4. Rules of Other Arbitration
Institutions
The current rules provide that
where the parties have agreed on
the application of other arbitration
rules, the parties’ agreement shall
prevail except where such
agreement is inoperative or in
conflict with a mandatory provision
of the law of the place of
arbitration. Such a provision faces
some practical difficulties when the
application of other arbitration
rules is in conflict with CIETAC
rules. The New Rules make it clear that CIETAC will
fulfill its administrative duties for other arbitration
institutions when other arbitration rules are used. It
may be seen as a sign that CIETAC will be more open to
using the rules of other arbitration institutions.
Luming Chen at
Junhe Law Offices
in Shanghai
5. Summary Proceedings
Under the current rules, summary proceedings will be
used in a case where the amount in dispute does not
exceed RMB 500,000. Due to the increase of amount in
dispute in many cases, the New Rules will raise the
threshold to RMB 2,000,000. It is contemplated that a
large number of cases will be handled through summary
proceedings after the New Rules are adopted.
JUDICIAL SUPPORT
It is generally expected that the implementation of the
Law and New Rules will further systemize and
modernize international arbitration in China. Meanwhile,
it is observed that the unfailing support from the
Chinese court has also played an important role in
safeguarding the development of international
arbitration in China.
1. Few Rejections by Chinese Courts
Prior to 2000, comparatively few foreign arbitral
awards were filed with Chinese courts for recognition
and enforcement. Since 2000, the number of filings has
been continuously increasing. A majority of foreign or
foreign-related arbitral awards have been successfully
recognized and enforced in Chinese courts. Statistics
show that there have been only 23 applications that
were rejected by Chinese courts since 2000; most
rejections were made on the basis of violation of due
process under the New York Convention.
2. Pre-reporting System
Under Chinese law, to recognize and enforce a foreign
arbitral award, a foreign company should go to a
competent Chinese court at the intermediate level. If
the court thinks that the foreign arbitral award will not
be recognized and enforced, under the current pre-reporting system, the court is required to report to the
higher court. Should the higher court concur with the
intermediate court on the rejection, it must report to
the Supreme People’s Court for final review. Under this
pre-reporting mandate, the Supreme People’s Court is
in a good position to monitor all the potential rejections
of applications for recognition of foreign arbitral awards
in the courts all over the country. The system has
effectively established a centralized reporting and
review mechanism. It has maintained the uniformity and
conformity of the judicial review. At the same time, it
has also effectively minimized local protectionism that
is one of the main concerns to many foreign companies
and lawyers.
3. Cautious Use of Public Policy Reservation
Some foreign companies have questions on how the
public policy reservation in the New York Convention is
used by the Chinese judiciary. Statistics shows that
among the 23 rejections in the past ten years, there is
only one case where the Chinese court used public
policy violation. It is generally observed that Chinese
courts have been extremely cautious in using the public
policy reservation when determining whether to
recognize a foreign arbitral award.
CONCLUDING REMARKS
The Law and New Rules codify the existing practice in
many important areas, while adding a number of
innovative features intended to address the growing
complexity of today’s arbitration and demands for
efficiency and cost-effectiveness. These new changes
as well as the past achievements imply that China is
striving to integrate its arbitration system and keeps
pace with the international standards.
In response to these new changes, this article also
offers a salutary reminder to companies and their legal
counsel of the importance of amending China-related
arbitral agreements in light of the Law and New Rules.
Please note that this article is unable to address all
changes made in the Law and New Rules. If you wish to
discuss any of the issues outlined above, please contact
the writer for more details. ■
Author:
Luming Chen
Partner
Junhe Law Offices
32/F, Shanghai Kerry Centre
1515 Nanjing Road West
Shanghai 200040, China
Office: 86-21-5298-5488 ext 6396
Direct: 86-21-2208-6396
Fax: 86-21-5298-5492
Email: chenluming@junhe.com
