Arbitration procedures and practice in China: overview

A Q&A guide to arbitration law and practice in China.

The country-specific Q&A guide provides a structured overview of the key practical issues concerning arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local law, confidentiality, local courts' willingness to assist arbitration, enforcement of awards and the available remedies, both final and interim.

To compare answers across multiple jurisdictions visit the Arbitration procedures and practice Country Q&A Tool.

This Q&A is part of the global guide to arbitration. For a full list of jurisdictional Q&As visit www.practicallaw.com/arbitration-guide.

Contents

Use of arbitration and recent trends

1. How is commercial arbitration used and what are the recent trends?

Use of commercial arbitration and current trends

Generally speaking, commercial arbitrations are currently more common in China.

According to the Annual Report on International Commercial Arbitration in China (2014) released by the China Academy of Arbitration Law and statistics from the Legal Affairs of the State Council:

  • Arbitration cases administered by arbitration committees of China increased by 9%, from 104,257 in 2013 to 113,660 in 2014.

  • There was a further increase of 20% in 2015 to 136,924.

  • The overall disputed amount increased by 61% from RMB164.6 billion in 2013 to RMB 265.6 billion in 2014.

  • In 2015, there was a 55% increase to RMB411.2 billion.

Nationwide statistics for 2014 show that commercial disputes resolved through arbitration account for about 4% of cases resolved through litigation.

In 2014, about 24% of disputes in international business transactions were resolved through commercial arbitration and the rest through litigation. With the development of foreign trade and especially the "One Belt and One Road" initiative, it is likely that commercial arbitration involving foreign elements will increase.

Advantages/disadvantages

Compared to litigation, arbitration has the following advantages:

  • Arbitration is usually considered to be neutral and can alleviate the parties' concerns about the impartiality of local Chinese courts.

  • The parties have a great deal of flexibility to choose the procedures they wish to follow and there are very few limits on these choices as long as there is a consensus. In contrast, litigation procedures are much more rigid.

  • Arbitration is confidential but litigation is open to the public (unless it involves state secrets, personal privacy or other circumstances that warrant the confidentiality of court proceedings).

  • Enforcing a foreign arbitral award through the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) is much easier than enforcing a foreign court judgment.

  • Enforcing a Chinese award in other countries is easier than enforcing a Chinese court judgment.

However, arbitration also has the following limits:

  • The arbitration agreement usually only binds the parties who sign it. A non-signing party cannot be compelled into the arbitration and sometimes disputes cannot be resolved in a single arbitration. This seriously hampers the efficiency of dispute resolution.

  • In contrast to court judgments, arbitral awards cannot be appealed.

 

Legislative framework

Applicable legislation

2. What legislation applies to arbitration? To what extent has your jurisdiction adopted the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law)?

The applicable law includes the Arbitration Law and the Supreme Court's interpretations in relation to it. There are also some arbitration-related rules in the Civil Procedure Law (such as those on jurisdiction, procedures, and recognition and enforcement of arbitral awards).

As a party to the New York Convention, its rules apply to the recognition and enforcement of foreign arbitral awards in China.

China has not adopted the UNCITRAL Model Law.

 

Mandatory legislative provisions

3. Are there any mandatory legislative provisions? What is their effect?

A Chinese institution (an arbitration commission) must be chosen where China is the seat of the arbitration; domestic ad hoc arbitrations are not allowed. However, foreign arbitral awards from ad hoc arbitrations (including those from Hong Kong, Macau and Taiwan) are still eligible for recognition and enforcement in China.

Under Chinese law, arbitration clauses which provide for disputes not involving foreign elements to be settled by foreign arbitration institutions are invalid. The following situations may be deemed to involve foreign elements:

  • Where one or more parties are of foreign nationality or of no nationality.

  • The object of the contract is located in or the performance of the contract occurs in a foreign territory.

  • The legal facts that the contractual rights or obligations are based on occur in a foreign territory.

 
4. Does the law prohibit any types of disputes from being resolved via arbitration?

The Arbitration Law prevents the following disputes from being resolved by arbitration:

  • Disputes concerning marriage, adoption, custody, fostering and succession.

  • Administrative disputes.

 

Limitation

5. Does the law of limitation apply to arbitration proceedings?

Generally, the limitation period is two years.

The following disputes have a limitation period of one year:

  • Claims for compensation for personal injury.

  • Sales of substandard goods without proper notice to that effect.

  • Delays in paying or refusal to pay rent.

  • Loss of or damage to articles left in the care of another person.

When a dispute arises from a contract for the international sale of goods or the import or export of technology, the statutory limitation period is four years.

The limitation period for claims against a carrier for carriage of goods by sea is one year from the day on which the goods were, or should have been, delivered.

The limitation period is triggered when an aggrieved party knows or should know about the facts leading to its claim.

 

Arbitration organisations

6. Which arbitration organisations are commonly used to resolve large commercial disputes?

The following are the main Chinese arbitration institutions:

  • China International Economic and Trade Arbitration Commission (CIETAC).

  • Shangai International Economic and Trade Arbitration Commission/Shanghai International Arbitration Center (SHIAC).

  • South China International Economic and Trade Arbitration Commission/Shenzhen Court of International Arbitration (SCIA).

  • Beijing Arbitration Commission/Beijing International Arbitration Center (BIAC).

  • China Maritime Arbitration Commission (CMAC).

  • Wuhan Arbitration Commission.

  • Shanghai Arbitration Commission (SHAC).

  • Guangzhou Arbitration Commission.

Where there is an international component, or an international arbitration is seated in China, CIETAC, CMAC (for maritime disputes) and BIAC are most commonly used.

See box, Main arbitration organisations.

 

Jurisdictional issues

7. What remedies are available where one party denies that the tribunal has jurisdiction to determine the dispute(s)? Does your jurisdiction recognise the concept of kompetenz-kompetenz? Does the tribunal or the local court determine issues of jurisdiction?

China recognises the concept of kompetenz-kompetenz in a limited way. If one party denies the tribunal's jurisdiction to determine the dispute, the tribunal can decide its own jurisdiction before the party applies to the competent court for a ruling (Article 20, Arbitration Law and the Supreme Court's interpretation and clarification).

After the tribunal's decision has been made, the court will no longer accept any application to review the jurisdiction issue. But if the party makes an application to the court before the tribunal makes a decision, then the court has the power to decide the tribunal's jurisdiction and the tribunal must stop the arbitral proceedings once the court grants the party's application.

 

Arbitration agreements

Validity requirements

8. What are the requirements for an arbitration agreement to be enforceable?

Substantive/formal requirements

A valid arbitration agreement must:

  • Express the parties' intention to arbitrate.

  • Set out the matters to be arbitrated.

  • Be in writing and validly executed.

  • Be entered into by individuals with full civil capacity, or legal persons.

In addition, the subject matter must be arbitrable and the parties must select an arbitration commission.

Separate arbitration agreement

An arbitration agreement can either be contained in clauses stipulated in a contract or in a separate written agreement concluded before or after a dispute occurs (Article 16, Arbitration Law).

If a contract provides for a dispute to be subject to arbitration by reference to a clause in another contract or document, the parties must resort to arbitration under that clause provided that the reference is explicit and the parties are aware of it.

 

Unilateral or optional clauses

9. Are unilateral or optional clauses, where one party has the right to choose arbitration, enforceable?

It is not clear whether a unilateral clause would be enforceable. There is risk that a court will determine that unless both parties demonstrate a wish to submit to arbitration, the clause will be invalid.

 
10. In what circumstances can a party that is not a party to an arbitration agreement be joined to the arbitration proceedings?

Generally, a party that is not a party to an arbitration agreement cannot be joined to the arbitration proceedings without mutual consent from the parties.

However, a party who is not a signatory to the arbitration agreement can be bound it where:

  • A company is merged or divided, or an individual dies after concluding an arbitration agreement. The agreement will be binding on its/his successor unless the original parties to the arbitration agreement agree otherwise.

  • Obligations and rights are completely or partly assigned. An arbitration agreement will be binding on an assignee unless the parties agree otherwise, or the assignee specifically objects or is unaware of the existence of the separate arbitration agreement.

  • An insurance company explicitly accepts an arbitration clause agreed by the insured. The insurance company is then bound by the arbitration agreement after it assumes the rights and obligations of the insured under the contract incorporating the arbitration agreement.

 
11. In what circumstances can a party that is not a party to an arbitration agreement compel a party to the arbitration agreement to arbitrate disputes under the arbitration agreement?
 

Separability

12. Does the applicable law recognise the separability of arbitration agreements?

An arbitration agreement exists independently. Any changes to, rescission, termination or invalidity of the contract will not affect the validity of an arbitration agreement (Article 19, Arbitration Law).

 

Breach of an arbitration agreement

13. What remedies are available where a party starts court proceedings in breach of an arbitration agreement or initiates arbitration in breach of a valid jurisdiction clause?

Court proceedings in breach of an arbitration agreement

If a party starts court proceedings in breach of an arbitration agreement, the other party can object to the court's jurisdiction on the basis of the arbitration agreement. If the court decides that the arbitration agreement is valid, the action will be dismissed. In addition, a court can ex officio dismiss a case if it discovers the existence of a valid arbitration agreement.

If the defendant appears at the first court hearing without raising objection to the court's jurisdiction, the arbitration agreement will be deemed to have been waived by the defendant and the court will proceed. If the defendant does not appear at the first hearing, the court will dismiss the case if it finds that there is a valid arbitration agreement.

Arbitration in breach of a valid jurisdiction clause

If a party disputes the validity of an arbitration agreement it can apply to a competent court for a ruling. If the court decides that the arbitration agreement is invalid and the parties must abide by a jurisdiction clause, the arbitration proceedings will cease and the dispute will be referred to the court.

 
14. Will the local courts grant an injunction to restrain proceedings started overseas in breach of an arbitration agreement?

In theory, local courts have the power to issue injunctions under the Civil Procedure Law, but in practice they do not do this.

 

Arbitrators

Number and qualifications/characteristics

15. Are there any legal requirements relating to the number, qualifications and characteristics of arbitrators? Must an arbitrator be a national of, or licensed to practice in your jurisdiction in order to serve as an arbitrator there?

An arbitral tribunal can be made up of one or three arbitrators. Arbitrators must be fair and honest, and meet one of the following requirements:

  • Have been engaged in arbitration work for eight full years.

  • Have worked as a lawyer for eight full years.

  • Have worked as a judge for eight full years;

  • Engaged in legal research or legal teaching with a senior academic title.

  • Have legal knowledge and be engaged in professional work relating to economics and trade with a senior academic title or at the equivalent professional level.

Foreigners with professional knowledge in law, economics and trade, science and technology and other fields can also be appointed as arbitrators in foreign-related arbitrations.

 

Independence/impartiality

16. Are there any requirements relating to arbitrators' independence and/or impartiality?

Arbitrators must be fair and honest. They must withdraw from the arbitration (or a party can apply to have them withdrawn) if the arbitrator (Articles 13 and 34, Arbitration Law):

  • Is a party to the arbitration, or a close relative of a party or a party's agent.

  • Has any interest in the arbitration.

  • Has some other relationship with a party or a party's agent which might affect the impartiality of the arbitration.

  • Meets a party or the party's agent in private, or accepts any treatment or gifts from a party or the party's agent.

 

Appointment/removal

17. Does the law contain default provisions relating to the appointment and/or removal of arbitrators?

Appointment of arbitrators

If the parties agree to set up a tribunal of three arbitrators, each party will select or authorise the chairman of the arbitration commission to appoint one arbitrator. The third arbitrator must be selected jointly by the parties or be appointed by the chairman under a joint mandate from the parties. The third arbitrator will be the presiding arbitrator (Article 31, Arbitration Law).

If the parties agree to have a sole arbitrator, the arbitrator will be selected jointly by the parties or be appointed by the chairman of the arbitration commission under a joint mandate from the parties.

If the parties fail to appoint an arbitrator within the time limit set under the arbitration rules, the arbitrators will be appointed by the chairman of the arbitration commission (Article 32, Arbitration Law).

Removal of arbitrators

A party can apply to have an arbitrator withdrawn, which will be decided by the chairman of the arbitration commission. If the chairman is serving as an arbitrator, withdrawal will be determined collectively by the arbitration commission (Articles 35 to 37, Arbitration Law).

 

Procedure

Commencement of arbitral proceedings

18. Does the law provide default rules governing the commencement of arbitral proceedings?

This process is governed by the rules of the applicable arbitration institution. 

If an arbitration applicant who has been given a notice in writing fails to appear before the tribunal without due reason, or leaves the hearing without permission from the arbitral tribunal, the applicant will be deemed to have withdrawn his application (Article 42, Arbitration Law).

 

Applicable rules and powers

19. What procedural rules are arbitrators bound by? Can the parties determine the procedural rules that apply? Does the law provide any default rules governing procedure?

Applicable procedural rules

Arbitrators are bound by the arbitration rules the parties have agreed on and by the relevant procedural law of the country where the arbitration is seated.

For arbitrations seated in China, the procedures are subject to arbitration rules chosen by the parties (normally the rules of the arbitration commission to which the disputes are submitted), and the procedural rules contained in the Arbitration Law and the Civil Procedure Law. The arbitration rules agreed by the parties must not conflict with the mandatory rules under the Arbitration Law and the Civil Procedure Law.

Parties are free to agree variations to the standard institutional rules. For instance, Article 4(3) of CIETAC's arbitration rules provides that where the parties agree to refer their dispute to CIETAC for arbitration but have agreed on a modification of the rules (or have agreed on the application of other arbitration rules), the parties' agreement will prevail unless the agreement is invalid or in conflict with a mandatory provision of the law applicable to the arbitral proceedings. If the parties agree on the application of other arbitration rules, CIETAC must perform the relevant administrative duties under those rules.

Default rules

If the parties fail to agree on a set of rules, the rules of the selected institution apply by default.

 

Evidence and disclosure

20. If there is no express agreement, can the arbitrator order disclosure of documents and attendance of witnesses (factual or expert)?

Parties must produce evidence in support of their claims and the arbitration tribunal can also collect evidence of its own accord if it considers it necessary (Article 43, Arbitration Law).

If one party refuses to provide evidence, the tribunal can draw an adverse inference. Since an arbitration agreement does not bind third parties and the arbitral tribunal, unlike courts it has no authority to compel third parties to disclose documents. It is also generally difficult for an arbitral tribunal to get co-operation from third parties when collecting evidence. In practice, parties to an arbitration used to collect evidence from third parties by applying to the competent court to preserve such evidence. Recently, courts have become alert to the true intention of the parties applying for these interim measures and can refuse the application if they believe the purpose is actually to investigate and collect evidence.

If a non-party witness refuses to appear before the tribunal to render testimony, the party who provides the witness statement or intends to introduce the witness for testimony will be deemed to have failed to satisfy its burden of proof. The arbitral tribunal cannot compel a witness to appear for the hearing and it does not have the statutory power to compel a non-party to appear for the arbitration hearing.

 
21. What documents must the parties disclose to the other parties and/or the arbitrator? How, in practice, does the scope of disclosure in arbitrations compare with disclosure in domestic court litigation? Can the parties set the rules on disclosure by agreement?

Scope of disclosure

The parties must produce documents in support of their claims. If they fail to do so, they will not meet their burden of proof. There is no rule regulating document disclosure for arbitrations and arbitration commission rules rarely cover document disclosure. In practice, arbitral tribunals will not order the disclosure of documents.

Validity of parties' agreement as to rules of disclosure

In principle, the parties are bound by the procedural rules they agree upon, including rules of disclosure. For instance, Article 41(6) of the SCIA Arbitration Rules provides that where the parties have an agreement specifying the applicable evidence rules, their agreement will prevail unless it cannot be implemented or is in conflict with a mandatory provision of the law.

 

Confidentiality

22. Is arbitration confidential? If so, what is the scope of that confidentiality and who is subject to the obligation (parties, arbitrators, institutions and so on)?

Arbitration is confidential unless the parties agree otherwise. Generally, the parties, arbitrators, witnesses, translators, experts and all other parties participating in the arbitration are subject to confidentiality for both substantive and procedural aspects of it.

 

Courts and arbitration

23. Will the local courts intervene to assist arbitration proceedings seated in its jurisdiction?

Local courts can assist arbitration proceedings by ordering preservation of property or evidence if it appears that the arbitral award will be impossible or difficult to enforce, or the evidence might be destroyed or difficult to obtain later on (Articles 28 and 46, Arbitration Law.

In emergency situations where a party's rights and interests would suffer irreparable damage without prompt protective measures, the party can apply to court for property preservation measures before the arbitration proceeding is started (Article 101, Civil Procedure Law).

A court can order performance of certain acts or grant injunctions if its judgment will otherwise be impossible to enforce, or the parties' rights and interests will suffer damage (Article 100, Civil Procedure Law). Although this provision is not explicitly applicable to arbitrations, some argue that the new rule expands the scope of interim measures that the courts can order and should also apply to arbitrations. There is no judicial practice on the interpretation of the new rule and it remains to be seen how this rule will be applied in the future.

In foreign-related arbitrations, a party can submit an application for property preservation to the intermediate people's court at the place of the respondent's domicile or where the property is located. To preserve evidence, the application must be submitted to the intermediate people's court where the evidence is located.

In domestic arbitrations, such applications must be made to the basic courts and not the intermediate courts.

 
24. What is the risk of a local court intervening to frustrate an arbitration seated in its jurisdiction? Can a party delay proceedings by frequent court applications?

Risk of court intervention

There are several ways that a local court can intervene to frustrate an arbitration seated in China:

  • The arbitration agreement can be ruled to be invalid.

  • The arbitration award can be set aside by the intermediate people's court at the place where the arbitration commission is located.

  • The court can refuse to enforce the arbitral award unless the relevant conditions are met.

A local court cannot rule that a foreign-related arbitration agreement is invalid or that a foreign-related award cannot be enforced unless it receives consent from the Supreme People's Court.

Delaying proceedings

As a practical matter, a party can delay arbitration proceedings by applying to the competent court to rule on the validity of the arbitration agreement.

A party can delay enforcement proceedings by applying to the court to set aside or refuse to enforce the arbitral award.

 

Insolvency

25. What is the effect on the arbitration of pending insolvency of one of more of the parties to the arbitration?

Under the Enterprise Bankruptcy Law, the insolvency of one of more of the parties to the arbitration has the following effect:

  • Arbitration proceedings must be suspended after the court accepts the application for bankruptcy and can resume after an administrator takes over the party's property.

  • The administrator must participate in the arbitration on behalf of the party and continue to perform this role even after the party has been de-registered.

  • Any unsettled claims against the party in arbitration can be declared and at the time of distribution, a proportion of the property must be set aside in order to meet the claims. |If the property set aside cannot be distributed to the entitled party within two years from conclusion of the bankruptcy proceedings, it will be distributed to other creditors.

 

Remedies

26. What interim remedies are available from the tribunal?

Interim remedies

Interim remedies are not available from an arbitral tribunal, only from the competent court.

The China International Economic and Trade Arbitration Commission Rules (CIETAC 2012 Rules) permit a tribunal to order any interim measure it considers necessary or proper in accordance with the applicable law. This provision is intended for CIETAC arbitrations seated outside mainland China.

Ex parte

When a court orders property preservation measures, it must promptly notify the party whose property is subject to them (Article 103, Civil Procedure Law).

Security

The law does not explicitly grant arbitral tribunals the power to award security.

 
27. What final remedies are available from the tribunal?

Final remedies include damages, specific performance, injunctive relief, declarations, costs and interest.

 

Appeals

28. Can arbitration proceedings and awards be appealed or challenged in the local courts? What are the grounds and procedure? Can parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitral clause itself)?

Rights of appeal/challenge

The parties can apply to court to set aside or refuse to enforce an arbitral award.

Grounds and procedure

The grounds for setting aside or refusing to enforce a domestic arbitral award include (Article 58, Arbitration Law and Article 237, Civil Procedure Law):

  • There is no arbitration agreement between the parties.

  • The award deals with a dispute or contains decisions on matters which are not contemplated by or do not fall within the terms of the arbitration agreement, or the subject-matter of the dispute is not capable of settlement by arbitration under the law.

  • The composition of the arbitral tribunal or the arbitration procedure violates the requirements of the law.

  • The evidence on which the arbitral award is based is forged.

  • The other party has concealed evidence that is sufficient to affect the fair decision of the arbitral tribunal.

  • The arbitrator(s) has (have) demanded or accepted bribes, committed malpractice or perverted the law in making the arbitral award.

  • The arbitral award is in conflict with public interest.

The application to set aside or refuse to enforce an arbitral award must be made to the intermediate people's court where the arbitration commission is located, and the court must form a collegiate bench to review the application.

The grounds for setting aside or refusing to enforce a foreign-related arbitral award include (Article 70, Arbitration Law and Article 274, Civil Procedure Law):

  • There is no arbitration agreement between the parties.

  • The respondent was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case due to reasons not attributable to him.

  • The composition of the arbitral tribunal or the arbitration procedure violates the requirements of the law.

  • The award deals with a dispute or contains decisions on matters that are not contemplated by or do not fall within the terms of the arbitration agreement, or the subject matter of the dispute is not capable of settlement by arbitration under law.

  • The arbitral award is in conflict with public interest.

Waiving rights of appeal

The law does not have any provisions authorising parties to waive their rights of appeal or challenge an award by agreement before the dispute arises. Parties can agree that an arbitral award is final and binding but this will be without prejudice to the above grounds of appeal.

 
29. What is the limitation period applicable to actions to vacate or challenge an international arbitration award rendered?

Normally, an application to vacate a foreign-related arbitral award must be submitted within six months of its receipt. If the application exceeds the time limit due to a force majeure event or for other legitimate reasons, the party can apply for an extension of the time period within ten days after the causes for the extension are eliminated. The court has discretion to decide whether or not to allow the extension.

 
30. What is the limitation period applicable to actions to enforce international arbitration awards rendered outside your jurisdiction?

For arbitral awards within the scope of the New York Convention, or arbitral awards rendered in Hong Kong, Taiwan and Macau, the limitation period is two years.

Other foreign arbitral awards will be recognised and enforced under the relevant treaties to which China is a party, or on a reciprocal basis.

 

Costs

31. What legal fee structures can be used? Are fees fixed by law?

Fee structures can include hourly rates and task-based billing. Contingency fees are legal.

"Professional" third-party funders are unknown in China.

The most commonly used legal fee structure for commercial arbitrations is a fixed fee, plus a contingency fee based on the outcome of the arbitration.

 
32. Does the unsuccessful party have to pay the successful party's costs? How does the tribunal usually calculate any costs award and what factors does it consider?

Cost allocation

The unsuccessful party can be made to pay the successful party's costs if they agree this in the arbitration clause or agreement. Otherwise, the arbitration tribunal has discretion to decide the cost allocation between the parties.

Article 52 of the CIETAC's arbitration rules provides that the tribunal has the power to decide in the award that the losing party will compensate the winning party for its expenses reasonably incurred by it in pursuing the case, having regard to the circumstances of the case, including the:

  • Outcome and complexity of the case.

  • Workload of the winning party and/or its representative(s).

  • Amount in dispute.

Such expenses normally include part of the legal fees.

Cost calculation

The costs will be calculated based on the evidence provided by the winning party, such as the retainer agreement with lawyers, any bills or invoices, and any other proof of costs. The tribunal has the power to allocate the costs having regard to the circumstances of the case. Usually only "reasonable" costs will be upheld.

Factors considered

The factors the tribunal usually considers include the:

  • Nature, outcome and complexity of the case.

  • Fault of each party.

  • Workload of the winning party and/or its representative(s).

  • Amount in dispute.

 

Enforcement of an award

Domestic awards

33. To what extent is an arbitration award made in your jurisdiction enforceable in the local courts?

Most arbitration awards are performed voluntarily by the parties. If an award is not performed, the applicant must apply to the intermediate people's court where the respondent is domiciled or where the respondent's property is located to enforce it.

If the respondent applies to the competent court to vacate the arbitral award at the same time that the applicant has applied for enforcement, the enforcement proceedings will be suspended. If the court rules to vacate the arbitral award, the enforcement proceedings will be terminated. If the court rejects the application to set aside the award, the enforcement will resume.

The time limit to apply for enforcement is two years from either the:

  • Last day of the performance period specified in the arbitral award.

  • Last day of each performance period if the arbitral award requests performance in instalments.

  • Effective date of the arbitral award if the award does not specify a period for performance.

In the last six months of the time period available to apply for enforcement, if an application for enforcement cannot be filed due to a force majeure event or other obstacles, the calculation of the time limit will be suspended and resume after the suspension causes are eliminated.

If the parties reach a settlement, or one party requests the performance of the award or agrees to perform the award, the time limit for applying for enforcement will be started again.

Refusal to enforce a foreign-related award must be approved by the Supreme People's Court.

 

Foreign awards

34. Is your jurisdiction party to international treaties relating to recognition and enforcement of foreign arbitration awards, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)?

China is a party to the New York Convention subject to the reciprocity and commercial reservations.

A separate arrangement with Hong Kong (which is treated as a different jurisdiction for the purposes of arbitration), was entered into in 2000 and adopts the same general principles as the New York Convention (Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region).

The Supreme Court has issued a judicial interpretation about recognising and enforcing arbitral awards made in Taiwan.

 
35. To what extent is a foreign arbitration award enforceable?

UK and US arbitration awards within the scope of the New York Convention are enforceable in China. For foreign arbitral awards not covered by the New York Convention, China will recognise and enforce them in accordance with relevant treaties or based on reciprocity.

An application to enforce an arbitral award under the New York Convention must be submitted to the intermediate people's court, specifically if the party subject to enforcement:

  • Is a natural person, in the place where his/her residence is registered or where his/her domicile is located.

  • Is a legal person, the place where its principal office is located, or where its enforceable property is located.

  • Has no residence, domicile or principal office in China but has property in the territory of China, in the place where that property is located.

The enforcement of foreign arbitration awards (awards by tribunals seated outside China) is subject to a reporting regime. Lower courts cannot refuse to recognise and enforce an award without referring the decision to the higher courts. The Supreme People's Court is the only court that can decide to refuse to recognise and enforce a foreign arbitration award.

 

Length of enforcement proceedings

36. How long do enforcement proceedings in the local court take, from the date of filing the application to the date when the first instance court makes its final order? Is there an expedited procedure?

A court must make a ruling on the application to enforce an arbitral award under the New York Convention within two months from the date of acceptance of the application. Barring any special circumstances, it must enforce the ruling within six months. In practice, it can take much longer. For example, the party against whom the application is made can object to the jurisdiction of the enforcing court, or the court may not strictly abide by the rules on time limits.

For domestic awards, the court hearing the application for enforcement has the full power to decide on whether to refuse it or not. For foreign awards, the court hearing the application for enforcement only has the power to decide on recognition and enforcement. If the court intends to refuse recognition and enforcement, it must report to its higher court and the Supreme Court has the final say.

 

Reform

37. Are any changes to the law currently under consideration or being proposed?

The Supreme People's Court is looking into the issue of the relationship between arbitrations and court proceedings. Rules about judicial review of arbitrations are being discussed.

 

Main arbitration organisations

China International Economic and Trade Arbitration Commission (CIETAC)

Main activities. CIETAC independently and impartially resolves economic and trade disputes using arbitration.

W www.cietac.org

Beijing Arbitration Commission/Beijing International Arbitration Center (BIAC)

Main activities. BIAC is a permanent arbitration body which settles contractual and property-related disputes among equal parties including natural persons, legal persons and other organisations.

W www.bjac.org.cn

Shanghai International Economic and Trade Arbitration Commission/Shanghai International Arbitration Center (SHIAC)

Main activities. The SHIAC arbitrates disputes including trade, investment, transfer of technology, M&A, finance, securities, insurance, real estate, construction, logistics, intellectual property, franchising, energy, environment interest and information technology.

W www.cietac-sh.org/SHIAC/index.aspx

Shenzhen Court of International Arbitration/South China International Economic and Trade Arbitration Commission (SCIA)

Main activities. SCIA is an arbitration institution founded to resolve contract and other property rights disputes among individuals, legal entities and other institutions from domestic China and overseas. It is the nationally first arbitration institution established by legislation with its legal person governance model.

W www.sccietac.org

China Maritime Arbitration Commission (CMAC)

Main activities. Please refer to the introduction on its website.

W www.cmac-sh.org



Online resources

China law

W www.chinalaw.gov.cn/article/fgkd/xfg

Description. The website is maintained by the central government and contains official texts of legislations. There is no official website where English-language translations can be obtained.

Supreme People's Court of China

W http://wenshu.court.gov.cn

Description. The website is maintained by the Supreme People's Court of China and contains texts of cases of different instances. There is no official website where English-language translations can be obtained.



Contributor profile

Huang Tao, Partner

King & Wood Mallesons

T +86 10 5878 5029
F +86 10 5878 5522
E huangtao@cn.kwm.com
W www.kwm.com

Professional qualifications. China, 1994

Areas of practice. International commercial and maritime litigation and arbitration

  • Recent transactions Represented a large Chinese state-owned enterprise in ICC arbitration over an international contract dispute with an US equipment supplier.
  • Represented one of the world's biggest solar panel manufacturers in a large scale trade dispute arbitration against a Korean company before the ICC in Hong Kong.
  • Represented a large steel state-owned enterprise in a large scale trade disputes arbitration case against four Australian companies before the LCIA in London.
  • Represented a Chinese public company in HKICA arbitrations in relation to share-purchase agreement for a gold mine in South Africa.
  • Represented various Chinese agricultural and food enterprises in more than 20 arbitration cases before FOSFA and GAFTA in London.
  • Represented a Macau company in a CIETAC arbitration relating to a high-speed road franchising agreement dispute against a Chinese local government.
  • Represented a Korean client in CIETAC arbitrations in relation to international sale of goods contract disputes.
  • Engaged by a Singapore company as an expert witness in an SIAC arbitration relating to a share purchase agreement.
  • Engaged by a Thailand company as an expert witness in an SIAC arbitration relating to a purchase of equipment contract.

Languages. Mandarin, English

Publications

  • Validity of Arbitration Agreements under Chinese Law, published in Resolving Business Disputes in Today's China, by Harvard Club, 2009.
  • An Introduction to the Resolution of International Commercial Disputes in China, published in International Commercial Dispute Resolution Publication, by Tottel Publishing, 2009.
  • Ambush Marketing in Beijing Olympics and Measures of Anti-ambush Marketing, published in China Law (Hong Kong edition), 2008, 2 (70).
  • Practical Issues in Anti-dumping Application, published in Economic Law Review Volume 2, 2006.

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