectual Property Publishing House, 2006) 399.

100  D Huanfang, ‘Reflection regarding the Perfection of the Annulment System of Foreign-related Arbitral Awards’ (CIETAC, 2007) available at <http://cn.cietac.org/TheoryResearch/Theory.asp?stitle=%B4%D3% CA%B5%C0%FD%BF%B4%D6%D0%B9%FA%C9%E6%CD%E2%D6%D9%B2%C3%B2%C3%BE%F6%B3%B7%CF%FA%B5%C4%CD%EA%C9%C6> (accessed 29 July 2012).

101  W Exiang and Y Xifu, ‘Re-discussion on the Relationship between Judicial System and Arbitration: Legislation, Practice and the Theories Regarding Whether the Court Should Supervise over the Substantive Issues in Arbitration’ (2004) 3 Law Review 60, republished on the website of the Law School of Renmin University of China, the International Law Department (RUC International Law), <http://www.rucil.com.cn/article/default.asp?id=461> (accessed 29 July 2012).

102  Exiang and Xifu (n 101).

103  UNICITRAL Model Law, arts 34 and 36.

104  New York Convention, Art 5.

105  Notice of the General Office of the State Council regarding Some Problems Which Need to Be Clarified for the Implication of the Arbitration Law of the PRC, promulgated 8 June 1996.

106  Arbitration Law 1994, art 70.

107  Civil Procedure Law 2013, art 274(2).

108  Interpretation of the Supreme People’s Court Concerning Some Issues on Application of the Arbitration Law of the PRC, promulgated on 23 August 2006 and effective 8 September 2006, arts 3–6 (hereinafter ‘SPC Interpretation on the Arbitration Law’).

109  Reply of the Supreme People’s Court to the Request for Instructions on the Case of Application of Changsha Xinzhi Industry Ltd and American Metal Plus International Ltd for Revocation of the Arbitral Award, promulgated 18 November 2008, effective 18 November 2008.

110  SPC Interpretation on the Arbitration Law, art 7.

111  SPC Interpretation on the Arbitration Law, art 13.

112  Civil Procedure Law 2013, art 274.

113  Reply of the Supreme People’s Court to the Request for Instructions on the Application of Hui Ying Media Sales Limited for Revocation of the Arbitral Award, [2003] Da Zhong Zi No 083, promulgated 14 September 2004, effective 14 September 2004.

114  SPC Interpretation on the Arbitration Law, art 19.

115  Z Xianchu, ‘The New Development in the Theories and Practice of the Judicial Supervision over Arbitral Awards in Foreign Commercial Arbitration in respect of Public Policy’ (2005) 4 Arbitration and Law 23, re-published on the official website of the CIETAC, <http://cn.cietac.org/TheoryResearch/Theory.asp?stitle=%CD%E2%B9%FA%C9%CC%CA%C2%D6%D9%B2%C3%B2%C3%BE%F6%CB%BE%B7%A8%C9%F3%B2%E9%D6%D0%A1%B0%B9%AB%B9%B2%D5%FE%B2%DF%A1%B1%C0%ED%C2%DB%D3%EB%CA%B5%BC%F9%B5%C4%D0%C2%B7%A2%D5%B9> (accessed 29 July 2012).

116  Civil Procedure Law 2013, art 274(2).

117  von Wunschheim, Tercier, and Ajani (n 46) 283, citing the Standing Committee of the National People’s Congress Legislative Affairs Commission/CIETAC, ‘Complete Works on Arbitration Law of the People’s Republic of China’, 62 and 125.

118  Supreme People’s Court Third Five-Year Plan 2009–2013, s I.3 provides seven principles for reformation of the People’s Court, where four are considered the Fundamental Principles of China: to adhere to the socialist road, to adhere to the people’s democratic dictatorship, to adhere to the leadership of the Communist Party, and to adhere to Marxism-Leninism and Mao’s thought.

119  von Wunschheim, Tercier, and Ajani (n 46) 283, citing Judge Gao Xiaoli of the Supreme People’s Court. See also G Xiaoli, Use of Public Policy in International Private Law (China Democracy & Legality Publishing House, 2008) 336.

120  von Wunschheim, Tercier, and Ajani (n 46) 283, citing Judge Gao Xiaoli of the Supreme People’s Court). See also Xiaoli (n 119) 285.

121  von Wunschheim, Tercier, and Ajani (n 46) 283 (citing Judge Gao Xiaoli of the Supreme People’s Court). See also Xiaoli (119) 284–5.

122  Arbitration Law 1994, art 70.

123  Arbitration Law 1994, art 59.

124  Du Huanfang (n 100).

125  Arbitration Law 1994, art 60.

126  Arbitration Law 1994, art 64.

127  Civil Procedure Law 2013, art 274.

128  Civil Procedure Law 2013, art 237(2).

129  Arbitration Law 1994, art 61.

130  Du Huanfang (n 100).

131  Reply of the Supreme People’s Court to the Request for Instructions on the Case of Application of Sichuan Hua Hang Construction Ltd for Revocation of an Arbitral Award, promulgated 15 June 2005, effective 15 June 2005.

132  Reply of the Supreme People’s Court to the Request for Instructions about Whether to Revoke the Arbitral Award No 0140 [2007] of China International Economic and Trade Arbitration Commission, promulgated 7 April 2008, effective 7 April 2008.

133  Reply of the Supreme People’s Court to the Request for Instructions about Whether to Revoke an Arbitral Award Rendered by Dalian Arbitration Commission, promulgated 23 February 2006, effective 23 February 2006.

134  The special circumstances include, but are not limited to, those where an arbitrator cannot further perform his or her obligation as an arbitrator due to illness, death, or other similar reasons, or should be removed based on the situations set forth in the Arbitration Law 1994, art 34.

135  Notice of the Supreme People’s Court on Relevant Issues Relating to the Cancellation by the People’s Courts’ of Foreign-Related Arbitral Awards, promulgated by the Supreme People’s Court, 23 April 1998, revised by Decision of the Supreme People’s Court on Adjustment of Serial Number of Articles of the Civil Procedure Law of the People’s Republic of China Cited in Judicial Interpretation and Other Documents, promulgated 16 December 2008, effective 31 December 2008.

136  Notice of the Supreme People’s Court on Several Issues Regarding the Handling by the People’s Courts of Certain Issues Pertaining to Foreign-Related Arbitration and Foreign Arbitration, promulgated by the Supreme People’s Court, 28 August 1995, effective 28 August 1995, revised by Decision of the Supreme People’s Court on Adjustment of Serial Number of Articles of the Civil Procedure Law of the People’s Republic of China Cited in Judicial Interpretation and Other Documents, promulgated 16 December 2008, effective 31 December 2008.

137  Circular of the Supreme People’s Court on Issues in the People’s Courts’ Revocation of Foreign-related Arbitral Awards, promulgated on and effective since 23 April 1998.

138  State Council Measure on Litigation Cost, art 13, promulgated by the State Council 8 December 2006, effective 1 April 2007.

139  Examples of countries with which China has concluded treaties include France, Poland, Mongolia, Romania, Russia, Belarus, Cuba, and Spain. Moreover, Mainland China has recently concluded two arrangements providing for the recognition and enforcement of court judgments rendered by courts in Macao and Hong Kong. On the other hand, major economies with which China has not concluded treaties include the US, the UK, and Japan.