The Value of Chinese Lawyers
-To secure the foreign party an international arbitral award recognizable and enforceable before the Chinese court
2017/2/17 11:06:11 点击率[28] 评论[0]
【法宝引证码】
    【学科类别】律师
    【出处】邓永泉律师的博客
    【写作时间】2012年
    【中文关键字】中国律师;价值
    【英文关键字】Value; Chinese Lawyers
    【全文】

      The recognition and enforcement of foreign arbitral awards in China comprises two parts: one is the “recognition”, and the other is the “enforcement”. “Recognition” is to examine whether there are any factors that render the arbitral award non-recognizable; while “Enforcement” is the actual act to enforce the respondent's asset and realize the creditor's rights under the arbitral award. In a boarder sense, recognition involves two aspects. First is to avoid any factors that affect the recognition of the arbitral award during the arbitration process; second is to prove to Chinese courts that no factors would render the arbitral award non-recognizable during the recognition and enforcement process.
     
      Generally, foreign parties to international commercial arbitration will retain Chinese legal counsel only during the recognition and enforcement proceedings of foreign arbitral awards. For instance, foreign parties usually only retain Chinese counsel to prove to the Chinese courts that no circumstance that renders the arbitral award non-recognizable so that creditors' rights are able to be enforced without hindrance. If, at this stage in proceedings, there are circumstances that will affect the recognition of the arbitral award, then the Chinese legal counsel's hands are tied. If, however, the foreign parties had consulted Chinese legal counsel when entering into the arbitration agreement, and engaged Chinese lawyers to serve as one of their representatives in the arbitral proceedings, the Chinese legal counsel would have been able to alert the parties and the arbitral tribunal to the circumstances in which Chinese courts will refuse to recognize and enforce arbitral awards, thereby ensuring that the foreign parties could ultimately obtain an award recognizable and enforceable in China. The key focus of this article is to discuss the ways that Chinese lawyers can manage and reduce the legal risks arising for foreign parties in China-related international commercial arbitration.
     
      1.      Arbitration conducted in the territory of a signatory to the new york convention
     
      Applications to the Chinese courts for the recognition and enforcement of foreign arbitral awards shall be handled either in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, adopted in New York in 1958 (hereinafter referred to as “the New York Convention”), or on the basis of the principle of reciprocity.[1]
     
      Chinese courts recognize three categories of arbitral awards: (1) domestic awards, (2) foreign-related domestic awards and (3) foreign awards. Foreign awards can be further divided into: (3-1) awards made in countries that are signatories to the New York Convention (hereinafter, “Convention Awards”), (3-2) awards made within the territory of countries that are not signatories to the New York Convention but have entered into other arbitration treaties with China, and (3-3) awards made within the territory of countries that are neither signatories to the New York Convention nor party to any other arbitration treaties with China. The second and third categories of arbitral award are regarded as international commercial arbitral awards according to the Chinese legislative structure.
     
      The first and second categories of arbitral award are enforced in accordance with the terms of the Civil Procedure Law of the People's Republic of China and the Arbitration Law of the People's Republic of China; arbitral awards under category (3-1) are enforced in accordance with the terms of the New York Convention and the Civil Procedure Law;[2] awards under category (3-2) are enforced in accordance with the terms of the relevant bilateral treaty and the Civil Procedure Law. Arbitral awards under (3-3) can be enforced only under the principle of reciprocity, yet neither the Civil Procedure Law nor the Arbitration Law contains any provisions as to how the Chinese courts apply the principle of reciprocity.[3]  Therefore, despite that the Civil Procedure Lawexplicitly states that Chinese courts may recognize and enforce foreign arbitral awards “in accordance with the principle of reciprocity”; in practice, however, it is very difficult for the Chinese courts to recognize and enforce awards of this kind, as there is no clear statutory basis on which Chinese courts may rely.
     
      Therefore, to ensure a smooth recognition and enforcement proceedings of a foreign arbitral award in China, it's better for the parties to select a country that is a signatory to the New York Convention as the venue (the so-called “seat of arbitration”)。 Parties shall not rely on the principle of reciprocity for Chinese courts to recognize and enforce their foreign arbitral awards.
     
      2.      Selecting an appropriate governing law for the arbitration agreement
     
      The governing law of the arbitration agreement is the applicable law of the arbitration clause. The governing law of the arbitration agreement and the governing law of the contract are two distinctive concepts; the governing law of the contract is not necessarily the governing law of the arbitration agreement. The former is the law applicable to the substantive issues of contractual dispute, while the latter is the law applicable to the procedural issues.These two can be separated, and in some circumstances they have to be separated.[4] The parties can select the governing law for their arbitration clause on the principle of autonomy of will; where no choice is made, the law of the “place” or “seat” of arbitration will be the governing law.[5]The principle of autonomy of will in arbitration is widely accepted throughout the world, and international conventions further recognize that the law chosen by the parties themselves shall be the preferred law applicable to the arbitration clause.[6]
     
      Under PRC law, the governing law of the contract and the governing law of the arbitration agreement can also be separated. In the dispute between Zhangjiagang Electronics and the international company Brose regarding the parties' joint venture contract, the Supreme People's Court reached the following conclusion in respect of the validity of a foreign-related arbitration clause.[7]
     
      Article 126(2)[8]of the Contract Law of the People's Republic of Chinain respect of the governing law applies to the substantive issues arising under the contract, but does not apply to the validity of the arbitration clause contained in the contract. Moreover, the governing law of the arbitration agreement within a Sino-foreign joint venture contract is not required to be PRC law.Since the parties had not expressly agreed upon the governing law for the validity of their arbitration clause, the law of the seat of arbitration agreed by the parties--Switzerland--was to be applied. Furthermore, in accordance with the relevant provisions of Swiss law, the arbitration clause was valid, and Chinese courts therefore have no jurisdiction over the dispute.
     
      Both the validity of the arbitration agreement and the proper conduct of the arbitration proceedings involve the governing law of the arbitration agreement.Different conclusions regarding above two issues may be reached with different governing law applied,whichmay further lead to the courts refusing to recognize and enforce the arbitral award on account of the invalidity of the arbitration agreement[9] or the improper conduct of the arbitral proceedings.[10] Therefore, the parties must pay highly attention to their choice of the governing law of the arbitration agreement, knowing exactly what law they have chosen to be the governing law, whether their arbitral agreement is valid under such governing law, as well as the procedures to be observed in the arbitration.
     
      3.      selecting ad hoc arbitration in accordance with the governing law of the arbitration agreement
     
      Article I (2) of the New York Convention provides that the term “arbitral awards” includes not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies by which the parties have submitted; in other words, under the New York Convention, both institutional arbitral awards and ad hoc arbitral awards can be the subject of applications for enforcement. However, according to Article V(1)(a) of the New York Convention, if an arbitration agreement is invalid, the country where recognition and enforcement is sought may refuse to recognize and enforce the foreign arbitral award upon application by the party against whom enforcement is sought.[11]
     
      Chinese courts recognize arbitral awards issued by ad hoc arbitral bodies,[12] but there are no express provisions under PRC law recognizing ad hoc arbitral bodies and its awards[13]. The Civil Procedure Law and the Arbitration Law both regulate “institutional arbitration” only,[14] and the Notice of the Supreme People's Court on the Handling by the People's Courts of Issues in Foreign-related Arbitration and Foreign Arbitration also deals only with “institutional arbitration”. In addition, the Arbitration Law expressly provides that the parties to a contract must select an arbitral institution in their arbitration agreement, and the special circumstances in relation to the selection of an arbitral institution referred to in the provisions of the Supreme People's Court's Interpretation of Several Issues Relating to the Application of the Arbitration Law of the People's Republic of China do not include ad hoc arbitration. It is therefore fair to say that there is no room under PRC law for ad hoc arbitral awards.[15] As a consequence, if the governing law of an arbitration agreement is PRC law, and the respondent in the enforcement proceedings initiated under the arbitration agreement requests that the court refuse to recognize and enforce a foreign ad hoc arbitral award, then the court in which the proceedings are brought (whether a domestic Chinese court or a court in any other jurisdiction) can refuse to recognize and enforce the arbitral award.[16] For this reason, the parties to a contract should carefully consider whether the governing law of their arbitration agreement recognizes ad hoc arbitration; if ad hoc arbitration is not recognized by that governing law, then either ad hoc arbitration should not be chosen by the parties, or the governing law in question should be replaced with one which recognizes ad hoc arbitration.
     
      4.      selecting an appropriate place or seat of arbitration
     
      The “place of arbitration” or “seat of arbitration” in international commercial arbitration is a legal rather than a geographic concept, and means that arbitration is conducted within a certain country's arbitration legal framework. In international commercial arbitration, arbitral proceedings are commonly conducted in various different locations, including the place where the dispute is originally accepted, the place where the materials relating to the arbitration are submitted, the place where the hearing of the case is conducted, the place where the arbitral tribunal meets to discuss the case, the place where the arbitral award is signed, the place from which the arbitral award is issued, and so on. In addition, to make the arbitration proceedings more convenience and cost effective, arbitral tribunals will commonly conduct case hearings or discussions, or sometimes even execute the final award, in multiple countries or regions. These countries and regions are all places in the geographic sense. These are places where the various proceedingsphysically occur during the arbitration, but not the place of arbitration occurs in legal sense.[17] In contrast to the physical locations, there can only be one “place” or “seat” of arbitration in legal sense. As Article 31(3) of the 1985 UNCITRAL Model Law on International Commercial Arbitration states: “The award shall state its date and the place of arbitration as determined in accordance with article 20(1)。 The award shall be deemed to have been made at that place.”
     
      The parties to the contract may either explicitly agree upon the place/seat of arbitration or make arrangements for the place/seat of arbitration by citing the provisions of a particular set of arbitral rules referring to the seat of arbitration. Legislation in many countries permits the parties to freely choose the seat of arbitration.[18] If the parties have not agreed upon the seat of arbitration or their agreement on the seat of arbitration is unclear, the arbitral institution, the tribunal or the court is entitled to designate the seat of arbitration in accordance with certain rules.[19]Because the seat of arbitration place an important role in determining the governing law of the arbitration agreement and thereby the validity of the arbitration agreement, and moreover, thecourts at the seat of arbitration are entitled to annul and supervisethe arbitral awards issued within the jurisdiction (upon request), the parties must explicitly agree upon the seat of arbitration; otherwise, the seat of arbitration becomes highly uncertain, and so does the validity of an arbitration agreement.
     
      5.      entering into a valid arbitration agreement
     
      Arbitration agreements are the foundation of international commercial arbitration; according to the terms of the New York Convention, arbitration agreement is the prerequisite to initiate arbitration[20] and the basis for recognition and enforcement of an arbitral award.[21]Under either proceeding, the courts of a signatory state must determine whether an arbitration agreement exists. The courts will consider (1) the capacity of the parties to the agreement and (2) the validity of the arbitration agreement.[22]
     
      Regarding the capacity of the parties to the agreement, if either of the parties is suffering any legal incapacity at the time of entering into the arbitration agreement, then the arbitration agreement will be deemed invalid. The New York Convention does not expressly provide which country's law should be applied in determining whether either of the parties to an arbitration agreement was suffering from legal incapacity of any kind, but based on the general principles of private international law, the legal capacity of the parties to an arbitration agreement should be determined in accordance with their lex peronalis, i.e., the laws of their country of nationality or domicile. One point that needs to be borne in mind is that, even though the law applicable to the parties and the governing law of the arbitration agreement will commonly be the laws of the same country, the two concepts are quite distinct, with the law applicable to the parties to the arbitration agreement generally being the law of their place of domicile. When signing the arbitration agreement, if the counter-party to the agreement is a natural person, the party to the arbitration agreement should consider whether the counter-party possesses full legal capacity in accordance with the law applicable to the counter-party; if the counter-party is an institution, then the party to the arbitration agreement should assess whether the counter-party to the agreement constitutes a lawfully established and existing institution in accordance with the law applicable to it, and should also assess whether the natural person executing the arbitration agreement on behalf of the institution is able to represent the counter-party.[23]
     
      As regards the validity of the arbitration agreement, an assessment of the validity of the arbitration agreement should be made on the basis of the New York Convention and the requirements of the governing law of the arbitration agreement. The New York Convention expressly states that the arbitration agreements should be “in writing,”[24]and divides “written agreements” into two broad categories.[25]The first category consists of an arbitral clause contained in a contract executed by the parties or an independent arbitration agreement executed by the parties; the second category consists of an arbitration clause contained in a contract constituted through an exchange of letters or telegrams between the parties, or a separate arbitration agreement contained in an exchange of letters or telegrams between the parties.
     
      The judicial practice in all countries is to adopt a relatively lenient approach in relation to the first category, comprising “written agreements”. The parties are generally not required to have signed on the same document, and the interpretation of “document” in this context is relatively broad as well, not limited to “contracts” or “agreements” in the narrow sense.[26] With respect to the second category of “written agreements”, the parties to an agreement should bear in mind that only where an offer and acceptance is capable of being construed from their exchange of letters or telegrams will they be deemed as having entered into an arbitration agreement.[27]
     
      Finally, in practice, there are a number of special circumstances in which parties will be deemed to have entered into an arbitration agreement.[28] In these circumstances, the parties to the agreement should carefully consider whether they have entered into a valid arbitration agreement, taking into account both the governing law of the arbitration agreement as well as the judicial practice of the supervising court and the court likely to recognize and enforce the award. For example, “tacit” arbitration agreements are not generally recognized under PRC law, but under certain exceptional circumstances, it is possible for Chinese courts to recognize a tacit arbitration agreement.[29]
     
      6.      conducting settlement Negotiations prior to the initiation of arbitral proceedings in accordance with the terms of the arbitration agreement
     
      The parties to a contract will commonly agree to first attempt an amicable resolution of their dispute, and to only submit their dispute to arbitration in the event that those negotiations are unsuccessful. The Chinese courts also recommend this arrangement. In a case involving PepsiCo Investment (China) Ltd.'s applications for the recognition and enforcement of arbitral award No. 111/2003 and No. 076/2002issued by the Arbitration Institute of the Stockholm Chamber of Commerce, the parties to the dispute had agreed to arbitration clauses of the underlying contracts to a period of negotiations of 90 and 45 days respectively, with each party entitled to submit the dispute to arbitration when negotiations fails.  The applicants in both cases submitted the dispute to arbitration immediately the dispute occurred without prior negotiations, and requested the Chinese courts to recognize and enforce of the arbitral award. The Chinese court held:
     
      the initiation of arbitral proceedings by one of the parties and the tribunal's review and acceptance of the case both constitute parts of the arbitral proceedings…The parties had agreed in their arbitration clause that in the event of a dispute arising in respect of the contract, there was a prerequisite to the commencement of arbitral proceedings, namely that only where the parties had negotiated the dispute yet were unable to resolve their dispute within a further 45 days…The tribunal's acceptance of PepsiCo's arbitration requestsand its initiation of the arbitral proceeding before the parties had attempted to negotiate was inconsistent with the arbitral agreement; in other words, there was an inconsistency in this case between the arbitral proceedings and the terms of the arbitration agreement. In accordance with Article 5(1)(d) of the New York Convention, it should not be recognized and enforced by the Chinese courts.“[30].
     
      Accordingly, it is important for the parties to an arbitral agreement first to check whether their arbitration agreement provides for pre-arbitration negotiations before initiating arbitral proceedings; if there is such a pre-negotiations provision in place, the parties must first enter into negotiations with the counter-party to the contract, initiating arbitral proceedings only if such negotiations are unsuccessful. In practice, some arbitration agreements contain pre-negotiations provisions that are extremely unclear, such as ”any disputes should be resolved through arbitration upon their occurrence; disputes that cannot be resolved through negotiations may be submitted to arbitration.“ Provisions of this kind may not be restrictively appliedto the parties due to their ambiguity,[31] but in light of the serious consequences of refusal of recognition and enforcement, it is recommended that parties in these circumstances issue a formal notice to their contractual counter-party for the negotiations, and then only initiate arbitral proceedings if the negotiations remain unsuccessful following the passage of a reasonable period of time.[32]
     
      7.      the request for arbitration must not contain matters that are not arbitrable under PRC law
     
      Under Article 5(2) of the New York Convention,[33]recognition and enforcement of an arbitral award may also be rejected if the competent authority in the country where recognition and enforcement is sought finds that the subject matter of the issue is not suitable for arbitration under the law of that country. It should be noted here that the courts in the country where recognition and enforcement is sought can undertake a review of these matters based on their own inherent authority, and it is not necessary for the respondent in the enforcement proceedings to make an application to the courts in this respect. In addition, in China ”arbitrability“ is one aspect of ”public policy“, and ”violation of public policy“ in fact already includes the notion that ”the subject matter of the dispute is not suitable for arbitration“. Therefore, Chinese courts will always conduct an assessment of whether the arbitral award covers any non-arbitrable issues in accordance with PRC law. Under PRC law, contractual disputes and other property disputes arising between citizens, legal persons and other organizations of equal footing are arbitrable;[34] marital disputes and disputes regarding adoption, guardianship, family support and succession, as well administrative disputes that should be handled by administrative authorities in accordance with the law, cannot be arbitrated.[35] The parties to a contract must ensure that their arbitral claims do not contain any of the aforesaid matters.
     
      8.      The tribunal must not exceed the scope of its authority; the applicant should to the extent possible itemize each of its arbitral claims separately and clearly delineate the liability of each respondent
     
      Arbitral award by tribunal outside its scope is one of the circumstances listed under the New York Convention where an arbitral award may not be recognized and enforced.[36] The courts in the country where recognition and enforcement is sought should review the award to determine whether the tribunal has exceeded its authority in accordance with the terms of the New York Convention. The provisions of the New York Convention prescribe two ways in which a tribunal may exceed its authority: by exceeding the scope of the arbitration agreement and by exceeding the scope of the claimant's arbitral claims.
     
      In this context, it is important to note that the arbitration agreement is only binding on the immediate parties to the arbitration agreement, and third parties other than the parties to the arbitration agreement shall not become parties to the arbitral proceedings. The arbitral tribunal must not issue rulings in respect of matters involving such third parties. In a case where US company GMI' sought to recognize and enforce of an arbitral award against London Stock Exchange,[37] the parties to the arbitration agreement were GMI and the Wuhu Smelting Plant, but the US company GMI also included Wuhu Hengxin Copper Industry Group Co., Ltd. as a respondent to the arbitration. The arbitral tribunal therefore issued an award in respect of the three-party arbitration between GMI, the Wuhu Smelting Plant and Wuhu Hengxin Copper Industry Group Co., Ltd The Chinese court, however, refused to recognize and enforce that part of the arbitral award concerning Wuhu Hengxin Copper Industry Group Co., Ltd.
     
      In another case to recognize and enforce an arbitral award No.13464/MS/JB/JEM issued by the Court of Arbitration of the International Chamber of Commerce involving Hemofarm DD, MAG International Trading Co. and Sulame Media Co., Ltd.,[38] the arbitration clause executed by the parties was only applicable to disputes between the joint venture partners relating to the joint venture, and was not applicable to the lease dispute between the respondent and the joint venture company. The tribunal issued a ruling on the lease dispute between the respondent and the joint venture company, which exceeds the scope of the arbitration clause contained in the joint venture contract. The Chinese courts therefore refused to recognize and enforce the arbitral award.
     
      Where the tribunal has exceeded the scope of its authority, the courts in the country where recognition and enforcement is sought will consider whether the part of the award exceeding the tribunal's authority can be separated from those parts of the award within the scope of the tribunal's authority.If the two parts can be separated, the courts will recognize and enforce the part falling within the scope of the tribunal's authority and reject the part which exceeds the tribunal's authority. In order to avoid the situation where the exceeding part of the award becomes inseparable from the remainder of the award, the claimant should, when initiating arbitral proceedings, ensure that each of its claims is individually itemized to the greatest possible extent and, where there are two or more respondents, should delineate the respective liability of each respondent to the greatest extent possible. The final award should also be addressed to each respondent separately, and avoid addressing all respondents collectively as ”the respondents“.[39]
     
      9.      strict observance of due process
     
      Violation of due process is one of the grounds upon which the country in which recognition and enforcement is sought may refuse to recognize and enforce an arbitral award. The due process applicable to arbitration originates from three sources: the arbitration agreement itself, the governing law of the arbitration agreement and the governing procedural law of the arbitral proceedings. In order to avoid arbitral award being annulled by the supervising court or rejected to recognize and enforced in the courts where recognition and enforcement is sought, the parties to an arbitral agreement and the tribunal must closely study the arbitral agreement, its governing law and the procedural law governing the arbitration, and strictly observe any procedural requirements.
     
      1)     The tribunal or the party to the arbitral proceedings must give the other party to the proceedings proper notice of the appointment of its arbitrator and the existence of the arbitral proceedings, and must adduce evidence to prove that it has done so
     
      Article 5(1)(b) of the New York Convention provides the following as one of the grounds when requests of recognition and enforcement may be rejected: ”The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.“ Based on this provision, the arbitral tribunal or the parties to the proceedings must give the other party proper notice on the appointment of the arbitrator and the arbitration proceedings; otherwise, the courts in the country where recognition and enforcement is sought may refuse to recognize and enforce the arbitral award. If the respondent claims that it has not been given proper notice on either the appointment of the arbitrator or the arbitration proceedings, then in the recognition and enforcement proceedings, the applicantshall prove to the court that such notice was given, either by the applicant or by the tribunal. If the applicantfailed to prove it, the country in which recognition and enforcement is sought can refuse to recognize and enforce the arbitral award. Therefore, either the tribunal or one of the parties to the proceedings must give the other party to the proceedings proper notice of the appointment of the arbitrator and the arbitration proceedings themselves. The ”proper notice“ means that the form of the notice must comply with the governing procedural law of the arbitration proceedings.
     
      In a recognition and enforcement proceeding brought by a Japanese company Shinetsu for its arbitral award No. 04-05 issued by the Japanese Commercial Arbitration Association in Tokyo,[40] the rules applicable to the arbitral proceedings were the Arbitration Rules of the Japanese Commercial Arbitration Association and the Japanese Arbitration Law, but the tribunal failed to inform the Chinese party to the proceedings in accordance with the Arbitration Rules the time limit for the tribunal to renderthe decision, thereby violated Article 5(1)(b) of the New York Convention (”The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.“) In addition, when the Japanese party moved to amend its request for arbitration, the tribunal did not inform the Chinese party of such request, depriving the Chinese party of the rights and opportunities to submit a defense, which also violated Article 5(1)(b) of the New York Convention. The Chinese court therefore refused to recognize and enforce the arbitral award.[41]
     
      In another case where the World Maritime Shipping Management Company attempted to recognize and enforce an arbitral award issued in London, England in respect of a lease contract against the ABRA vessel dated 28 December 2004,[42] the applicant had delivered the notice of its selection of an arbitrator by email during the course of the arbitration proceedings. Although this did not violate the procedural law governing the arbitration (the 1996 Arbitration Law of England), nor did it violate any mandatory legal provisions applicable at the respondent's place of domicile, however, the applicant should have requested that the respondent's reply upon receipt of the notice. In the absence of such reply, the applicant had to prove to the court that the respondent had received the appointment notice; otherwise, the notice would be considered not delivered/received. The Chinese court ultimately refused to recognize and enforce the arbitral award in accordance with Article 5(1)(b) of the New York Convention.
     
      2)     formation of the arbitral tribunal and conduct of the arbitration in strict observance due process
     
      Article 5(1)(d) of the New York Convention provides the following as one of the grounds for refusing to recognize and enforce an arbitral award: ”The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place.“ Accordingly, the tribunal and the parties to the arbitration must form the arbitral tribunal and conduct the arbitration strictly following the due process; otherwise, the courts in the country where enforcement is sought can refuse to recognize and enforce the award.
     
      When Bunge Agribusiness Singapore Pte. Ltd.'s tried to recognize and enforce an arbitral award rendered in London by an arbitrator of the Federation of Oils, Seeds and Fats Associations (”FOSFA“),[43]the parties to the arbitration agreement had expressly agreed to apply FOSFA's Rules of Arbitrations and Appeals (amended and effective on 1 January 2001), as well as the 1996 Arbitration Law of England. Rule 1(f) of the Rules of Arbitrations and Appeals provides that:
     
      The Federation will notify the party who has failed to make an appointment or a substitution of its arbitrator, as the case may be, that the Federation intends to make such an appointment unless that party makes its own appointment within 14 consecutive days of notice being dispatched to it by the Federation. In the absence of an appointment being notified to the Federation within the stipulated period the Federation shall make such an appointment.
     
      In this case, following the voluntary withdrawal of Mr. S. Bigwood, the arbitrator appointed by the Respondent, Guangdong Fengyuan Grain and Oil Group Co., Ltd., the tribunal had not sent notice to the Respondent for the selection of a replacement arbitrator, but had instead directly appointed a replacement arbitrator for the Respondent. The tribunal's self-appointment of the replacement arbitrator violated the above-cited provision of the Rules of Arbitration, thus constituting the circumstances stipulated under Article 5(1)(d) of the New York Convention (”The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement“)。 Accordingly, the Chinese court refused to recognize and enforce the arbitral award.
     
      Since the year 2000 there have been 20 instances of international arbitral awards reported to the Supreme People's Court yet ultimately rejectedfor recognition and enforcement on the grounds of violating the New York Convention. 50% of these cases involved violations of the due process provisions of the New York Convention (Article 5(1)(b)) or failure to comply with due process in the constitution or the tribunal or the arbitration proceedings (Article 5(1)(f))。[44]Therefore, it is easy for the above-mentioned issues to become the hindrance of recognition and enforcement of international arbitral awards, and the parties to arbitration shall pay more attention to them.
     
      10.  Arbitral awards must not violate Chinese public policy
     
      Public policy is an important doctrine under the domestic law of all countries. Under international law, ”public policy“ commonly refers to situations where, based purely on their own conflict rules, the courts of a particular jurisdiction should apply foreign laws, but where, because the application of such foreign laws would be inconsistent with significant interests, fundamental policies and basic moral principles of the jurisdiction in which the court is located, or inconsistent with the fundamental principles of its legal system, the court decides to exclude the application of the foreign laws.[45] In accordance with Article V(2)(b) of the New York Convention, the courts in the country where enforcement is sought can issue a ruling refusing to recognize and enforce a foreign arbitral award where it finds that the recognition or enforcement of the award would be contrary to the public policy of that country. No provision under China law defines public policy, yet it is a classic example of a concept subject to judicial discretion.[46]
     
      1.       Violation of mandatory provisions of PRC law does not constitute a violation of Chinese public policy
     
      In the first case of recognition and enforcement proceedings brought by Japanese company Mitsui & Co., Ltd. for the Award No. 060/1999 issued by the Arbitration Institute of the Stockholm Chamber of Commerce,[47] the Supreme People's Court of PRC stated in its opinion,
     
      Hainan Textile Industrial General Corporation (the Respondent in the recognition and enforcement proceedings), as a state-owned enterprise, directly undertook the debts of Mitsui & Co., Ltd. without obtaining the approval of the State Administration for Foreign Exchange nor conducting the relevant procedures for the registration of foreign debt, violated the PRC laws and regulations on the approval and registration of foreign debt, and is also against the national policy concerning the administration of foreign exchange. Nevertheless, the violation of mandatory provisions of administrative laws and regulations and departmental rules does not necessarily constitute a violation of Chinese public policy.”
     
      In the second case, involving the application by ED & F Man (Hong Kong) Co., Ltd. for the enforcement of Award No. 158 issued by the Sugar Association of London,[48] the Supreme People's Court stated in its reply letter,
     
      under relevant PRC laws and regulations, domestic enterprises are prohibited from conducting offshore futures transactions without prior approval. The offshore futures transactionsby China National Sugar & Wines Group Co. without any prior approval are doubtless invalid under PRC law. However, the violation of mandatory provisions of PRC law cannot be considered the same as the violation of Chinese public policy. Accordingly, the court shall not apply the circumstances stipulated under Article V(2) of the New York Convention, where the award involves non-arbitrable matters and its enforcement and recognition mayconstitute a violation of domestic public policy.
     
      2.       violation of Chinese judicial sovereignty and the jurisdiction of the Chinese courts constitutes a violation of Chinese public policy
     
      In recognition and enforcement proceedings brought by Hemofarm DD, MAG International Trading Co., Ltd. and Sulame Media Co., Ltd. for the of Arbitral Award No. 13464/MS/JB/JEM issued by the International Court of Arbitration of the International Chamber of Commerce,[49] the Supreme People's Court opined,
     
      in circumstances where the relevant court in China had already issued an asset preservation order against the joint venture company and entered into a judgment in respect of the lease contract dispute between JinanYongning Pharmaceutical Co., Ltd. and the joint venture company (Jinan Hemofarm Pharmaceutical Co., Ltd.), the conduct of the Court of Arbitration of the International Chamber of Commerce in rehearing and rendering an award in respect of the lease contract dispute between Jinan Yongning Pharmaceutical Co., Ltd. and the joint venture company (Jinan Hemofarm Pharmaceutical Co., Ltd.) constituted a violation of China's judicial sovereignty and the jurisdiction of the Chinese courts.
     
      3.       the fairness and reasonableness of the substantive outcome of the arbitration cannot be used as the standard for determining whether the recognition and enforcement of an arbitral award would violate Chinese public policy
     
      In a case where GRD Minproc Co., Ltd. tried to get recognition and enforcement of an arbitral award issued by the Arbitration Institute of the Stockholm Chamber of Commerce,[50] the Shanghai Higher People's Court held,
     
      the parties' dispute originated in the fact that the special manufacturing equipment purchased and sold did not meet the industry's safe manufacturing standards, thereby causing serious pollution and damage to the Respondent's factory environment and the health of its employees. This then resulted in the long-term closure and discontinued use of the Respondent's factory due to the public nuisance, thereby resulting in the Respondent's inability to realize the purpose of the contract and significant damage to its economic interests. However, the arbitral tribunal did not give due consideration to these important circumstances, instead concluding that the equipment provided by the seller did not constitute a breach of contract in strict application of the formal terms of the contract. This approach was clearly inconsistent with the spirit of fairness and justice underlying the arbitration process, and in an objective sense led to consequences that were adverse to China's public interest. All of the foregoing factors satisfy the condition prescribed under Article V(2)(b) of the New York Convention, and this arbitral award should therefore not be recognized and enforced.“
     
      The Supreme People's Court opined on this case, stating,
     
      On the issue of whether the recognition and enforcement of the arbitral award in question would be a violation of Chinese public policy, (The Respondent) Feilun Companyobtained the approval of the relevant government departments for its procurement of the equipment from overseas, and the equipment was not of a kind the importation of which is prohibited. The equipment caused environmental pollution during the course of installation, testing and operation, and the reasons for this were probably multi-dimensional. Following Feilun Company's application for arbitration in respect of the quality issues surrounding the equipment in accordance with the valid arbitration clause in the contract, the arbitral tribunal conducted an assessment of the quality of the equipment, which was both within the tribunal's rights and precisely what the parties should have expected as the outcome of the resolution of their dispute through arbitration. The fairness and reasonableness of the substantive outcome of the arbitration cannot be used as the standard for determining whether the recognition and enforcement of an arbitral award would violate Chinese public policy. The recognition and enforcement of the arbitral award at issue in this case does not constitute a violation of China's fundamental public interests, nor of the fundamental principles of its legal system, norany good morals. Accordingly, the circumstances under Article V(2)(b) of the New York Convention do not apply to this case.
     
      4.       the fact that an arbitral award facilitates significant dumping by a foreign company on the Chinese market or violates basic principles of prc law or principles of fairness does not constitute a violation of Chinese public policy
     
      In the abovementioned case on Japanese company Shin-Etsu Chemical Co., Ltd., arbitral award No. 04-05,[51] the Tianjin Higher People's Court, in its report to the Supreme People's Courtrequesting for opinions, stated that: ”the price offered by the applicant for enforcement, Shin-Etsu Chemical Co., Ltd., to domestic Japanese fiber-optics companies was far lower than the price offered to Genius Co., Ltd. and other Chinese companies, and the Respondent's inappropriate conduct in this regard meant that the manufacturing costs of Japanese companies were far lower than those of Chinese companies, objectively facilitating significant dumping by Japanese companies on the Chinese market; under the combined pressure of the significant dumping carried out by these foreign (including Japanese) companies and its being forced to purchase upstream inputs at high prices, the Respondent, Genius Co., Ltd., suffered serious harm, recording huge losses and ultimately falling into a position where it found it difficult to continue its manufacturing operations. The decision of the arbitrator in these circumstances to support Shin-Etsu's request for huge amounts of compensation from Genius Co., Ltd. should be deemed a violation of Chinese public policy.“ In addition, the Tianjin Higher People's Court found that the irrevocable letter of credit executed by the parties guaranteeing the sale and purchase agreement for a term of more than five years was unfair, and on that basis concluded that ”the arbitral award violation the most fundamental principle of PRC law – the principle of fairness.“
     
      The Supreme People's Court declined to take a position in respect of the Tianjin Higher People's Court's conclusion on the grounds of violation of public policy, ultimately instructing the Tianjin Higher People's Court that the award should be refused recognition on the grounds of violation of Articles V(1)(b) and V(1)(d) of the New York Convention.
     
      In conclusion, therefore, judicial practice in China suggests that the Chinese courts adopt a cautious approach to the application of public policy grounds, and will generally not use public policy as a grounds for refusing to recognize and enforce an arbitral award.
     
      11.  applying for recognition and enforcement within the period prescribed under prc law
     
      The New York Convention prescribes the circumstances in which recognition and enforcement can be rejected, but it does not prescribe the specific procedures for recognition and enforcement.Under Article III of the New York Convention, where a party applies to the courts in a certain country for the recognition and enforcement of an arbitral award issued in its favor,  the courtsshould recognize the arbitral award as binding and enforce the award in accordance with the rules of procedure in that jurisdiction. However, Article III further provides that there shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of foreign arbitral awards than those imposed on domestic arbitral awards.[52]
     
      Under PRC law, a party to a dispute must apply to the Chinese courts for recognition and enforcement of its arbitral award within two years; if that time limit is exceeded, the Chinese courts will not accept the case for hearing.[53] However, it should be noted that where a party submits its application for recognition and enforcement of an award within the above time limit, but fails to provide sufficient supporting materials with its application, the Chinese courts should not directly refuse recognition and enforcement of the award, but should rather expressly inform the applicant and prescribe a reasonable time for the applicant to supplement its materials; if the applicant refuses to supplement its materials within such reasonable time, then the court should consider rejecting the application on the grounds that it does not meet the condition for acceptance.[54]
     
      The above-mentioned two year period is calculated from the final day of the period prescribed for the performance of the arbitral award; where the arbitral award provides for performance in installments, the period will be calculated from the final day of each period for performance; where the arbitral award does not prescribe a period for performance, the two year enforcement period will be calculated from the day that the award enters into force.[55] The laws applying to the suspension and termination of the statute of limitations in respect of civil litigation are also applicable to the suspension and termination of the period for the recognition and enforcement of arbitral awards.
     
      Even though the New York Convention provides that if an arbitral award is not yet binding, has been set aside or if the enforcement of the award has been suspended, the country in which recognition and enforcement is sought can refuse recognition and enforcement of the award upon the application of the other party to the proceedings and the adduction of evidence in proof, one must bear in mind that the Chinese courts' position is that the initiation of proceedings for the setting aside of the award by one of the parties to the arbitration in the courts of the seat of arbitration, and the hearing and issuance of a judgment by those foreign courts in respect of that party's application, does not constitute a basis for suspending or extending the time limit for the application for recognition and enforcement of the award by the applicant.[56]Therefore, even if following the issuance of the arbitral award the counter-party to the proceedings initiates proceedings before the courts of the seat of arbitration requesting the setting aside of the award, it is imperative for the successful party under the award to apply for recognition and enforcement of the award in the courts with relevant jurisdiction in China as quickly as possible within the abovementioned two year time limit, rather than waiting for the courts in the seat of arbitration to finish hearing the dispute and issue a judgment upholding the award before applying to the Chinese courts with relevant jurisdiction for the recognition and enforcement of the award.
     
      Article 4 of the New York Convention prescribes the documentary requirements for an application for recognition and enforcement of an arbitral award, which include the original award or a duly certified copy, the original arbitration agreement or a duly certified copy and a translation of the documents where necessary. In China, the following documents need to be submitted in an application for recognition and enforcement of a foreign arbitral award:
     
      ? The original arbitral award or a duly certified copy notarized by a public notary in the seat of arbitration and authenticated by the local Chinese embassy or consulate in the seat of arbitration;
     
      ? An original or duly certified copy of: a power of attorney issued to the applicant's legal counsel; the applicant company's registration documents; proof of identity for the company's legal representative in the case; the request for arbitration; and the arbitration agreement or the contract in which the arbitration clause is contained, each notarized by a public notary in the applicant's place of domicile and authenticated by the local Chinese embassy or consulate in the applicant's place of domicile; and
     
      ? Chinese translations of any of the above documents that are not in the Chinese language by a translation company designated by the Chinese court.[57]
     
      Asthe Chinese courts receive and hear an extremely small number of cases involving the recognition and enforcement of foreign arbitral awards, the vast majority of courts are inexperienced in this respect. Chinese courts often have considerable doubts when accepting and hearing cases of this kind. In order to facilitate the swift acceptance of the case by the courts, the applicant should explain in detail to the court that the arbitral award fulfils the conditions for recognition and enforcement set out in the New York Convention and provide corresponding evidence.
     
      In conclusion, risk management by foreign parties in China-related commercial arbitrations should start from the time of executing the arbitral agreement; foreign parties cannot wait until the recognition and enforcement proceedings of their awards in Chinese courts before implementing a risk management strategy. In addition, foreign parties should also note that the circumstances under which recognition and enforcement of foreign arbitral awards can be refused under Article V of the New York can be classified into two kinds. The provisions under Article V(1) list circumstances in which the country where recognition and enforcement is sought may refuse recognition and enforcement only upon request by the parties, whilst Article V(2) lists circumstances in which the country where recognition and enforcement is sought can itself decide to reject to recognize and enforce awardswithout the respondents initiating any request. In practice, there will be some cases that fall under both categories. For example, in China, ”arbitrability“ is one aspect of ”public policy“; i.e., the ”violation of public policy“ in fact includes circumstances where ”the dispute is not suitable for arbitration.“
     
      The reason for making the above distinction is that under the circumstances falling within the first category, if the respondent in the recognition and enforcement proceedings does not expressly request the relevant provisions to be applied or such request is lack of evidence, the country in which recognition and enforcement is sought cannot by itself decide to refuse to recognize and enforce only on these grounds. It is important for foreign parties to bear this in mind during the recognition and enforcement proceedings of foreign arbitral awardsin Chinese courts, as the vast majority of Chinese courts has not had any experience in cases of this kind.[58]

    【作者简介】
    邓永泉,律师,大成律师事务所高级合伙人、北京仲裁委员会仲裁员、中欧仲裁委员会仲裁员,《商法》(China Business Law Journal)“法律精英100强”(China's Top100 Lawyers)。
    【注释】
    [1]According to Article 267 of the Civil Procedure Law of the People's Republic of China: “if an award made by a foreign arbitration institution needs the recognition and enforcement of a people's court of the People's Republic of China, the party shall directly apply to the intermediate people's court located in the place where the party subject to the enforcement has its domicile or where its property is located. The people's court shall deal with the matter according to the relevant provisions of the international treaties concluded or acceded to by the People's Republic of China or on the principle of reciprocity.”
    In 1986, China decided to join the New York Convention, and the New York Convention entered into force in respect of China on 22 April 1987.
    According to Article 1 of the Circular of the Supreme People's Court on the Implementation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Entered into by China (“Notice for the Implementation of the New York Convention”): “In accordance with the reciprocity reservation statement made by China when entering the Convention, this Convention shall apply to the recognition and enforcement of an arbitral award made in the territory of another Contracting State.”
    [2]According to Article 2 of the Notice for the Implementation of the New York Convention: “After the people's courts of China with jurisdiction receives the application of one party, it shall examine the arbitration award whose recognition and enforcement has been applied for; if the court believes that the circumstances listed in Subparagraph 1 and Subparagraph 2 of Article 5 of the 1958 New York Convention do not exist, it shall rule that the validity of award shall be recognized and that the award shall be enforced according to the Civil Procedure Law (Trial Implementation); if the court holds that any of the circumstances listed in Subparagraph 2 of Article 5 exists, or the evidence provided by the person subject to enforcement proves that any of the circumstances listed in Subparagraph 1 of Article 5 exists, it shall dismiss the application and refuse to recognize and enforce the arbitration award.”
    [3]The principle of reciprocity prescribed to under Article 267 of the Civil Procedure Law of the People's Republic of China refers to cases where there is no treaty relationship between China and the jurisdiction where the arbitral institution is located. In these circumstances, an arbitral award issued by a foreign arbitral institution located in a jurisdiction with which China does not have a treaty relationship is not only not a “Convention Award” but it is also does not constitute a “foreign-related arbitral award” in China.
    [4]For example, if the parties to a contract choose an international treaty or international commercial practice as the governing law of their commercial contract, because neither of these sources of law ever include provisions regarding the governing law for an arbitration agreement, the parties to the contract will have no choice but to choose a separate law as the governing law of the arbitration agreement. If the parties fail to do so, the arbitral tribunal will have no choice but to review the validity of the arbitration agreement in accordance with other laws.
    [5]According to Article V(1)(a) of the New York Convention, the governing law of the arbitration agreement shall be (a) the law to which the parties have subjected it; or (b) failing any indication thereon, the law of the country where the arbitral award was made.
    [6]In addition to the New York Convention, the 1985 UN Model Law on International Commercial Arbitration, the 1961 European Convention on International Commercial Arbitration, the 1965 Convention on the Settlement of Investment Disputes Between States, the 1967 UNCITRAL Arbitration Rules and the 1975 Inter-American Convention on International Commercial Arbitration all contain similar provisions.
    [7]Letter of Reply of the Supreme People's Court in respect of the Request for Guidance on the Validity of an Arbitration Agreement ([2006] Min Si Ta Zi No.1)。
    [8]This Article provides: “For a Chinese-foreign equity joint venture contract, Chinese-foreign contractual joint venture contract, or a contract for Chinese-foreign joint exploration and development of natural resources which is performed within the territory of the People's Republic of China, the law of the People's Republic of China shall be applied.”
    [9]In a case involving an application by Zublin International GmbH and Wuxi Woke General Engineering Rubber Co., Ltd. for confirmation of the validity of an arbitration agreement, the arbitration clause the parties had entered into stated “Arbitration: ICC Rules, Shanghai shall apply”. In its Letter of Reply, the Supreme People's Court held that since the parties to the agreement had not specified a governing law in their arbitration agreement, the validity of the arbitration agreement should be determined in accordance with the law of the seat of arbitration, i.e., the validity of the arbitration clause should be determined on the basis of PRC law. Because the relevant arbitration clause had not indicated an arbitral institution, the  Court held that the arbitration agreement should therefore be deemed invalid. Letter of Reply of the Supreme People's Court to the Request for Instructions on the Case concerning the Application of Zublin International GmbH and Wuxi Woke General Engineering Rubber Co., Ltd. for Determining the Validity of the Arbitration Agreement ([2003] Min Si Ta Zi No.23)。
    [10]In a case involving the application by China Shipping Development Co., Ltd. Tramp Co. for the recognition of a London arbitral award, the parties held differing views as to the governing law of an arbitration clause which read “arbitration in Hong Kong in accordance with English law”. One of the parties argued that the governing law of the arbitration clause was English law, whilst the other party argued that since the arbitration agreement had not expressly provided for the governing law, the governing law should be determined on the basis of the seat of arbitration, i.e., that the governing law of the arbitration agreement was Hong Kong law. The provisions of English law and Hong Kong law relating to arbitral procedures are different, and the arbitration had been conducted in London in accordance with English law. If the proper governing law was Hong Kong law, the arbitral procedures had been conducted in violation of the governing law. In its Letter of Reply, the Supreme People's Court indicated that the governing law of the arbitration agreement should be Hong Kong law, and since the arbitral procedures had violated the governing law, the Chinese courts should refuse to recognize and enforce the award. Letter of Reply of the Supreme People's Court to the Request for Instructions on the Case concerning the Application byChina Shipping Development Co., Ltd. Tramp Co. for the recognition of an arbitral award issued in London.
    [11]That provision states: “ The parties to the agreement referred to in Article II were, under the law applicable to them, under some incapacity , or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.”
    [12]In the Letter of Reply of the Supreme People's Court to the Request for Instructions on the Case Involving the Shipping Dispute Between the Fujian Province Manufacturing Materials General Co. and Golden Dove Shipping Co., Ltd. over the Validity of the Arbitration Clause in the Bill of Lading (Fa Han [1995] No.135), the Supreme People's Court stated: “in a foreign-related case, if the parties to the dispute provide in their contract or agree following the advent of their dispute for arbitration to be conducted by a foreign ad hoc arbitral institution or a non-permanent arbitral institution, the validity of the arbitration agreement should in principle be upheld, and the courts should not thereafter accept proceedings initiated by the parties.”
    [13]In practice, Chinese courts do not recognize the arbitral awards made by domestic ad hoc arbitral bodies.
    [14]The term used in Article 213 of the Civil Procedure Law of the People's Republic of China is “an award made by an arbitration institution that was established in accordance with law”, whilst the term used in Article 258 is “an arbitral award made by a foreign-related arbitral institution of the People's Republic of China”, and the term used in Article 267 is “an award of a foreign arbitral institution”. The term employed throughout the Arbitration Law of the People's Republic of China is “arbitration commission”. In this article, “arbitral institution: and ”arbitration commission“ will be used interchangeably.
    [15] ZHAO Xiuwen, ”An analysis of the recognition and enforcement of foreign ad hoc arbitral awards in China in the context of the Autodesk case,“ Journal of Political Science and Law, Volume 3, 2007.
    [16]In a case involving the application by the Guangzhou Ocean Shipping Co., Ltd. for the recognition and enforcement of the arbitral award issued by an ad hoc arbitral institution in London, the Guangzhou Maritime Court, upon accepting and reviewing the case, found that the Claimant and the Respondent had entered into arbitration agreements in three ship leasing contracts, each of which provided for arbitration in London, England in the event of disputes in accordance with English law. The Guangzhou Maritime Court could not use PRC law as the basis for refusing recognition and enforcement of the award, on the basis that the award in question was an ad hoc arbitral award. Therefore, this case does not support the conclusion that Chinese law recognizes ad hoc arbitration.  Source: http://law.people.com.cn/showdetail.action?id=2677519, accessed on: 20 August 2012.
    [17]The arbitration rules of a great many international commercial arbitration institutions contain similar provisions. For example, Article 14 of the 1998 Rules of Arbitration of the International Chamber of Commerce states: ”The Arbitral Tribunal may, after consultation with the parties, conduct hearings and meetings at any location it considers appropriate unless otherwise agreed by the parties.“ Article 16(2) of the 1998 Arbitration Rules of the London International Court of Arbitration similarly provides: ” The Arbitral Tribunal may hold hearings, meetings and deliberations at any convenient geographical place in its discretion; and if elsewhere than the seat of the arbitration, the arbitration shall be treated as an arbitration conducted at the seat of the arbitration and any award as an award made at the seat of the arbitration for all purposes.“ Article 20(2) of the 1985 UNCITRAL Model Law on International Commercial Arbitration provides: ” the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents.“
    [18]The legislative bodies of more than forty countries worldwide have adopted the 1985 UNCITRAL Model Law on International Commercial Arbitration or incorporated it into domestic legislation. Article 20(1) of the Model Law provides: ”The parties are free to agree on the place of arbitration.“
    [19]Because this article strongly recommends that the parties to a contract expressly agree upon the place/seat of arbitration, and given that where the parties have failed to specify the place/seat of arbitration or their agreement on the matter is unclear, determining the place/seat of arbitration becomes very complicated, this article will not explore the rules for determining the place/seat of arbitration in the absence of express agreement by the parties.
    [20]Article II(3) of the New York Convention provides: ”The court of a Contracting State, when seized of an action in a manner in respect of which the parties have made an agreement within the meaning of this article at the request of one of the parties, refer the parties to arbitration unless it finds that the said agreement is null and void, inoperative or incapable of being performed.“
    [21]Article V(1)(a) of the New York Convention provides: ” The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.“
    [22]Ibid.
    [23]In theLetter of Reply of the Supreme People's Court to the Request for Instructions on the Case Involving the Application by UK Company Glencore Co., Ltd. for the Recognition and Enforcement of an Arbitral Award Issued by the London Metal Exchange ([2001] Min Si Ta Zi No.2), the Supreme People's Court indicated: ”In accordance with Article V(1)(a) of the UN's Convention on the Recognition and Enforcement of Foreign Arbitral Awards, in determining the capacity of the parties to the arbitration agreement, Chinese law should be applied in accordance with the nationalityprinciple. Sun Jian, an employee of Chongqing Machinery and Equipment Import and Export Co., Ltd., executed a contract with Glencore Co., Ltd However, in signing the contract “on behalf” of the company, Sun Jian had not been authorized to do so, and the company had not affixed its chop to the contract; the necessary conditions for a relationship of agency were therefore lacking, and Chongqing Machinery and Equipment Import and Export Co., Ltd. clearly expressed its repudiation of Sun Jian's conduct after the event. Furthermore, Sun Jian's conduct in signing the contract was not consistent with past practices between the two companies, and there was therefore no apparent agency… Sun Jian did not possess agency rights, and the contract executed by him “on behalf” of the company should be deemed invalid. His civil liability should not be borne by Chongqing Machinery and Equipment Import and Export Co., Ltd. By extension, the arbitration clause signed by Sun Jian “on behalf of” the company is also invalid, and Chongqing Machinery and Equipment Export Co., Ltd. cannot be affected by the legal consequences of that clause in any way. The arbitration clause in this case should be refused recognition and enforcement in accordance with the law.“
    [24]Article II(1) of the New York Convention provides: ” Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.“
    [25] Article II(2) of the New York Convention provides: ” The term “agreement in writing” shall include an arbitral clause in a contact or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.“
    [26]In a case heard by the Florence Court of Appeal in Italy, an American buyer signed a purchase order and delivered it to the Italian seller, the purchase order containing an arbitration clause. Upon receiving the purchase order from the purchaser, the Italian seller did not sign the purchase order, nor did it return the purchase order to the American purchaser. Nevertheless, the seller later signed an invoice that it produced to the buyer, and thatinvoice expressly stated that it was an invoice in relation to the abovementioned purchase order. On that basis, the Court held that a written arbitration agreement existed between the parties. The Court further reasoned that the parties' intention to submit their dispute to arbitration, as required under Article 2 of the Convention, did not need to be expressed in the same document, and that an arbitration agreement can be contained in an exchange of documents or telegrams. Reported in ICC Yearbook IV (1979) and cited in HUANG Yaying, ”A Discussion of the New York Convention and the Formal Requirements of Arbitration Agreements,“ Law Science Magazine, Volume 25, p.14.
    [27]IntheLetter of Reply of the Supreme People's Court to the Request for Instructions on the Case Involving the Request by the Singaporean company Yideman Asia Pte. Ltd. for the Recognition and Enforcement of a Foreign Arbitral Award ([2001] Min Si Ta Zi No.43), the Supreme People's Court stated: ”based on the faxes exchanged between Yideman Asia Pte Ltd. and Wuxi Huaxin Cocoa Food Co., Ltd., the parties had not reached an agreement to resolve disputes arising in respect of the purchase of cocoa beans through arbitration. There was no factual or legal basis for the decision of the London Cocoa Association to arbitrate the parties' dispute on the basis of the arbitration clause unilaterally prepared by Yideman Asia Pte. Ltd…The Chinese people's courts should refuse to recognize and enforce the arbitral award in this case.“
    [28]For example, arbitration clauses contained in a bill of lading, arbitration clauses in a lease incorporated in a bill of lading, tacit arbitration agreements, the extension of arbitration clauses to cover contracts not containing an arbitration clause, the extension of an arbitration clause to cover non-signatory parties.
    [29]Article 20(2) of the Arbitration Law of the People's Republic of China provides: ”If the parties contest the validity of the arbitration agreement, the objection shall be made before the start of the first hearing of the arbitration tribunal.“ Article 13(1) of Interpretation of the Supreme People's Court on Several Questions concerning the Application of the Arbitration Law of the People's Republic of China provides: ”As required by Paragraph 2 of Article 20 of the Arbitration Law, if a party concerned fails to object to the effectiveness of the agreement for arbitration prior to the first hearing in the arbitral tribunal, and then applies to the people's court for confirming the agreement for arbitration as ineffective, the application shall not be accepted by the people's court.“ Accordingly, if an arbitration agreement is invalid in accordance with the law, but when one of the parties to the agreement applies for arbitration the other party waives its right to object to the validity of the arbitration agreement and instead conducts a substantive defence of the arbitral claims, the parties can be deemed to have reached a tacit arbitration agreement.”
    [30]See the civil ruling issued by the Chengdu Intermediate People's Court in Sichuan Province on 30 April 2008 refusing recognition and enforcement of an arbitral award.
    [31]English law considers provisions of this kind to be “unenforceable agreements” and therefore not binding on the parties. YANG Liangyi, Arbitration Law – From the 1996 English Arbitration Act to International Commercial Arbitration, Law Press, 2006 Edition, pp.26-28.
    [32] Article 15 of The Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures also prescribes the following negotiation procedures: “Disputes arising between the parties to a joint venture that the board of directors cannot settle through consultation may be settled through mediation or arbitration by a Chinese arbitration agency or through arbitration by another arbitration agency agreed upon by the parties to the venture.” The “other arbitration agencies” referred to in this provision clearly include arbitral institutions established overseas.
    [33]Article V(2)(a) of the New York Convention provides: “The subject matter of the difference is not capable of settlement by arbitration under the law of that country.”
    [34]Article 2 of the Arbitration Law of the People's Republic of China.
    [35]Article 3 of the Arbitration Law of the People's Republic of China.
    [36]Article V(1)(c) of the New York Convention provides: “ The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced.”
    [37]Letter of Reply of the Supreme People's Court to the Request for Instructions on the Case Involving the Application by the US Company GMI for the Recognition and Enforcement of an Arbitral Award Issued by the London Metal Exchange ([2003] Min Si Ta Zi No.12)。
    [38]Letter of Reply of the Supreme People's Court to the Request for Instructions on the Case Involving the Refusal to Recognize and Enforce an Arbitral Award of the Court of Arbitration of the International Chamber of Commerce ([2008] Min Si Ta Zi No.11. An additional reason that the award in this case was refused recognition and enforcement was for violation of Chinese public policy.
    [39]In the Letter of Reply of the Supreme People's Court to the Request for Instructions on the Case Involvingthe Application by the US Company GMI for the Recognition and Enforcement of an Arbitral Award Issued by the London Metal Exchange ([2003] Min Si Ta Zi No.12), the Supreme People's Court held: “there are several instances in the arbitral award where the arbitral tribunal refers simply to ”the Respondent“, without specifying whether it is referring to the Wuhu Smelting Plant or Wuhu Hengxing Copper Industry Co., Ltd. Given that the introductory section of the arbitral award lists both the Wuhu Smelting Plant and Hengxing Copper Industry Co., Ltd. as Respondents, a reference to the Respondent should be interpreted as a reference to both the Wuhu Smelting Plant and to Wuhu Copper Industry Co., Ltd., unless there are any express indications to the contrary. But the mere use of the single appellation for the two Respondents does not mean that the part of the award falling within the tribunal's jurisdiction and that part of the award exceeding the tribunal's jurisdiction are inseparable. From the point of view of the final result of the arbitral award, there is one part of the award that clearly states that the Wuhu Smelting Plant shall be individually liable. The tribunal clearly had jurisdiction in respect of that part of the award. Moreover, that part of the award can be clearly separated from the part of the award exceeding the tribunal's jurisdiction, and there are no circumstances in respect of that part of the award justifying refusal to recognize and enforce the award. Therefore, that part of the award relating to the liabilities independently undertaken by the Wuhu Smelting Plant should be recognized and enforced. On the other hand, the other parts of the award that use the term ”the Respondent“ in providing for the allocation of liabilities do not clearly distinguish between the liabilities to be undertaken by the Wuhu Smelting Plant and Wuhu Copper Industry Co., Ltd. Therefore, there is no way for the people's court to distinguish between those parts of the award that fall within the tribunal's jurisdiction and those parts of the award that exceed its jurisdiction, and those parts of the award should not be recognized and enforced.”
    [40]Letter of Reply of the Supreme People's Court concerning the Refusal to Recognize and Enforce Award No. 04-05 Issued by the Japanese Commercial Arbitration Association ([2007] Min Si Ta Zi, No.26)。
    [41]Letter of Reply of the Supreme People's Court concerning the Refusal to Recognize and Enforce Arbitral Award No. 05-03 of the Japanese Commercial Arbitration Association ([2008] Min Si Ta Zi No.18)。
    [42]Letter of Reply of the Supreme People's Court concerning the Request for Instructions as to whether to Recognize and Enforce an Arbitral Award Issued in London in respect of a Shipping Lease for the ABRA Vessel Dated 28 December 2004 ([2006] Min Si Ta Zi, No.34)。
    [43]Letter of Reply of the Supreme People's Court concerning the Application by Bunge Agribusiness Singapore Pte Ltd. for the Recognition of an Arbitral Award Issued in England ([2007] Min Si Ta Zi, No. 41)。
    [44] WAN Exiang & XIA Xiaohong, “The Basis of Chinese Courts' Refusal to Recognize and Enforce a Number of Foreign Arbitral Awards – An Analysis of New York Convention-related Cases”, Wuhan University International Law Review, Volume 13, 2012, No.2.
    [45] ZHAO Xiuwen, “Public Policy and the Recognition and Enforcement of Foreign Arbitral Awards”, Journal of International Trade Law, available at: http://china.findlaw.cn/bianhu/xingfazhishi/wgpj/12460.html, accessed on 20 August 2012.
    [46]Clause 2, Article 274 of Civil Procedure Law: “ If a people's court determines that the enforcement of an arbitration award would contradict the social and public interest, it shall make a ruling of not to enforce the award.” This provision does not provide a specific standard for determining whether an arbitral award violates the public policy of China, but just empower the judge with judicial discretion. In addition, through this provision is applicable to Chinese foreign-related arbitral tribunals, theoretically applying it to arbitral awards made by foreign arbitral tribunals is possible.
    [47]Letter of Reply of the Supreme People's Court concerning the Request for Instructions in respect of the Haikou Intermediate Court's Refusal to Recognize and Enforce an Arbitral Award of the Arbitration Institute of the Stockholm Chamber of Commerce ([2005] Min Si Ta Zi No. 12.
    [48]Letter of Reply of the Supreme People's Court concerning the Application by ED & F Man (Hong Kong) Co., Ltd. for the Recognition and Enforcement of an Arbitral Award Issued by the Sugar Association of London ([2003] Min Si Ta Zi, No.3)。
    [49]Letter of Reply of the Supreme People's Court concerning the Request for Instructions on the Refusal to Recognize and Enforce an Arbitral Award of the Court of Arbitration of the International Chamber of Commerce ([2008] Min Si Tai No.11)。
    [50]Letter of Reply of the Supreme People's Court concerning the Request for Instructions on the Case involving the Request by GRD Minproc Co., Ltd. for the Recognition and Enforcement of an Arbitral Award of the Arbitration Institute of the Stockholm Chamber of Commerce ([2008] Min Si Ta Zi, No.48)。
    [51]Letter of Reply of the Supreme People's Court concerning the Refusal to Recognize and Enforce Arbitral Award No. 05-03 of the Japanese Commercial Arbitration Association ([2008] Min Si Ta Zi No.18)。
    [52] Article 3 of the New York Convention states: “ Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory when the award is relied upon, under the conditions laid down in the following articles. there shall not be imposed the substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.”
    [53]According to Article 18 of the Trial Provisions of the Supreme People's Court concerning Several Questions Relating to the Acceptance of Enforcement Cases by the People's Courts, there are certain conditions for the acceptance of enforcement cases by the people's courts, amongst which is that “the claimant [shall] submit its application within the legally prescribed time limit.” If the applicant fails to fulfill these conditions, the court should issue a ruling refusing to accept the applicant's case within seven days.
    [54]This was the position reached by the Supreme People's Court in its Letter of Reply concerning the Request for Instructions on the Case involving the Refusal to Enforce the Final Award No. 10334/AMW/BWD/TE of the Court of Arbitration of the International Chamber of Commerce ([2004] Min Si Ta Zi No.6. The Supreme People's Court also stated this position in its Letter of Reply concerning the Request for Instructions on the Case Involving the Application by Macor Neptun GmbH for the Recognition and Enforcement of an Arbitral Award: “even though the application materials submitted by the applicant within the statutory period were not entirely in compliance with the relevant provisions of the law, after the claimant supplemented those materials upon notice from the people's court the materials were fundamentally consistent with the statutory requirements. The people's court should therefore accept and initiate the case (and in fact has already accepted the case), and cannot refuse to recognize and enforce the arbitral award in this case on the grounds that ”the applicant did not submit a valid application within the statutory time limit.“”
    [55]In the Letter of Reply of the Supreme People's Court concerning the Request for Instructions on the Case Involving the Application by Macor Neptun GmbH for the Recognition and Enforcement of an Arbitral Award (Fa Min Er [2001] No.32), the Supreme People's Court indicated that the time limit for an application for recognitionand enforcement should be calculated from the final date stipulated for performance in the legal document. Regarding the specific case before it, the Supreme People's Court held that because the arbitral award did not say anything regarding the period for performance of the award, and the parties should be given a reasonable period for performance, it was reasonable for the time limit for the application to be calculated from the day after the arbitral award was delivered to the parties, rather than calculating the time limit for the application for recognition and enforcement from the date upon which the arbitral award was issued.
    [56]See the civil ruling issued by the Tianjin Maritime Court in respect of the application by the V Y Santhi Shipping Company Limited of Cyprus for the recognition and enforcement of an arbitral award issued in London, England, as well as the Letter of Reply of the Supreme People's Court concerning the Request for Instructions on the Case Involving the Non-recognition and Non-enforcement Ruling Issued in respect of an Arbitral Award of an Arbitral Tribunal in London, England, in respect of the Arbitral Dispute between V Y Santhi Shipping Company Limited and China Grains, Oild and Feedstuffs Co., Ltd., the Hebei Branch Office of the People's Insurance Company of China and the People's Insurance (Holding) Company of China (Min Si Ta Zi [2004] No.32)。
    [57]In previous cases that we have handled, courts have requested that a notarized and certified Chinese translation be submitted together with the original. However, we have had to explain to the courts that this is simply not objectively possible, as neither the public notary nor the certifying authorities are capable of certifying whether an original document and its translation are identical. The courts finally accepted our argument in each case.
    [58]In the Letter of Reply of the Supreme People's Court concerning the Request for Instructions on the Case Involving the Application by Macor Neptun GmbH for the Recognition and Enforcement of an Arbitral Award (Fa Min Er [2001] No.32), the Supreme People's Court indicated: “Regarding the inferior court's findings that ”the arbitral award failed to make a preliminary ruling and thereby violated the law of the place/seat of arbitration“ and ”the arbitral award ordered the losing party to compensate for the legal fees of the winning party, in excess of the scope of authority conferred upon the tribunal by the parties“: in accordance with Article V of the New York Convention, issues of this kind should only be reviewed upon express application by the parties, and should not be reviewed by the people's court on its own initiative. These issues were never raised by the parties, and the people's court cannot therefore use them as grounds to refuse recognition and enforcement of the award in this case.”

    本网站文章仅代表作者个人观点,不代表本网站的观点与看法。
    转载请注明出自北大法律信息网
0
北大法律信息网
www.chinalawinfo.com
法律动态
网站简介
合作意向
网站地图
资源导航
版权声明
北大法宝
www.pkulaw.cn
法宝动态
法宝优势
经典客户
免费试用
产品服务
专业定制
购买指南
邮件订阅
法律会刊
北大英华
corp.chinalawinfo.com
英华简介
主要业务
产品列表
英华网站
诚聘英才
联系我们
用户反馈
返回顶部
二维码