China's rapid economic growth, and its emergence on
the world stage as an international trader of real significance,
has had a significant impact on the development of the rule of law
in China, and on its legal system.
China has, since the 1980s, taken giant strides towards
developing an institutionalised codified system of laws
China is a Contracting State to the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, which
entered into force in China on 22 April 1987. China has made two
reservations under the Convention, being:
Reciprocity – China will only apply the New York
Convention to the recognition and enforcement of awards made in
another Contracting State
Commercial relationships – China will only apply the
New York Convention to disputes arising out of legal relationships
that are considered "commercial" under Chinese law.
Historically, Chinese courts have not always enforced foreign
arbitral awards in the routine manner that successful claimants
might have hoped for. The Chinese judicial system is a relatively
young system that until recently (and perhaps currently) was at
risk of external influences. Additionally Chinese judges are not
necessarily drawn from the ranks of experienced lawyers.
Presumably in order to address this external perception, and to
improve China's standing as a reliable country with which to
engage in international trade, on 17 April 2000, the Supreme
People's Court of China mandated that foreign arbitral awards
could not be vacated, or enforcement refused, unless the Court had
first approved that action. Since then, lower court decisions
vacating arbitral awards are subject to review by the Supreme
Wan E'xiang, a Deputy Chief Justice of the Supreme
People's Court, has said that between 2000 and 2008 lower
courts refused to enforce foreign arbitral awards on public policy
grounds but the Supreme People's Court did not uphold any of
those decisions. It appears that this happy state of affairs was
short lived, as Chinese media reported in August 2008 that the
Supreme People's Court upheld a decision of an intermediate
court that had refused to enforce an arbitral award issued by a
Parisian tribunal on the basis the award contravened Chinese public
policy. In this case the violation of public policy was constituted
by the Parisian tribunal deciding a matter that should have been
determined by a Chinese court. That is, the tribunal usurped the
judicial sovereignty of China.
While not totally devoid of risk, arbitration is by far the most
preferable method of enforcing rights against a Chinese company.
Foreign arbitral awards are enforced, even in China, with relative
ease compared to the impossibility of enforcing a judgment of a
foreign court. Successful claimants should note that time limits
apply to enforcement proceedings, which must be commenced within 2
years from the last day of the period specified in the award (or
judgment) for its performance, or if no period is specified for its
performance, the time limit is calculated from the day when the
award takes effect. A foreign arbitral award in China is enforced
by application to the Intermediate People's Court for the
region where the party against which the award is to be enforced is
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The TPP could have a significant positive impact on the investment and financial services of Australia and Singapore.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).