China: Enforcement Of International Arbitral Awards In China

Last Updated: 29 December 2017
Article by Zhang Yunyang and Zhao Ziyu

Digest

With the development of international economic and trade integration and the promotion of The Belt and Road initiative, the arbitration has been chosen more and more as a settlement mechanism of international commercial disputes by global enterprises, China enterprises are no exception, and Chinese enterprises are no exception. China recently approved to join The Hague Convention on the Choice of Court Agreements in September 2017. Under the circumstances of increasingly frequent international civil and commercial exchanges, domestic and international commercial arbitration are both facing unprecedented opportunities and challenges. At the same time, the adjudication of international dispute settlement is more and more recognized and identified by Chinese judicial institutions. From the perspective of the enforcement of Foreign Arbitral Awards in china, this paper intends to explore the history, current situation and future trend of the recognition and enforcement of international arbitral award in china.

Key words

New York convention; Foreign Arbitral Awards; recognition and enforcement; trend of development

In recent years, international arbitration is in the ascendant. With the further opening of the Chinese market and the accelerating pace of "going out" of Chinese enterprises, International arbitration is the most important cross-border dispute settlement mechanism, and whether its adjudication can be recognized and enforced in China has naturally become a major concern for Chinese Enterprises. This paper sums up the effect, the procedure, including prescription and application process, the objection handing and situation of non recognition and enforcement, and the status and trend of international arbitration award in China, in order to help enterprises to find practical and reasonable ways of dealing with foreign affairs.

I. The Enforceability of International Arbitral Awards

The main legal basis for application of recognition and enforcement of foreign arbitral awards in China are:

i) The "New York Convention

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter referred to as the "New York Convention") signed on the United Nations Conference on International Commercial Arbitration on June 10, 1958 is currently the most significant convention on the global scope on recognition and enforcement of arbitral awards, it stipulates conditions for contracting states to recognize and enforce foreign arbitral awards and the reasons for the parties concerned and countries within which the application is made to refuse recognition or enforcement of foreign arbitral awards. So far, there are 157 contracting states to New York Convention, including all members of G20 except the European Union, and 58 countries and 1 region (i.e. Sinai Peninsula of Egypt) participating in the "Belt and Road" initiative have also acceded to this convention.

On December 2, 1986, the Eighteenth Session of the Standing Committee of the Sixth National People's Congress of China formally approved the bill on accession to New York Convention proposed by the State Council, meanwhile declared that: a) People's Republic of China only applies New York Convention on the recognition and enforcement of arbitral awards made within the territory of another contracting state to this convention on a reciprocity basis; b) People's Republic of China only applies New York Convention on the disputes arising from contractual and non-contractual commercial legal relationship identified by the law of People's Republic of China. New York Convention officially came into force in China as from April 22, 1987.

ii) Notice of the Supreme People's Court on the Enforcement of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards joined by China

To facilitate the smooth implementation of New York Convention, on April 10, 1987, the Supreme People's Court promulgated Notice on Enforcement of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards' joined by China [Fa (Jing) Fa (1987) No. 5]. The Notice further defined the applicable rules of New York Convention, including the jurisdiction, application period, standard of examination on recognition and enforcement, etc.

iii) Civil Procedural Law of the People's Republic of China (hereinafter referred to as Civil Procedural Law)

On April 9, 1991, Civil Procedural Law of the People's Republic of China was released and came into force, it formally stipulated the rules on recognition and enforcement of foreign arbitral awards in the civil procedural legal system of China. Article 283 of this law stipulates: where an arbitral award of an overseas arbitration organization requires recognition and enforcement by a People's Court of the People's Republic of China, the parties concerned shall submit an application directly to an intermediate People's Court at the location of the enforcee's residence or the location of the enforcee's properties, the People's Court shall handle the matter pursuant to the international treaty concluded or participated by the People's Republic of China or in accordance with the principle of reciprocity.

iv) Notice of the Supreme People's Court on the Handling of Issues Concerning Foreign-related Arbitration and Foreign Arbitration by People' Courts

To enhance supervision on local courts in respect of recognition and enforcement of foreign arbitral awards, the Supreme People's Court promulgated Notice of the Supreme People's Court on the Handling of Issues Concerning Foreign-related Arbitration and Foreign Arbitration by People' Courts on August 28, 1995 (Fa Fa [1995] No. 18). According to this Notice, where a party concerned applies to a people's court for the recognition and enforcement of an arbitral award made by a foreign arbitration institution, if the people's court considers that the foreign arbitral award in question fails to conform to the international conventions China has entered into, or fails to comply with the principle of mutual benefit, the people's court must report to the higher people's court of the jurisdiction concerned for examination before making a decision on non-enforcement or refusal of recognition and enforcement. If the higher people's court agrees with non-enforcement or refusal of recognition and execution, it shall report its examination opinions to the Supreme People's Court. Only after the Supreme People's Court gives its reply can the decision of non- enforcement or refusal of recognition and enforcement be made. The Notice indicates that China holds a cautious attitude on refusal of recognition and enforcement of foreign arbitral awards when related to reciprocity. In practice, most of the time, the people's courts in China will make a ruling to recognize and enforce foreign arbitral awards, they seldom make a ruling to refuse recognition or enforcement.

v) Arbitration Law of the People's Republic of China (hereinafter referred to as Arbitration Law)

Arbitration Law 1995 is the first legislation in China stipulating arbitration matters and hence it is a milestone in the legislation history of China. It has been the basic law so far to regulate various arbitral behaviors in mainland China. Although the main purpose of this legislation is to reshape the local arbitration system in China, some articles of it also may regulate international commercial arbitration related to China. The examination standard of foreign arbitral awards established by the above-mentioned articles of Civil Procedural Law of China was adopted by Arbitration Law. For example, Article 71 of Arbitration Law directly cites Article 274 of Civil Procedural Law (i.e. Article 258 of Civil Procedural Law 2007) as the reason for people's courts to refuse enforcement of arbitral awards made by domestic foreign-related arbitration institutions.

II. Procedures of Enforcement of International Arbitral Awards

i) Time Frame

According to Article 5 of Notice of the Supreme People's Court on the Enforcement of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards joined by China and Article 239 of Civil Procedural Law (i.e. Article 169 of Civil Procedural Law 2007), the time frame for application for recognition and enforcement of arbitral awards is two years, commencing from the last day of the performance period specified in the arbitral awards; where the arbitral awards specify performance by instalments, the period shall commence from the last day of each specified performance period; where the arbitral awards does not specify the performance period, the period shall commence from the effective date of the arbitral awards. Relevant laws' stipulations on suspension and termination of limitation of action shall apply to suspension and termination of limitation period for arbitral awards' application for enforcement.

According to Article 4 of Provisions of the Supreme People's Court on Issues Concerning Fees Collection and Review Period for Recognition and Enforcement of Foreign Arbitration Awards, where a party concerned applies for recognition and enforcement of foreign arbitration awards, the people's court that accepts the application shall render a decision within two months of accepting the application. Where no special circumstances occur, the enforcement shall be accomplished within six months of the decision being rendered. Where the people's court decides to refuse the recognition and enforcement, it shall, in accordance with the relevant provisions of the Notice of the Supreme People's Court on the Handling of Issues Concerning Foreign-related Arbitration and Foreign Arbitration by People' Courts, report to the Supreme People's Court within two months of acceptance of the application.

ii) Procedures of Application for Enforcement

a. Competent Court

According to Article 283 of Civil Procedural Law, where an arbitral award of an overseas arbitration organization requires recognition and enforcement by a People's Court of the People's Republic of China, the parties concerned shall submit an application directly to an intermediate People's Court at the location of the enforcee's residence or the location of the enforcee's properties, the People's Court shall handle the matter pursuant to the international treaty concluded or participated by the People's Republic of China or in accordance with the principle of reciprocity.

b. The Reporting System of the Decision on Non-Enforcement

According to Article 62 of Arbitration Law, the parties concerned shall implement the arbitral award. Where one party does not implement the award, the other party may apply to a People's Court for enforcement in accordance with the relevant provisions of the Civil Procedural Law. Article 71 of Arbitration Law stipulates that where a respondent can provide evidence proving that the foreign arbitration award was made under any of the circumstances described in the Article 274 (1) of Civil Procedural Law (i.e. the Article 258 (1) of Civil Procedural Law 2007), through examination and verification by a collegiate bench of the People's Court, the court may rule not to enforce such award. It is obvious that the non-enforcement procedure of an arbitral award may only be initiated by a respondent (normally the losing party) who refuses to implement an arbitral award. The main purpose of the non-enforcement procedure is to provide a judicial relief to the respondent by offering him a chance to rectify an unfair award. The respondent is obliged to provide evidence proving whether the arbitration award was made in any of the circumstances with the legal reasons of non-enforcement, while the people's courts bear no obligations of voluntary examination. In Notice of the Supreme People's Court on the Handling of Issues Concerning Foreign-related Arbitration and Foreign Arbitration by People' Courts released on August 29, 1995, the Supreme People's Court established the reporting system of the decision of non-enforcement of foreign-related arbitral awards. The Notice indicates that where a party concerned applies to a people's court for the enforcement of an arbitral award made by a domestic foreign-related arbitration institution, if the people's court considers that the arbitral award made by the arbitration institution in China falls under any case described in Article 274 of the Civil Procedural Law (i.e. Article 260 of the Civil Procedural Law 1991), the people's court must report to the higher people's court of the jurisdiction concerned for examination before making a decision on non-enforcement. If the higher people's court agrees with non-enforcement, it shall report its examination opinions to the Supreme People's Court. Only after the Supreme People's Court confirmation can the decision of non- enforcement be made.

III. Handling of Objection to International Arbitral Awards and Conditions of Refusal on Recognition and Enforcement by the People's Court in China

i) Handling of Objection to International Arbitral Awards

A party shall promptly raise his objection to the validity of a foreign arbitration clause once the arbitration proceeding begins, otherwise it would be regarded as a waiver or implied jurisdiction. If a party objects to the validity of an arbitration clause after the arbitral award is made, in accordance with Article 27 of Interpretation of the Supreme People's Court on Certain Issues relating to Application of the Arbitration Law of the People's Republic of China, the People's Court shall not support the party's application if, it didn't raise objection to the validity of the arbitration clause during the arbitration proceeding while after the arbitral award is made, applied to set aside or not enforce the arbitral award on the grounds that the arbitration clause is invalid.

Every rule has its exception. Where a party concerned has raised it objection to the validity of an arbitration agreement during arbitration proceedings, and after the arbitral award is made it applies to set aside or not enforce the arbitral award on the grounds that the arbitration clause is invalid, the court shall not grant its application in principle.  We hereby re-clarity the circumstances under which the People's Court will set aside or refuse to recognize and enforce foreign arbitral awards.

ii) Conditions of Refusal on Recognition and Enforcement of Foreign Arbitral Awards by the People's Court in China

a. New York Convention

According to New York Convention 1958 , the contracting states shall ensure and recognize arbitral awards made by any contracting states. The reasons for refusal on recognition or enforcement of foreign-related arbitral awards shall only limited to the conditions prescribed in Article 5 of New York Convention. These conditions have been converted to detailed articles in legislation of China.

b. Related Domestic Legislations in China

According to Article 4 of Notice of the Supreme People's Court on the Enforcement of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards joined by China, the competent court shall examine the arbitral award when it accepts the application by a party concerned for recognition and enforcement. The court shall recognize the validity of the arbitral award and enforce it in accordance with the procedure prescribed in the Civil Procedural Law if it finds that no condition prescribed in Article 5 (1) and (2) of New York Convention exists. The court shall rule to reject the application and refuse to recognize and enforce the arbitral award if it finds that any of the conditions prescribed in Article 5 (1) and (2) exists. In brief, People's Courts in China conduct no substantive examination on foreign arbitral awards. In detail, People's Courts in China shall always recognize and enforce foreign arbitral awards unless any of the following conditions occurs: ①the parties to the arbitration agreement were, under the law applicable to them, under some incapacity, or the arbitration 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; or ② 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; or ③ 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; or ④ the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made; or ⑤ the subject matter of the difference is not capable of settlement by arbitration under the law of the country where recognition and enforcement is sought; or ⑥ the recognition or enforcement of the award would be contrary to the public policy of the country where recognition and enforcement is sought.

According to Article 2 of Notice of the Supreme People's Court on the Handling of Issues Concerning Foreign-related Arbitration and Foreign Arbitration by People' Courts and Article 283 of Civil Procedural Law, the recognition and enforcement in China of foreign arbitral awards should be in accordance with the international conventions China has entered into or the principle of reciprocity.

By comparing the statutory conditions of refusal of enforcement of foreign and foreign-related arbitral awards, we may find out that the conditions of refusal of enforcement for the two kinds of arbitral awards are basically the same. The difference is that a foreign arbitral award may not be set aside while a foreign-related or a domestic one may. The reason is that although New York Convention imposes strict restrictions on the conditions of refusal of recognition and enforcement by a contracting state on the arbitral award made within another contracting state, New York Convention only restricts the conditions base on which the country where enforcement is sought to refuse recognition and enforcement of foreign arbitral award, it does not stipulate conditions base on which the country where the arbitral award was made to refuse recognition or enforcement on the award. In practice, international commercial arbitral awards are regulated by a "dual supervision": on the one hand, the country where the arbitral award was made has exclusive jurisdiction on the arbitral award setting-aside dispute (i.e. the so-called "primary jurisdiction"); on the other hand, the country where enforcement is sought also has the right to examine the recognition and enforcement of a foreign award (i.e. the so-called "secondary jurisdiction"). In other words, in the case of a foreign arbitral award, China only examine whether to recognize and enforce it. In the case of an set aside arbitral award, according to Article 5(5) of New York Convention, the award which has set aside by the country where the award was made can be one reason of non-enforcement. In the meantime, pursuant to Article 7 of New York Convention, parties concerned may submit an application for recognition and enforcement of an arbitral award to the People's Court according to the law or the treaties of the country where the award is sought to be relied upon that is superior to New York Convention (i.e. the more-favorable-right provision). However, according to the 1987 Notice of the Supreme People's Court on the Enforcement of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards joined by China, the People's Court shall decide to reject the application and refuse enforcement of the arbitral award if it finds that any of the conditions prescribed in Article 5 (1) and (2) of New York Convention exists. It is worth noting that the word "shall" rather than "may" is used here to exclude the right of discretion of the judge.

On October 24, 2017, Shanghai No. 1 Intermediate People's Court concluded the first case in Shanghai in which the court ruled not to recognize and enforce a foreign arbitral award, taking this case as an example, because the composition of the arbitral tribunal did not comply with the parties' agreement in the arbitration clause, after the examination and verification by the court pursuant to related stipulation of New York Convention, the court ruled not to recognize and enforce the arbitral award.

On October 29th, 2017, the seller, Noble Resources International Pte. Ltd.("Noble"), and the buyer, Shanghai Xintai Real Estate Co. Ltd. ("Xintai") have entered into Iron Ore Purchase Agreement. This agreement stipulated that selling and delivering iron ore shall be in accordance with the terms and conditions in second part of Global ORE Standard Iron Ore Trade Agreement, version L2.4 (hereinafter referred to as "Standard Agreement") by quotation. Standard Agreement explicitly provides that any disputes or claims arising out of trades or agreements between two parties shall be submitted to Singapore International Arbitration Center ("SIAC") for arbitration, which shall be conducted in accordance with SIAC's arbitration rules in effect at the time of applying for arbitration, and the arbitral tribunal shall be constituted by three arbitrators.

Owing to the dispute arose during the performance of the agreement, Noble applied to SIAC for arbitration on January 1, 2015, claiming that Xintai has fundamentally breached the contract, requesting Xintai to undertake liabilities for breaching contract, and it applied for Expedited Procedure. Xintai raised objection to the Expedited Procedure and the constitution of the tribunal for four times. However, SIAC never responded to it and approved the application for Expedited Procedure by Noble, in addition, the arbitration was carried out by sole arbitrator. 

After hearing, the arbitral tribunal made the final arbitral award in August, 2015 supporting all the arbitration claims raised by Noble, i.e., Xintai shall compensate a liquidated damage in the amount of $1,603,100 as well as relevant interests and legal fee to Noble. After the render of the arbitral award, Xintai did not fulfil its obligations under arbitral award.

In February 2016, Noble applied to Shanghai No. 1 Intermediate People's Court for the recognition and enforcement of this arbitral award made by SIAC. The court held the view that the focus of this dispute is whether or not the constitution of the arbitral tribunal or the arbitration procedure did not comply with the parties' agreement, as stipulated in New York Convention. This court points out that Standard Agreement was invoked and applied by Iron Ore Purchase Agreement which executed by two parties, and Standard Agreement does have arbitration clauses which include "the arbitral tribunal shall be constituted by three arbitrators", so there is an effective written arbitration clause between the parties. Secondly, the application of Expedited Procedure in this case did not violate any agreements between the two parties. Lastly, the constitution of the arbitral tribunal does not comply with the parties' agreement. Despite that the arbitration clause stipulates that the arbitral tribunal shall be constituted by three arbitrators and Xintai explicitly objected to the sole arbitrator,  SIAC conducted the arbitration with sole arbitrator, which violated the agreement of arbitration clause. In consideration of the above, the court ruled to refuse recognition and enforcement of this arbitral award, according to relevant provisions of New York Convention and Civil Procedural Law of the People's Republic of China.

IV. Enforcement Fees

When a party applies for recognition and enforcement of an international arbitral award to a court having jurisdiction in China, it is necessary to consider the cost of the application, in which there are two parts involving attorney fees and court fees.

According to New York Convention, the recognition and enforcement of arbitral awards are actually divided into two steps. The first step is the recognition of a foreign arbitral award, which will have the force of law in China after being acknowledged by China's court. When it comes to the force of law, it actually means the enforcement power. The step of recognition makes the foreign arbitral awards have the same power as executable as the judicial documents made by the judicial authorities in China. The second step is the execution of the award with legal effect. In the course of execution, it should be applied to the same procedure as the domestic awards. In the term of Article 2 and Article 3 of Provisions of the Supreme People's Court on the Issues concerning charges and review period of recognition and enforcement of foreign arbitral awards (hereinafter Regulations), the People's court actually allows the parties to apply for recognition and enforcement of a foreign arbitral award separately. Therefore, the applicant can decide whether to apply to the court for recognition, or to apply for both recognition and enforcement of it.

i) Court Fees

According to Article 1 of Regulations, the people's court would receive RMB 500 in advance, when accepting the application for recognition of a foreign arbitral award. According to Article 2 of Regulations, when accepting the application for recognition and enforcement of a foreign arbitral award, the people's court would receive enforcement fees by the standard of the amount of applied enforcement or subject prices, in accordance with the relevant provisions of Rules on the Litigation Fees of the People's Court, if the people's court decides only to acknowledge a foreign award but not to enforce it, the rest fees would return to the applicant after deducting the expenses listed in Article 1 of this rules. But in practice, there is also views that Rules on the Litigation Fees of the People's Court involved in Regulations has been replaced by Approach to Pay the Cost of Litigation, which just provides the application fees for acknowledgement and enforcement of a foreign arbitral award. So even if an applicant only asks for acknowledgement of it, he should still pay the enforcement fees in advance by the subject amount of application enforcement. 

Although Rules on the Litigation Fees of the People's Court involved in Regulations has been replaced by Approach to Pay the Cost of Litigation, this does not affect the ongoing validity of Regulations. According to Approach to Pay the Cost of Litigation, the party should pay the application fees, when he applies for acknowledgement and enforcement of foreign judgment or verdict and foreign arbitration award. In the meanwhile, this Approach also sets the standards of payment, in which there is a special provision that, if only there is no amount of money or price of enforcement, the court charge shall be RMB 50 to 500; the payment is normally calculated by the amount of enforcement. This is consistent with the standard of Article 1 of Regulations.

ii) Lawyer Fees

If the applicant applies to the court for recognition and enforcement of foreign arbitral award, and appoints lawyer as his agent, lawyer fees shall be generated accordingly. There are three main forms as follows: percentage charging, contigent charging, and timing charging.

Percentage charging means that a certain percentage on the disputed amount will be charged as legal fee. The Law Firm usually charges segmentally and accumulatively, according to the disputed amounts of acknowledgement and enforcement. Taking Shanghai lawyer fee standard as an example, acting on behalf of cases involving property relations, the Law Firm could charge by the disputed amounts of legal service segmentally and accumulatively as follows: when the disputed amount is below RMB 100,000 (including RMB 100,000), the charging ratio ranges from 8% to 12%; when the disputed amount is below RMB 3,000, it can be charged at RMB 3,000; when the disputed amount is from RMB 100,000 to 1,000,000 (including RMB 1,000,000), the charging ratio ranges from 5% to 7%; when the disputed amount is from RMB 1,000,000 to 10,000,000,000 (including ¥ 10,000,000,000), the charging ratio the charging ratio ranges from 3% to 5%; when the disputed amount is from RMB 10,000,000 to 100, 000,000 (including RMB 100,000,000), the charging ratio ranges from 1% to 3%; when the disputed amount is more than RMB 100, 000,000, the charging ratio ranges from 0.5% to 1%.

Contingent charging means that, if the Law Firm accepts the appointment of applicant and applies to court for recognition and enforcement of foreign arbitral award, the service reward is specified on the contract in advance by the Law Firm and the client, in accordance with the target and effect of the commitment and the time, proportion, and condition of paying Lawyer fees. When the contractual terms are met, you should pay according to the contract. When the contractual terms are not met, you should not pay. In this form the Law Firm and the client would reach an agreement, in which it specifies the risk liability, charging method, toll time limit, charging amount or ration so that the two parties should undertake. The latest Standards of lawyer fees in Beijing, Shanghai and other cities clearly define that, except the charging of some special service items is charged at the government directed price, the rest of which is fully decontrolled. But in practice of this form, depending on the successfully enforced amount a not higher than 30% of the amount will be charged. That is to say, the specific charge ratio and the amount of fee are determined by between the Law Firm and the client.

There is another form of timing charging that can also be adopted. It is based on the effective working hours of lawyers. Hour rates differ from firm to firm, based on the size of the subject, the complexity of the case and the cost of service, the market supply and demand, the competitive situation and etc.

Work time is calculated at the effective working hours of lawyer, including receiving clients (i.e. legal consultation), getting to know the case, consulting legal provisions, drafting litigation documents and legal documents, participation in mediation and negotiation, and doing the relevant items on application for recognition and enforcement of foreign arbitral award for client. How to calculate working hours would be specified by the lawyer and the client. The time the lawyer spends on the road (including within the same city) is calculated at half. The following table indicates hourly rates for the different lawyer levels from JT&N:

Standard Fee     Rate per hour(/h)

Discount Fee     Rate per hour

Senior Partner

3600

3200

Partner

3000

2800

Senior Lawyer

2800

2600

Middle Lawyer

2500

2300

Junior Lawyer

2000

1800

Lawyer Assistant

1000

800

The specific charging form is eventually determined by the applicant and the Law Firm, according to the disputed amount, the complexity of the case, the service costs, the market supply and demand, and the competition situations.

V. Development Status and Tendency

i) The status of recognition and enforcement of international commercial arbitration awards in China before 2000

Before 2000, there were just a few foreign arbitration awards recognized and enforced in China. According to a research initiated by Arbitration Research Institute of China Chamber of International Commerce("CCIC") in 1997, there are 15 cases regarding recognition and enforcement of foreign arbitration awards in total were applied to courts of China from 1990 to the end of August, 1997, among which ten of them are ruled to be enforced and four of them were refused. As for these four cases, two of them were refused directly without any reasons, the other two were refused because the enforcee did not exist and lack of executable property. Statistics indicate that 13.33% of foreign arbitration awards were ruled on refusal of recognition and enforcement. (a) Based on the second research initiated by Arbitration Research Institute of CCIC from August to September, 1997, some scholars concluded that more than 92% of foreign arbitration awards were recognized and enforced by courts. In summary, a preliminary conclusion could be drawn based on research statistics that China has conscientiously fulfilled its obligations under New York Convention and the recognition and enforcement of foreign arbitration awards were implemented pretty well before 2000.

ii) The status of recognition and enforcement on international commercial arbitration award in China after 2000

After 2000, according to a research initiated by No.4 Civil Tribunal of the Supreme People's Court, there are 58 awards that have been recognized or recognized and enforced from 2002 to 2006, accounting for 78.38% of the total, while 5 awards have been ruled on refusal of recognition and enforcement, accounting for 6.76%. 6 awards (8.1%) are withdrawn because of parties' settlement. The cases in process and others account for 6.76%. In addition, according to the website of China Court, Ji'nan Intermediate People's Court has ruled on refusal of recognition and enforcement of ICC No.13464/MS/JB/JEM arbitral award on July 11st, 2008. This is the first time ever on record that China has refused recognizing and enforcing a foreign arbitration award by invoking the social public interests.

With the increasing complexity of the international economic and trade relations and the gradual improvement of the arbitration system in Chinese law, the total amount of non-recognition or non-enforcement of foreign arbitration awards in China has been substantially increased compared with the situation before 2000. The reasons for refusal of recognition and enforcement are also becoming more various, even the "social public interests" has been invoked, which is very rare in the worldwide.

iii) Tendency of Development

According to New York Convention and relevant domestic laws and regulations, the main reasons that China court refused to recognize and enforce foreign arbitration awards upon request by parties are as follows: the parties under incapacity and the arbitration agreement is invalid; the notice has not been delivered to enforcee appropriately or enforcee was unable to present his case; arbitral tribunal is acting beyond its authority; the composition of the arbitral tribunal or the arbitration procedure does not comply with the arbitration rules; the award have no binding force or it has been set aside or suspended; the award violates public policy. The first five reasons belong to procedural defects, while the sixth one is closely related to the national interests. The discussion and illustration here will focus on the last one.

Firstly, for those arbitration awards that have been refused to be recognized and enforced on the ground of violating public policy, the standard of judicial review shall apply "public policy" provisions in Article 5 Section 2 of New York Convention, rather than taking public order within China into consideration. The authority of dealing with certain disputes shall be only granted to the court instead of arbitration institutions. Some issues are closely related to national or public interests in practice, therefore they can only be settled by court rather than arbitration. However, with development of international economy, the scope of economic activities as well as arbitrable matters have been expanding. Therefore, New York Convention lists arbitrability as one of matters that shall be initiatively reviewed. The country's restrictions on arbitrable matters are mainly based on following considerations: (a) The parties that involved in the disputes shall be equal subjects. Disputes between parties in which vertical legal relations are involved, including administrative factors, shall not be arbitrated. (b) Only for those matters that parties could dispose of freely, the parties have right to choose a dispute resolution method. (c) Arbitrable matters only involve the parties' interests, which are pure private rights, which means when , they could be settled through such civil method.

Secondly, Arbitration Law of the People's Republic of China has stipulated principles on arbitrable matters. Article 2 of this law provides that contractual disputes and other disputes concerning property rights and obligations between citizens, legal persons and other organizations of equal status may be subject to arbitration. According to Article 3 of this law, disputes concerning marriage, adoption, custody, fostering and succession as well as administrative disputes which shall, in accordance with the law, be dealt with by administrative bodies shall not be subject to arbitration. Thus, when considering the arbitrability of controversial issues, the Arbitration Law in China persist in two standards: (a) the parties shall have equal status, so administrative disputes outside the scope of arbitrable matters, only civil and commercial disputes are arbitrable; (b) the parties shall have the right to dispose of the arbitration issues. A conclusion can be drawn based on above rules that there are few limitations on arbitrability and the range of arbitrable matters is relatively broad in China, it is in consistent with general practice of international community. In practice, arbitrability shall be judged pursuant to these rules in accordance with New York Convention. If a foreign arbitration award applied in China is not arbitrable pursuant to Chinese law, the court may rule on refusal of enforcement directly. In judicial practice, judges have discretion on how to identify contractual disputes and other disputes concerning property rights. Therefore, the refinement on certain filed of legal issues in international community shall draw our attention. Traditionally, the disputes concerning bankruptcy, antitrust, securities, intellectual property and those involved with personal relations, personal status and family laws are mainly controversial issues that may not be subject to arbitration. However, with the development of arbitration system, the traditional rules have changed in some ways. (a)the patents, trademarks, copyright and know-how are main subjects of arbitration in the field of intellectual property. There are two major types of disputes about patents and trademarks. The first one is disputes concerning damage compensation for patents infringement or trademarks infringement, and royalties under license agreement. The second type is disputes regarding validity of patents or trademarks, and compulsory licensing of patents. Generally, the former type of disputes is allowed to be settled by arbitration in worldwide. As for the disputes concerning copyright and know-how, normally they are also arbitrable in judicial practice. (b) In the field of antitrust, it is an inherent traditional rule that antitrust disputes shall not be arbitrated. In many countries, those disputes are under exclusive jurisdiction of the court. However, restrictions have loosened in this respect since 1980s. The arbitrability of antitrust disputes has been explicitly defined in Germany, and this kind of disputes may be subject to arbitration in Italy and France too. But still, these countries have comparatively more restrictions on adopting arbitration in this field. (c) Each country has different rules on security arbitration, most of them are adopting strict restrictions on it. However, there are some countries allow arbitration for contractual disputes concerning stock exchange, including China. (d) Generally, the bankruptcy disputes can be broadly divided into two categories. The first one is creditor's right and obligation disputes between creditors and bankrupts, the other one is dispute on insolvency proceedings. The former one currently is gradually becoming arbitrable while the the latter one is still negated.

It is worth mentioning that even though recognition and enforcement of international commercial arbitration in foreign countries is obviously an international affair, international commercial arbitration institutions have no jurisdiction on international civil disputes. The disputes processed by such institutes are all related to international commercial issues. Thus, the parties involved with international civil disputes lack the chance to adopt international arbitration to resolve disputes, if the parties choose arbitration, the conflict laws should be considered. The 20th diplomatic conference of Hague Conference on Private International Law has approved Hague Convention on the Choice of Court Agreements (hereinafter referred to as the Convention) on June 30, 2005 and the Convention takes effect on October 1, 2015. The Convention adopted litigation as a new resolution method for disputes, which is different from arbitration. The Convention also applies to civil disputes, which fully fills the gap left by international commercial arbitration. Meanwhile, this achievement means the unification of civil jurisdiction at the international level and the establishment of enforcement mechanism between states. Since international economic and trade activities, especially civil and commercial activities are becoming more thriving and the globalization is developing rapidly in today's world, the Convention is helpful to find a more efficient and convenient way to resolve the disputes arising from international civil and commercial matters, and also facilitate the recognition and enforcement of effective judgments rendered by foreign courts. Our government has participated in the drafting and negotiation of the Convention and then entered into Choice of Court Agreements signed by Chinese ambassador to Holland, Wu ken on September 12, 2017. The Convention shall apply in exclusive choice of court agreement concluded in civil or commercial matters, and it contains three core contents including procedure and obligations of chosen court, procedure and obligations of a un-chosen court, and recognition and enforcement of the judgment rendered by chosen court. This perfect legal mechanism will effectively promote the development of economic and trade relations between China and other countries, and provide judicial safeguard for pushing forward the building of the Belt and Road Initiative. However, some substantial rules under the Convention regarding exclusive jurisdiction, level jurisdiction, effectively-connected principle, intellectual property and so on are in conflict with domestic laws of China, it undoubtedly will exert an influence on our current judicial system and pose new challenges to future judicial practice. China's relevant authorities have put great emphasis on the Convention and have been studying the necessity and feasibility of joining it.

To sum up, currently New York Convention is the main legal basis for recognizing and enforcing foreign arbitration awards in China. It is necessary to take deep research on its contents and application. According to legislation and practice from various countries, some countries have more favorable provisions than New York Convention concerning recognition and enforcement of foreign arbitration awards. As mentioned before, the form of supervision report system in China regarding non-recognized and non-enforced foreign arbitration awards from lower courts is reply letter issued by the Supreme People's Court. As a matter of fact, this system has granted the ultimate right to make the final decision on refusal of recognition and enforcement of foreign arbitration awards to the Supreme People's Court. Thus it could effectively prevent intermediate people's court from abusing judicial supervision power, thereby reduce excessive supervision and maintain justice. Under the circumstance that most of countries in the world support international commercial arbitration, follow the legislation spirit and principles of New York Convention, apply the rules of New York Convention appropriately, actively explore countermeasure for joining The Hague Convention on the Choice of Court Agreements by drawing lessons from other countries' legislations and practices to establish a fair judicial image of supporting international commercial arbitration of China court, shall be the underlying significance of China's actively participated in the drafting, negotiation on and signing the convention.

Produced from Mrs.Zhang Yunyan's speech at the International Commercial Arbitration Conference in Germany

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