China: Several Procedural Issues on the Recognition and Enforcement of Foreign Arbitral Awards

Last Updated: 27 May 2013
Article by Jiang Rongqing

Instead of specifying worldwide regulations on the recognition and enforcement of foreign arbitral awards for the courts of each State, the 1958 New York Convention leaves the issue to be solved by domestic legislation of each contracting State. The applicant who applies to a Chinese court for the recognition and enforcement of a foreign arbitral award shall comply with the procedure laws and rules applied by the Chinese court in dealing with such cases. However, due to lack of legislation and legislative lag, many aspects of the procedure rules applied by the Chinese courts in the recognition and enforcement of foreign arbitral awards are not clear enough. In practice there are still some issues which need to be regulated or clarified through legislation or judicial interpretation. This article briefly introduces current procedural issues on the ruling of the Chinese courts in respect of the recognition and enforcement of foreign arbitral awards and also points out the existing matters therein.

There are regulations on the application of laws in respect of the recognition and enforcement of foreign arbitral awards in the 1958 New York Convention which provides that regarding the specific procedures on the recognition and enforcement of foreign arbitral awards the law of the territory where the application for enforcement of foreign arbitral awards is made shall apply. At the same time the Convention has made two aspects of restrictions on the application of domestic rules by the State where the enforcement of foreign arbitral awards is made in the enforcement of the arbitral awards to which the Convention applies: (1) national treatment shall be granted in the recognition and enforcement of foreign arbitral awards and there shall not be imposed more onerous conditions on the recognition and enforcement of foreign arbitral awards than are imposed on the enforcement of domestic arbitral awards; (2) there shall not be imposed higher fees or charges on the recognition and enforcement of foreign arbitral awards than are imposed on the enforcement of domestic arbitral awards. At present, certain aspects of the procedure rules applied by the Chinese courts in dealing with the cases of the recognition and enforcement of foreign arbitral awards are still vague.

  1. Restriction on the identity of the applicant

There may be cases in which the arbitrator is awarded arbitrators' fees to be paid by the parties to the foreign arbitral award. Nevertheless, since the arbitrator is not a party to the arbitral award, he has no right to apply for the recognition and enforcement of the arbitral award in respect of the part of arbitrators' fees. However, the relevant arbitrator may separately initiate proceedings in respect of the arbitrators' fees before the people's court which has jurisdiction over such cases based on the arbitral award. Such proceedings are regarded in nature as proceedings of contractual obligation.

  1. Limitation period for the application for the recognition and enforcement of foreign arbitral awards

In China, the limitation period for the recognition and enforcement of foreign arbitral awards under the law is relatively short and the limitation period for the enforcement of domestic arbitral awards is the same as that for the recognition and enforcement of foreign arbitral awards.

  1. Commencement of the limitation period for the application

The Supreme People's Court held that if the time of performance is not included in the international arbitral award, the parties to the arbitration shall be given reasonable time of performance and therefore it would be relatively reasonable that the limitation period commences from the second day of the service of the arbitral award to the parties.

  1. The circumstances in which the application is made with incomplete information within the limitation period

If the applicant has made the application for the recognition and enforcement of foreign arbitral awards within the limitation period as requested by law but cannot provide the complete information required by the court, the Chinese court will grant a grace period to some extent.

  1. Forum competens

Please kindly pay attention to the following two points: first, not all the Intermediate People's Courts have jurisdiction over the recognition and enforcement of foreign arbitral awards and the forum competens shall be the courts which have jurisdiction over foreign cases; second, there is priority level for the aforesaid forum competens and only when the respondent of the application has no places of domicile, places of residence or principal places of business in China the court in the place where the property to be executed is located has the jurisdiction.

  1. Legal documents to be submitted for the application for the recognition and enforcement of foreign arbitral awards

The New York Convention specifies the principles in respect of the legal documents which shall be submitted for the application to the courts of the contracting States for the recognition and enforcement of foreign arbitral awards.

  1. Filing procedures

As a result of the lack of specific operational criteria on the filing procedures for the cases of the recognition and enforcement of foreign arbitral awards under existing laws, the practices of courts diverse from place to place under our judicial system of separation of judgment from enforcement.

  1. Property preservation before litigation

In practice, as for the cases of the recognition and enforcement of foreign arbitral awards, the application to the Chinese courts for property preservation against the respondent will not be supported by the courts for the reason that there is no legal basis.

  1. Establishment of hearing procedure

In practice, most of the Chinese courts will hold hearings in the course of the recognition and enforcement of foreign arbitral awards to hear the facts and reasons put forward by the applicant and respondent in order to decide whether to recognize and enforce foreign arbitral awards, while only a small part of courts will make an order after reviewing the written documents.

  1. Fees and review period

Provisions on the Fees and Review Period for the Recognition and Enforcement of Foreign Arbitral Awards [Fa Shi (1998) No. 28] issued by the Supreme People's Court on 21 October 1998 provide provisions on the fees and review period for the recognition and enforcement of foreign arbitral awards by the Chinese courts in accordance with the provisions of the New York Convention.

  1. Contents of the ruling

In practice, the Chinese courts will make several different rulings after reviewing the application for the recognition and enforcement of foreign arbitral awards.

  1. Appeal

In China, the decision on whether to recognize and enforce foreign arbitral awards or not is made in the form of an order. According to Article 140 of the Civil Procedure Law, an order to refuse to recognize and enforce foreign arbitral awards cannot be appealed against.

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.

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