International Arbitration

The principal legislation applicable to arbitration in China includes:

• the Arbitration Law of the People’s Republic of China (PRC) (2017);
• the Civil Procedure Law of the PRC (2017);
• the Civil Code of the PRC (2021) (repealing, among other things, the General Principles of Civil Law (2017) and the Contract Law of the PRC (1999) as of 1 January 2021); and
• the Law on the Applicable Law to Foreign-Related Civil Relations (2011).

In applying and interpreting these laws, Chinese courts often refer to the Supreme People’s Court (SPC) Interpretation of the Arbitration Law (2006) and various other documents issued by the SPC, including replies to lower courts that had sought guidance with respect to particular issues. However, neither court decisions nor SPC interpretations or replies are precedential under Chinese law.

There are limitations on the statutory regime governing arbitration in China. For example, oral arbitration agreements are not enforceable under Article 16 of the Arbitration Law, which stipulates that an arbitration agreement must be in writing. Under Chinese law, the requirement of ‘writing’ may be satisfied by a contract, letter or electronic message that is capable of expressing its contents in a tangible form (Article 469 of the Civil Code). In addition, the Arbitration Law and relevant judicial opinions do not apply to arbitration of labour disputes (Article 77).

The Arbitration Law and the Civil Procedure Law distinguish purely ‘domestic’ arbitrations from ‘foreign-related’ Chinese arbitrations. One important legal implication of this distinction is that parties may choose a seat of arbitration outside of mainland China only if their dispute is considered ‘foreign-related’ under Chinese law (Article 16 of the Arbitration Law; Article 271 of the Civil Procedure Law). In addition, awards resulting from purely domestic arbitrations and those resulting from foreign-related arbitrations are enforced under different legal regimes (see question 13.1).

Whether an arbitration is ‘foreign-related’ is defined by the Interpretation (I) of the SPC on Several Issues Concerning the Application of the Law on the Applicable Law to Foreign-related Civil Relations (amended effective 1 January 2021), according to which a civil relation is foreign-related under any of the following circumstances:

• One or both parties are:
• • foreign citizens;
  • foreign legal persons or organisations; or
  • stateless person(s);
• The habitual residence of one or both parties concerned is located outside the territory of China;
• The subject matter of the dispute is located outside the territory of China;
• The legal facts that trigger, change or terminate the civil relation take place outside the territory of China; or
• Any other circumstances exist that can be determined as foreign-related civil relations.

Recent court practice and judicial opinions provide guidance as to which factors may be relevant to a finding of ‘foreign-related’ elements pursuant to the ‘other circumstances’ prong of the ‘foreign elements’ test. For example, in Siemens v Golden Landmark (Belt and Road Typical Case 12 [2013] Hu Yi Zhong Min Ren No 2), although both parties were Chinese entities, the subject matter of the dispute was in China, and the agreement was entered into and expected to be performed in China. The SPC thus determined that a foreign-related civil relationship existed in light of ‘other circumstances’. The SPC based this determination on the fact that the case involved contractual performance that took place in part in a free trade zone within China and the two companies were wholly foreign-owned enterprises (WFOEs) (Reply of SPC Re: Request for Instructions on Application filed by Siemens International Trading (Shanghai) Co, Ltd for Recognition and Enforcement of a Foreign Arbitral Award [2015] Min Si Ta Zi 5). Subsequently, in the SPC’s Opinions on Providing Judicial Safeguards for the Construction of Pilot Free Trade Zones (2016), the SPC confirmed what was decided in Siemens v Golden Landmark and broadened its scope by expressly permitting WFOEs registered in pilot free trade zones to refer their disputes to foreign-seated arbitration. However, the SPC’s opinions, while highly persuasive, are not binding under Chinese law.

No, China has not adopted the UNCITRAL Model Law on International Commercial Arbitration. However, the Arbitration Law has adopted certain concepts from the UNCITRAL Model Law. For example, Article 19 of the Arbitration Law is generally considered to be based on the separability principle stipulated in the UNCITRAL Model Law.

Among the important principles of the Model Law that have not been incorporated in the Arbitration Law are:

• the kompetenz-kompetenz principle;
• the concept of ad hoc arbitration; and
• the arbitral tribunal’s power to grant interim measures.

In addition, unlike the Model Law, the PRC Arbitration Law expressly allows arbitrators to act as mediators during an arbitration proceeding (Article 51).

Not every provision in the Arbitration Law is mandatory, but arbitrations seated in China must meet certain mandatory requirements (from which the parties may not derogate), including:

• the arbitrability requirements (Articles 2 and 3);
• the requirement that an arbitration agreement be in writing (Article 16);
• the requirement that an arbitration agreement contain:
• • the parties’ expression of intent to arbitrate;
  • the matters to be arbitrated; and
  • a designated arbitral institution (with the effect that domestic ad hoc arbitrations are generally considered to be prohibited in China) (Article 16);
• the powers of a court in relation to an arbitration (Articles 20, 28, 46 and 68);
• the qualification requirements of arbitrators (Article 13); and
• the grounds for setting aside an award (Articles 58 and 70).

Yes, plans are underway to amend the Arbitration Law. Specifically, on 30 July 2021, the Ministry of Justice published a draft amended Arbitration Law for public consultation. The draft proposes extensive revisions aimed at bringing Chinese arbitration practice into line with international norms and standards. The most significant of the changes proposed in the draft, from the perspective of the practice of international arbitration in mainland China, include the following:

• allowing foreign arbitration institutions to establish their operations in mainland China and “conduct foreign-related arbitration business” (Article 12);
• recognising the concept of the ‘place of arbitration’ (Articles 27 and 91);
• recognising that an arbitral tribunal has the power to independently rule on its own jurisdiction (competence-competence), including “any objections with respect to the existence or validity of the arbitration agreement” (Article 28);
• permitting an arbitral tribunal to order interim measures (Article 43); and
• allowing ad hoc arbitration in ‘foreign-related’ commercial disputes (Article 91).

Yes. China is a contracting state to the New York Convention. When acceding to the convention, China made two reservations: the commercial reservation and the reciprocity reservation.

Under the commercial reservation, China limited its recognition and enforcement obligations under the convention to disputes arising from legal relationships that are considered ‘commercial’ under its national law (Article 2 of the Notice of the SPC on Implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Acceded to by China). The SPC has clarified that ‘commercial’ relationships refer to:

Disputes between a foreign investor and the host state government (ie, investor-state disputes) are expressly excluded (id). Accordingly, under current law, Chinese courts are not permitted to enforce investment treaty awards under the New York Convention.

Under the reciprocity reservation, China limited its recognition and enforcement obligations to “arbitral awards made in the territory of another Contracting State” (Article 1 of the Notice of the SPC on Implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Acceded to by China).

Application of the New York Convention in China was extended to the Special Administration Regions of Hong Kong and Macao in 1997 and 2005, respectively. By virtue of this extension, China’s reservations to the New York Convention were also extended to Hong Kong and Macao.

In addition to the New York Convention, China is a party to a number of other treaties and conventions relevant to arbitration, including:

• the Statute of the Hague Conference on Private International Law (1951) (as amended in 2007);
• the Vienna Convention on the Law of Treaties (1969);
• the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965); and
• the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (1970).

As of February 2021, China had also concluded 127 bilateral investment treaties and 24 other treaties with investment provisions, which contain arbitration provisions.

The Ministry of Foreign Affairs lists on its website all of the treaties to which China is a party at present (http://treaty.mfa.gov.cn/Treaty/web/index.jsp).

Under Article 2 of the Arbitration Law, contractual disputes and other disputes concerning property rights and obligations between private parties of equal status (ie, citizens, legal persons and other private organisations) are subject to arbitration.

Article 3 of the Arbitration Law identifies the following categories of disputes as non-arbitrable:

• ‘administrative disputes’ – that is, disputes between a private party and a government authority; and
• disputes concerning marriage, adoption, custody, fostering or succession.

With respect to IP disputes, the question of arbitrability is determined by specific laws governing the subject matter:

• Copyright disputes are arbitrable pursuant to the Copyright Law of the PRC (2010). The Supreme People’s Court has also specifically confirmed that copyright infringement disputes should be regarded as arbitrable (Article 55 of the Copyright Law; ExperExchange, Inc v Hanwang Technology Co, Ltd [2012] Min Shen 178, holding that a software copyright infringement dispute is arbitrable).
• However, disputes concerning the validity or infringement of registered trademarks and patents are generally considered non-arbitrable under Chinese law (Article 60 of the Trademark Law of the PRC (2019); Articles 41 and 60 of the Patent Law of the PRC (2008)).

Competition disputes are non-arbitrable under Chinese law (Article 53 of the Anti-monopoly Law of the PRC (2008); Shell China Co Ltd v Huili Hohhot Co, Ltd [2019] Zhi Min Xia Zhong 47, holding that competition disputes are related to the state’s public power and thus are beyond the scope of the parties’ arbitration agreement).

Consumer disputes are considered arbitrable pursuant to Article 39 of the Law of the PRC on the Protection of Rights and Interests of Consumers (2013).

Yes. Unless the parties’ dispute is considered ‘foreign-related’ under Chinese law, the parties are not permitted to choose an arbitration seat outside of mainland China (see Article 271 of the Civil Procedure Law; Changzhou Sinya Motor Co, Ltd v Qin Xiaochun [2015] Chang Shang Xia Zhong 146). For the ‘foreign-related’ test and its application, see question 1.2.

To be valid under Chinese law, an arbitration agreement must be in writing. The writing requirement may be satisfied “in the form of a contract, letter or electronic text (including telegraph, telex, facsimile, electronic data interchange and e-mail)” (Article 16 of the Arbitration; Article 1 of the Supreme People’s Court’s (SPC) Interpretation of the Arbitration Law (2006)).

In addition, Article 16 of the Arbitration Law requires the parties to specify in their arbitration agreement:

• the intention to arbitrate;
• the subject matter chosen for arbitration; and
• the arbitral institution selected to administer the arbitration.

Ad hoc arbitration agreements are generally considered invalid under Chinese law due to failure to specify an arbitral institution (Articles 237 and 274 of the Civil Procedure Law). Similarly, arbitration agreements that fail to correctly state the name of an existing arbitral institution have been held to be invalid (eg, Beijing Xinzhonghexinye Medical Investment Co, Ltd v Li Jingli [2016] Jing 04 Min Te 12).

However, there is an exception to this general rule: since 2016, parties registered in a free trade zone of China have been permitted to refer their disputes to ad hoc arbitration seated in China (Article 9 of the Opinions on Providing Judicial Safeguards for the Construction of Pilot Free Trade Zones).

Moreover, ad hoc arbitral awards rendered in jurisdictions outside mainland China that permit ad hoc arbitration can be recognised and enforced in China (Article 545 of the Interpretations of the SPC on Application of the PRC Civil Procedural Law (2021); Article 2 of the Provisions of the SPC on Recognition and Enforcement of Arbitration Awards Issued in Taiwan (2015); Article 1 of the Arrangement of the SPC on Mutual Recognition and Enforcement of Arbitration Awards Between the Mainland and Macau Special Administrative Region (2008); Notice of the SPC on Issues concerning the Enforcement of Hong Kong Arbitral Awards in the Mainland. See also Dalian Zhengdao v Murmansk Shipping [2019] Jin 72 Min Chu 220, finding an arbitration agreement without designation of an arbitral institution valid pursuant to the law of the seat (English law)).

In connection with the requirement to specify an arbitral institution, earlier cases held that an arbitration agreement choosing a non-Chinese arbitral institution to administer an arbitration in mainland China was invalid under Chinese law (eg, see Reply of the SPC to the Request for Instructions on Application of Zueblin Construction & Engineering Co, Ltd and Wuxi Wo Ke Universal Engineering Rubber Co, Ltd for Determining the Validity of the Arbitration Agreement Concerned, invalidating an arbitration agreement that provided “Arbitration: ICC Rules, Shanghai shall apply”). In contrast, recent cases and policy guidance suggest that the Chinese courts will now uphold as valid an arbitration agreement selecting a foreign arbitral institution to administer an arbitration in mainland China (Reply of the SPC to the Request for Instructions on Application for Confirming the Validity of an Arbitration Agreement in the Case of Anhui Longlide Packaging and Printing Co, Ltd v BP Agnati SRL [2013] Min Si Ta 13, holding that the parties’ choice of the International Chamber of Commerce (ICC) as arbitral institution and of Shanghai as the arbitration seat was valid and resulted in an enforceable award; Brentwood v Guangdong Fa’anlong [2015] Sui Zhong Fa Min Si Chu 62, holding that arbitral award rendered by the ICC in Guangzhou was enforceable as a ‘foreign-related’ award under the Civil Procedure Law).

Yes. Article 19 of the Arbitration Law stipulates that “an arbitration agreement shall exist independently and its validity shall not be affected by modification, rescission, termination or invalidity of the contract” (see also Article 507 of the Civil Code). The China International Commercial Court recently affirmed this principle in its first judgment (Luck Treat Limited v Shenzhen Zhong Yuan Cheng Commercial Investment Holdings Co, Ltd [2019] Zui Gao Fa Min Te 1).

There are no provisions under the Arbitration Law that expressly set out default rules for ascertaining the place or language of arbitration.

In practice, these questions are often decided in accordance with the applicable rules of the arbitral institution that administers the arbitration. Absent party agreement on the seat and/or language of the arbitration, the rules of the major Chinese arbitral institutions typically provide that the default place of arbitration shall be the domicile (headquarters) of the arbitration institution (or, in the case of the China International Economic and Trade Arbitration Commission (CIETAC) and the China Maritime Arbitration Commission (CMAC), the relevant branch location of such institution) and the default language of the arbitration shall be Chinese (Articles 7 and 81 of the CIETAC Arbitration Rules 2015; Articles 7 and 78 of the CMAC Arbitration Rules 2018; Articles 7 and 60 of the Shanghai International Economic and Trade Arbitration Commission Arbitration Rules 2015). Notwithstanding the default rules, the arbitration institution may also determine the place and/or language of a given arbitration having regard to the circumstances of the case.

A party wishing to challenge the arbitral tribunal’s jurisdiction may do so by an application either to the arbitral institution or to a competent court. Under Chinese law, where one party makes such an application to the arbitral institution and the other party requests a decision from the people’s court, the jurisdictional objection shall be decided by the court (Article 20 of the Arbitration Law). However, if the arbitral institution has already ruled on the existence and validity of an arbitration agreement, the court has no jurisdiction to review such decision at that stage, subject to the court’s authority to consider the existence and validity of the arbitration agreement at the set-aside stage (Article 13 of the Supreme People’s Court’s Interpretation of the Arbitration Law (2006)).

In addition, Article 20 of the Arbitration Law requires the parties to submit their jurisdictional objections “before the arbitral tribunal commences the first hearing”. If a party fails to comply with this requirement, it may not thereafter raise such objections (Article 27 of the Supreme People’s Court’s Interpretation of the Arbitration Law).

The Arbitration Law does not explicitly authorise an arbitral tribunal to rule on its own jurisdiction. Instead, as mentioned in question 4.1, jurisdictional objections are decided either by the relevant arbitral institution or by a people’s court (Article 20 of the Arbitration Law).

In practice, however, upon receiving a party’s jurisdictional objection, an arbitral institution may refer the jurisdictional question to the arbitral tribunal if one has already been constituted. This is consistent with the position taken by various arbitral institutions in their arbitration rules (Article 6 of the China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules 2015, which provides that “CIETAC has the power to determine the existence and validity of an arbitration agreement and its jurisdiction over an arbitration case. CIETAC may, where necessary, delegate such power to the arbitral tribunal”; Article 6 of the Beijing Arbitration Commission Arbitration Rules 2019; Article 10 of the Shenzhen Court of International Arbitration Arbitration Rules 2019; Article 6 of the Shanghai International Economic and Trade Arbitration Commission Arbitration Rules 2015).

In addition, where one party seeks a ruling from a competent court that no arbitration agreement exists between the parties, the court may refer that ‘existence’ question to the arbitral tribunal if one has already been constituted (eg, see Shenzhen Green Power v Jincheng International [2017] Jing 02 Min Te 97, referring the question of the existence of an arbitration agreement to the arbitral tribunal).

Yes, for China-seated arbitrations. As discussed in question 4.1, the parties have the right under Article 20 of the Arbitration Law to apply to the competent people’s court for a ruling on the jurisdiction of the arbitral tribunal. Such application must be made before the arbitral tribunal commences the first hearing.

Yes. Restrictions relating to the capacity of a party to conclude an arbitration agreement under Chinese law include the following (Articles 2 and 17 of the Arbitration Law):

• The parties must be “fully capable for civil acts” as defined in Article 18 of the Civil Code. This restriction applies only to natural persons (Hebei Broadcast and TV Information Network Group v Handan Congtai Kezhao Internet Technology [2020] Ji 04 Min Te 17).
• The parties must not be under any duress when concluding the arbitration agreement (Heilongjiang Hongli Real Estate Development v Man Hongzhou [2020] Hei 01 Min Te 78).

Yes. Pursuant to the Arbitration Law, the parties are under the following duties in arbitration proceedings:

• The parties must comply with the arbitration procedures in a timely manner, including attending any hearings (Article 42);
• The parties must “provide evidence in support of their respective claims” (Article 43);
• The parties must “comply with an award”. “If a party fails to comply with the award within the time period specified by the award, the successful party is entitled to apply to the competent People’s Court for compulsory enforcement of the award” (Article 62); and
• The parties must “pay arbitration costs as required” (Article 76).

No. Chinese law is silent on multi-party arbitrations. While the Civil Procedure Law contains provisions governing multi-party proceedings in domestic litigation, those provisions do not apply to multi-party arbitrations (Articles 52–56).

However, the arbitration rules of multiple Chinese arbitral institutions do contain provisions dedicated to multi-party arbitration and consolidation issues, primarily regarding the following key aspects (for details, see questions 7.1–7.3):

• joinder of additional parties to an existing arbitration (Article 18 of the China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules 2015; Article 14 of the Beijing Arbitration Commission (BAC) Arbitration Rules 2019; Article 31 of the Shanghai International Economic and Trade Arbitration Commission (SHIAC) Arbitration Rules 2015; Article 20 of the Shenzhen Court of International Arbitration (SCIA) Arbitration Rules 2019);
• consolidation of two or more arbitrations (Article 19 of the CIETAC Arbitration Rules 2015; Article 30 of the BAC Arbitration Rules 2019; Article 30 of the SHIAC Arbitration Rules 2015; Article 18 of the SCIA Arbitration Rules 2019);
• claims between multiple parties (Article 15 of the BAC Arbitration Rules 2019; Article 21 of the SCIA Arbitration Rules 2019); and
• the composition of the arbitral tribunal in multi-party arbitrations (Article 29 of the CIETAC Arbitration Rules 2015; Article 24 of the SHIAC Arbitration Rules 2015).

The parties are free to choose the law of the arbitration agreement (Article 18 of the Law on the Applicable Law to Foreign-related Civil Relations (2011) (ALFCR); Article 13 of the Provisions of the Supreme People’s Court (SPC) on Several Issues Concerning Trial of Cases Involving Judicial Review of Arbitration (2017)).

In the absence of an express choice of governing law for the arbitration agreement, the Chinese courts do not automatically apply the law that the parties have selected to govern the underlying contract (Article 13 of the Provisions of the SPC on Several Issues Concerning Trial of Cases Involving Judicial Review of Arbitration). Instead, the Chinese courts adopt the following approach to determine the law of the arbitration agreement:

• If the parties have specified an arbitration seat and/or an arbitral institution, “the law of the seat of the arbitration or the law of the domicile of the arbitral institution” shall apply (Article 18 of the ALFCR; see also Dalian Zhengdao v Murmansk Shipping [2019] Jin 72 Min Chu 220, finding an agreement for ad hoc arbitration in London valid according to the law of the seat (ie, English law));
• “If there is a conflict between the law of the domicile of the arbitral institution and the law at the seat of arbitration”, the law that supports the validity of the arbitration agreement applies (Article 14 of the Provisions of the SPC on Several Issues Concerning Trial of Cases Involving Judicial Review of Arbitration); and
• If neither the seat nor the arbitral institution is specified, the law of the forum (ie, Chinese law) will apply to the arbitration agreement (Article 16 of the Provisions of the SPC on Several Issues Concerning Trial of Cases Involving Judicial Review of Arbitration).

The tribunal will generally uphold a party agreement as to the substantive law of the dispute (Article 3 of the ALFCR). However, the tribunal may disregard the parties’ agreement under certain circumstances (Article 194 of the Opinions of the SPC on Several Issues regarding the Implementation of the PRC General Principles, stating that if the parties try to “prevent the application of Chinese law through choosing a foreign law”, such choice may be deemed ineffective). Examples of mandatory application of a law irrespective of the parties’ choice include the following:

• For real property rights, the law of the place in which the real property is located will apply (Article 36 of the ALFCR).
• For negotiable securities, the law of the place where the rights of such securities are realised or any other law which has the closest connection to the negotiable securities will apply (Article 39 of the ALFCR).
• Chinese law will be the governing law for contracts for “Chinese-foreign equity joint ventures”, “Chinese-foreign contractual joint ventures” and “Chinese-foreign cooperative exploration and development of natural resources to be performed within the territory of the PRC” (Article 476 of the Civil Code; see also Article 4 of the ALFCR, requiring the application of “mandatory provisions on foreign-related civil relations”, including the provision providing for Chinese law as the governing law of the contract).
• Chinese law will be the governing law for disputes without ‘foreign elements’ (Article 3 of the ALFCR; Articles 4 and 5 of Interpretation (I) of the SPC on Several Issues Concerning the Application of the Law on the Applicable Law to Foreign-related Civil Relations (2021). See also Jinan Rural Commercial Bank v Dason Biological Pharmacy [2019] Lu Min Zhong 1412, holding that the dispute between the parties was not ‘foreign-related’ and thus that Chinese law must apply).

In the absence of agreement between the parties, the tribunal will apply:

• Chinese law, if the dispute is considered domestic; or
• the law of the country that has the closest connection with the “civil relations” between the parties, if the dispute is foreign-related (Article 2 of the ALFCR).

The tribunal may also refer to relevant industry practices and trade usages in making the applicable law determination (Article 49 of the China International Economic and Trade Arbitration Commission Arbitration Rules 2015; Article 51 of the Shenzhen Court of International Arbitration Arbitration Rules 2019). For certain disputes, the ALFCR stipulates a specific default law if the parties have not agreed on the substantive law of the dispute. For example:

• for movable property rights, if the parties have not made a choice as to the governing law, “the law of the place of the relevant property at the time when the relevant facts occurred” shall apply (Article 37 of the ALFCR); and
• for tort liabilities, if the parties have not made a choice, “the law of the place where the tort is committed” shall apply. However, if the parties have a mutual place of residence, the law of that place shall apply (Article 44 of the ALFCR).

As discussed in question 5.3, while the Arbitration Law is silent on the consolidation of separate arbitrations, the arbitration rules of the major Chinese arbitral institutions all provide that separate arbitration proceedings may be consolidated into one arbitration under certain circumstances. For example:

• the China International Economic and Trade Arbitration Commission (CIETAC) may consolidate separate proceedings if:
• • “all the claims are made under the same arbitration agreement;”
  • “the claims are made under multiple arbitration agreements that are identical or compatible and the arbitrations involve the same parties as well as legal relationships of the same nature”;
  • “the claims are made under multiple arbitration agreements that are identical or compatible and the multiple contracts involved are constituted by a principal contract and its ancillary contract(s)”; or
  • “all the parties to the arbitrations have agreed to consolidation” (Article 19(1) of the CIETAC Arbitration Rules 2015);
• the Beijing Arbitration Commission (BAC) may consolidate arbitrations “where the parties so agree, or where one party applies and the BAC, in its discretion, considers it necessary” (Article 30(1) of the BAC Arbitration Rules 2019);
• the Shenzhen Court of International Arbitration (SCIA) may consolidate separate arbitrations only when there is written consent by all parties (Article 18(1) of the SCIA Arbitration Rules 2019);
• under the rules of the Shanghai International Economic and Trade Arbitration Commission (SHIAC), the tribunal may order the consolidation of “related arbitrations or arbitrations … with the consent of all other parties concerned” (Article 30(1) of the SHIAC Arbitration Rules 2015); and
• under all major rule sets, cases shall be consolidated into the case that commenced first, unless otherwise agreed by the parties.

The Chinese courts have confirmed consolidation decisions made by arbitral institutions and arbitral tribunals as valid and consistent with Chinese law (eg, see Jiangyin Jinma v Atlas Copco (Shanghai) [2020] Jing 04 Min Te 662, holding that a consolidation decision made by a SHIAC tribunal was not in violation of statutory procedures and the resulting award would not be set aside; and Yinlong New Energy v CITIC Securities [2019] Jing 04 Min Te 656, holding that a consolidation decision made by a BAC tribunal was valid).

As mentioned in question 5.3, while the Arbitration Law is silent on the issue of joinder, almost all of the major Chinese arbitral institutions permit the joinder of additional parties to an ongoing arbitration upon the fulfilment of certain requirements. For example:

• CIETAC may join an additional party to an existing arbitration upon a determination that the arbitration agreement invoked in the arbitration “prima facie binds the additional party” (Article 18(1) of the CIETAC Arbitration Rules 2015);
• the BAC may approve an application for joinder only if “there is consent by all parties” – that is, the claimant, the respondent and the party to be joined (Article 14(3) of the BAC Arbitration Rules 2019); and
• the SCIA and the SHIAC authorise the arbitral tribunal to join an additional party to the arbitration, but only upon the written consent of all parties concerned (Article 20 of the SCIA Arbitration Rules 2019; Article 31 of the SHIAC Arbitration Rules 2015).

The Chinese courts have confirmed joinder decisions as valid and consistent with Chinese law (eg, see Beijing Skyline v Guilin Wireless [2014] San Zhong Min (Shang) Te 13118, holding that the BAC tribunal had authority to rule on whether additional parties should be joined to the arbitration proceeding; and Wuhan Xinji v Wuhan Dingji [2019] E 01 Zhi Yi 2, holding that the Wuhan Arbitration Commission and a tribunal empanelled under its rules had authority to rule on whether additional parties should be joined to the arbitration proceeding).

Third parties are generally not bound by an arbitration agreement under Chinese law, except under limited circumstances, including the following:

• If a company is merged or divided or an individual dies, the arbitration agreement is binding upon the successor, unless the parties have agreed otherwise (Article 8 of the Supreme People’s Court’s (SPC) Interpretation of the Arbitration Law (2006)).
• If obligations and rights are assigned, the arbitration agreement associated with such rights or obligations is binding upon the assignee, unless the parties have agreed otherwise (Article 9 of the SPC’s Interpretation of the Arbitration Law).
• If a company enters into bankruptcy proceedings, the bankruptcy administrator may “continue on behalf of the bankrupt enterprise to participate in arbitration proceedings that are started before the application for bankruptcy is accepted by the People’s Courts” (Article 20 of the Bankruptcy Law of the PRC (2006)).
• A principal may be bound by an arbitration agreement entered into by or in the name of its agent. Whether the arbitration agreement binds the principal will be determined considering all of the relevant circumstances. In several cases applying Articles 402 and 403 of the Contract Law of the PRC (1999) (now incorporated into Articles 925 and 926 of the Civil Code (2021)) (regarding an agent concluding a contract in its own name), the courts concluded that a sales contract and an arbitration clause contained in it would bind the principal even where only the name of the agent appeared on the contract (eg, see Changde Shaoshang v Xiangxibei International [2019] Xiang 07 Min Te 42, holding that an arbitration agreement signed between the plaintiff and the defendant’s agent bound the defendant, because the relationship of agency between the defendant and its agent had been disclosed to the plaintiff at conclusion of the contract).

The parties to international arbitration in mainland China are free to agree on the procedure for the appointment of arbitrators. In the absence of such agreement, the Arbitration Law provides for the following default procedure for the appointment of arbitrators:

• “If the parties agree that the arbitration tribunal shall be composed of three arbitrators, they shall each appoint or entrust the chairman of the arbitration commission to appoint one arbitrator. The parties shall jointly select or jointly entrust the chairman of the arbitration commission to appoint the third arbitrator who shall be the presiding arbitrator” (Article 31(1) of the Arbitration Law).
• “If the parties agree that the arbitration tribunal shall be composed of one arbitrator, they shall jointly appoint or jointly entrust the chairman of the arbitration commission to appoint the arbitrator” (Article 31(2) of the Arbitration Law).
• “If the parties fail to agree on the method of formation of the arbitration tribunal or to select the arbitrators within the time limit specified in the rules of arbitration, the arbitrators shall be appointed by the chairman of the arbitration commission” (Article 32 of the Arbitration Law).

The arbitration rules of the major Chinese arbitration institutions generally provide for the same or a similar default procedure as that in the Arbitration Law.

In appointing arbitrators, all Chinese arbitral institutions are required by Article 13 of the Arbitration Law to provide the parties with a panel from which to select arbitrators. Nevertheless, under the rules of several major arbitration institutions, the parties may appoint arbitrators from outside the arbitral institution’s panel, provided that both parties consent to such procedure and subject to confirmation by the chairperson of the arbitral institution (Article 26 of the China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules 2015; Article 21 of the Shanghai International Economic and Trade Arbitration Commission (SHIAC) Arbitration Rules 2015; Article 64 of the Beijing Arbitration Commission (BAC) Arbitration Rules 2019).

The parties can choose to appoint one or three arbitrators (see question 8.1).

With respect to the arbitrators’ qualifications, the Arbitration Law requires that all arbitrators be “honest and just” and fulfil at least one of the following requirements (Article 13):

• at least eight years’ experience working in the field of arbitration;
• at least eight years’ experience working as a lawyer;
• at least eight years’ experience serving as a judge;
• a senior position in the legal academic field; or
• knowledge of the law and a senior position in a professional field such as economics or trade, or equivalent knowledge.

Foreign nationals may be appointed as arbitrators, but only in ‘foreign-related’ arbitrations (Article 67 of the Arbitration Law). It appears that the Arbitration Law has a more relaxed requirement for the qualifications for foreign arbitrators, under which such arbitrators merely need to have “specialties in law, economics and trade, science and technology, etc” (id).

Chinese law does not expressly prohibit retired judges from acting as arbitrators. As for active judges, the Supreme People’s Court (SPC) has issued guidance prohibiting acting judges from serving as arbitrator (Notice of the SPC about Prohibiting In-service Judges from Acting as Arbitrators, Fa [2004] 129).

The parties are generally permitted to agree to additional requirements for arbitrators.

An arbitrator may be challenged if he or she:

• is a party to the arbitration, a close relative of a party or a party’s agent;
• has any interest in the arbitration;
• has some other relationship with a party or a party’s agent which might affect the impartiality of the arbitration; or
• has met a party or the party’s agent in private, or has accepted any treatment or gifts from a party or party’s agent (Article 34 of the Arbitration Law).

Arbitrator challenges must be submitted “before the first hearing of the tribunal”, except where the party raising the challenge only becomes aware of the ground for its challenge after the first hearing, in which case the challenge must be submitted no later than the end of the final hearing (Article 35 of the Arbitration Law). If a party fails to timely raise its challenge to an arbitrator after it becomes aware of the situation that gives rise to the challenge, it may be deemed to have waived its right to request that the resulting award be set aside on the same ground (see Inner Mongolia Yidong Coal v Jungar Banner Chuanfa [2020] Jing 04 Min Te 715, rejecting the losing party’s request to set aside the award on the ground of the arbitrator’s impartiality because the losing party failed to raise its challenge before the end of the final hearing). For arbitrators’ disclosure obligations, see question 8.5.

If one party challenges an arbitrator and the other party agrees to the challenge or the challenged arbitrator voluntarily resigns, the arbitrator will be deemed removed from the arbitral tribunal. However, in neither case will such removal imply that the reasons for the challenge are sustained (eg, see Article 32(5) of the CIETAC Arbitration Rules 2015; Article 33(4) of the Shenzhen Court of International Arbitration (SCIA) Arbitration Rules 2019; Article 26(4) of the SHIAC Arbitration Rules 2015).

If the parties are not in agreement regarding the challenge and the arbitrator declines to resign, “the chairperson of the arbitral institution shall decide as to whether or not the arbitrator in question should be removed”. “Where the chairperson of the arbitral institution is the arbitrator in question, the issue of removal shall be decided upon collectively by the arbitral institution” (Article 36 of the Arbitration Law).

An arbitral institution’s decision on a challenge to an arbitrator may not be appealed during the arbitral proceedings, but a party may apply to set aside or refuse enforcement of the arbitral award thereafter on the grounds that the arbitrator “should have been removed under the PRC Arbitration Law or the arbitration rules” (Article 14 of the Provisions of the SPC on Several Issues Concerning the Handling of Cases of Enforcement of Arbitration Awards by People’s Courts; Article 274 of the Civil Procedure Law).

Following a challenge, if the arbitrator in question voluntarily resigns or is removed (either by party agreement or by decision of the chairperson of the arbitral institution), a substitute arbitrator shall be appointed and the tribunal reconstituted, according to the rules that were applicable to the formation of the original tribunal (Article 37 of the Arbitration Law).

Once an arbitrator has been replaced, “the parties concerned may apply for the [prior] proceedings to be commenced again, but this shall be decided by the [reconstituted] arbitration tribunal” (id).

The Arbitration Law does not expressly stipulate the duties of arbitrators. However, several provisions of the law provide guidance on this issue. As discussed in question 8.3, the Arbitration Law sets out a list of circumstances in which an arbitrator must refrain from continuing to sit in an arbitration proceeding. If the arbitrator “has had private meetings with the parties concerned or their agents, or has accepted gifts or has attended banquets provided by the parties concerned or their agents”, or has “demanded or accepted bribes, abused their position for personal gain, or perverted the law by the award”, he or she “shall bear legal responsibility and shall be removed from the panel of arbitrators by the arbitral institution” (Article 38 of the Arbitration Law).

In addition, almost all Chinese arbitral institutions maintain their own codes of conduct for arbitrators (eg, CIETAC Code of Conduct for Arbitrators 1994; SCIA Code of Ethics of Arbitrator 2012; BAC Code for Arbitrators 2006; China Maritime Arbitration Commission (CMAC) Code of Conduct for Arbitrators 1994). For example, the CMAC Code of Conduct for Arbitrators requires an arbitrator to:

• “hear cases independently and impartially”;
• “allow the parties adequate opportunities to present their case”;
• “keep the confidentiality of an arbitration”; and
• not “disclose any information related to its substance or procedure”.

The Arbitration Law is silent as to an arbitrator’s duty of disclosure regarding his or her impartiality and independence. Nevertheless, various Chinese arbitral institutions have promulgated rules requiring an arbitrator to disclose any circumstances that may affect his or her impartiality and independence. Under these rules, the duty of disclosure is ongoing throughout the entire arbitral proceeding (Article 31 of the CIETAC Arbitration Rules 2015; Article 25 of the SHIAC Arbitration Rules; Article 22 of the BAC Arbitration Rules; Article 32 of the SCIA Arbitration Rules 2019).

Moreover, in foreign-related or foreign arbitrations, the parties are free to adopt the International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration, which contain detailed provisions on the arbitrators’ disclosure obligations. Party agreement is essential to the application of the IBA guidelines (Bright Morning v Yixing Leqi [2016] Su 02 Xie Wai Ren 1, holding that the IBA guidelines are not binding on parties absent agreement to that effect).

(a) Procedure, including evidence?

Under Chinese arbitration law and practice, the arbitral tribunal has a wide range of powers with respect to procedure. The Arbitration Law explicitly confers certain such powers on the arbitral tribunal, including the power to:

• decide whether the arbitration proceedings should be repeated upon the reselection or reappointment of an arbitrator (Article 37);
• decide whether to “postpone the hearing upon a party’s application” (Article 41);
• collect evidence on its own initiative when necessary (Article 43);
• make specialised appraisals (ie, valuations of property) where necessary (Article 44); and
• mediate the dispute before an award has been rendered (Article 51).

The rules of Chinese arbitral institutions confer other such powers on arbitral tribunals. For example:

• the tribunal may adopt “an inquisitorial or adversarial approach”, taking into account the circumstances of the case (eg, see Article 35 of the CIETAC Arbitration Rules 2015; Article 36 of the SCIA Arbitration Rules 2019);
• the tribunal may “investigate on its own initiative” (eg, see Article 43 of the CIETAC Arbitration Rules 2015; Article 44 of the SCIA Arbitration Rules 2019; Article 33 of the BAC Arbitration Rules 2019);
• the tribunal may assess, admit and evaluate evidence (eg, see Article 42 of the CIETAC Arbitration Rules 2015; Article 43 of the SCIA Arbitration Rules 2019; Articles 36 and 37 of the BAC Arbitration Rules 2019; see also China Mobile Communications Group Zhejiang Co, Ltd v Yang Tao [2019] Zhe 02 Min Te 305, holding that it is within the tribunal’s power to assess and admit evidence after receiving both parties’ arguments);
• the tribunal may “issue procedural orders or question lists”, adopt terms of reference or hold pre-hearing conferences (eg, see Article 35 of the CIETAC Arbitration Rules 2015; Article 36 of the SCIA Arbitration Rules 2019; Article 36 of the BAC Arbitration Rules 2019);
• the presiding arbitrator may decide on the procedural arrangements at his or her own discretion with the authorisation of the other members of the arbitral tribunal (eg, see Article 35 of the CIETAC Arbitration Rules 2015); and
• the tribunal may hold deliberations at any place or in any manner that it considers appropriate (eg, see Article 35 of the CIETAC Arbitration Rules 2015; Article 55 of the SHIAC Arbitration Rules 2015).

(b) Interim relief?

Under Chinese law, only courts, rather than arbitral tribunals, have the power to grant interim relief (Articles 28, 46 and 68 of the Arbitration Law, stipulating that where a party applies for “preservation measures”, the arbitration institution shall “submit the application to the competent People’s Court” for a ruling).

Although the rules of several major arbitral institutions allow tribunals to grant interim relief where permitted under applicable foreign law, such interim orders can only be enforced outside of mainland China (eg, see Article 23 of the CIETAC Arbitration Rules 2015; Article 63 of the BAC Arbitration Rules 2019; Article 26 of the SCIA Arbitration Rules).

(c) Parties which do not comply with its orders?

Under Chinese law, the arbitral tribunal does not have power to enforce compliance with its orders. The Arbitration Law does not expressly state whether an arbitral tribunal can draw adverse inferences based on non-compliance or impose other sanctions on recalcitrant parties.

Various institutional rules allow arbitral tribunals to draw adverse interferences from a party’s non-compliance or allocate costs taking into account the parties’ conduct in the arbitration proceedings. For example, paragraph 23 of the CIETAC Guidelines on Evidence (2015) stipulates that: “Where a party refuses, without justifiable reasons, to produce the document(s) pursuant to a request to produce granted or directly ordered by the tribunal, the tribunal may draw adverse inferences against the party refusing to produce the document(s)”. Similarly, Article 33 of the BAC Arbitration Rules 2019 provides that: “If a party having the burden of proof fails to produce evidence within the specified period of time, or if the evidence produced is insufficient to discharge its burden of proof, it shall bear the adverse consequences of such failure” (see also Article 52(3) of the BAC Arbitration Rules 2019; and Article 64 of the SCIA Arbitration Rules 2019, stating that reasonable costs incurred or increased due to any breach of arbitration rules by a party which caused delay in arbitral proceedings shall be borne by such breaching party).

(d) Issuing partial final awards?

An arbitral tribunal has the power to issue partial final awards under the Arbitration Law: “[B]oth partial awards and final awards are final and have a binding force on the parties” (Articles 54 and 55 of the Arbitration Law; see also Hebei Cangyun Haorizi Logistics Co, Ltd v Hebei Tianxin Construction Group Co, Ltd [2019] Ji 09 Min Te 56, holding that a partial award ordering the respondent to pay a certain amount was enforceable).

(e) The remedies it can grant in a final award?

A wide range of remedies are available in arbitration under Chinese law, including declaratory relief, specific performance and monetary compensation (Article 3 of the Provisions of the SPC on Several Issues Concerning the Handling of Cases of Enforcement of Arbitration Awards by People’s Courts).

Arbitral tribunals generally do not have the power to grant punitive damages, except in cases involving product liability and consumer protection (see Shi Zhihong v Jiangsu Tianlu Real Estate Development Co, Ltd [2018] Su 02 Min Te 41, upholding the tribunal’s rejection of punitive damages in a real property dispute on the grounds that the contract between the parties was not a consumer contract in nature; and Zunyi Supercar Service Co, Ltd v He Jian [2018] Qian 03 Min Te 39, upholding the tribunal’s award of punitive damages in a sales contract dispute between a consumer and a seller).

(f) Interest?

The Arbitration Law does not preclude an arbitral tribunal from awarding interest. A tribunal may award interest subject to the applicable substantive law, either at the request of a party or at its own discretion (see Beijing Shumi Network Technology Co, Ltd v Shanghai Jiashi Communication Technology Co, Ltd [2019] Jing 04 Min Te 332, holding that the arbitral tribunal has the power to award interest on liquidated damages at its own discretion).

Under Chinese law, a claimant’s failure to prosecute its claims in an arbitration is deemed a “withdrawal of its arbitration application”; whereas a respondent’s absence “without justifiable reason” does not prevent the tribunal from issuing an award in its absence (ie, a default award) (Article 42 of the Arbitration Law). The same rules apply to non-participation by counter-claimants and counter-respondents, respectively (Article 39 of the CIETAC Arbitration Rules 2015; Article 32 of the BAC Arbitration Rules 2019; Article 39 of the SCIA Arbitration Rules 2019; Article 35 of the SHIAC Arbitration Rules 2015).

Chinese law does not expressly provide for immunity for arbitrators. To the contrary, Chinese law stipulates penalties for arbitrators who have accepted gifts or bribes from a party or engaged in other specified misconduct.

Specifically, Article 38 of the Arbitration Law provides that arbitrators shall “bear legal liabilities” if the arbitrator:

• “has had private meetings with the parties concerned or their agents, or has accepted gifts or has attended banquets provided by the parties concerned or their agents” (where the circumstances are serious); or
• has “demanded or accepted bribes, abused their position for personal gain, or perverted the law by the award” (see also question 8.3).

Article 399 of the Criminal Law of the PRC (2017) further specifies that arbitrators may bear criminal liability for “pervert[ing] the law by the award”. In practice, this crime is most often substantiated where the arbitrator has accepted bribes in relation to the arbitration proceeding (see Kunming Guandu People’s Procuratorate v Xue Bingfeng and Shu Zhongliang [2018] Yun 01 Xing Zhong 703, holding that the arbitrator had committed the crime of “perverting the law by the award” by accepting bribes and deliberately ruling against the facts and law).

Under Chinese law, if a party files an action in Chinese court despite the existence of a valid arbitration agreement covering the dispute, the court will refuse to accept the case at the filing stage or, alternatively, will dismiss the case for lack of jurisdiction (following a timely objection by the other party or on its own motion) (Articles 5 and 26 of the Arbitration Law; Article 124(2) of the Civil Procedure Law). In determining whether it should refuse to accept or dismiss the case, the Chinese court will review the validity and scope of the arbitration agreement (Article 20 of the Arbitration Law). If the court determines that there is a valid arbitration agreement that covers the parties’ dispute, the case must be dismissed (Article 208(3) of the Supreme People’s Court’s Interpretation of the Civil Procedure Law).

If, however, the defendant to the court proceeding fails to raise any objection to the court’s acceptance of the case prior to the first hearing, “the arbitration agreement shall be regarded as having been forfeited” and the court will continue to try the case on its merits (Article 26 of the Arbitration Law).

The Chinese courts exercise the following supervisory powers with respect to arbitration proceedings seated within mainland China:

• determining the validity of an arbitration agreement (see question 4.3);
• granting interim measures to preserve property or evidence or to enjoin conduct (see question 8.6(b)); and
• setting aside arbitral awards (see question 14.1).

The Chinese courts generally do not exercise any powers with respect to arbitration proceedings seated outside of mainland China, with one exception: under the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region (2019), parties may seek interim measures from mainland Chinese courts in aid of Hong Kong-seated arbitrations administered by qualified institutions, such as the Hong Kong International Arbitration Centre, the International Chamber of Commerce or the China International Economic and Trade Arbitration Commission Hong Kong.

In addition to supervising arbitration proceedings, the Chinese courts have the power to enforce or refuse to enforce arbitral awards. For Chinese domestic awards – including foreign-related Chinese awards (see question 1.2 for a definition of ‘foreign-related’ Chinese awards), the Chinese courts apply the Arbitration Law and the Civil Procedure Law to enforcement proceedings. For the enforcement of foreign awards, the Chinese courts directly apply the provisions of the New York Convention. For awards rendered in Hong Kong, Macau or Taiwan, enforcement proceedings are governed by the applicable special arrangement in place between mainland China and the relevant jurisdiction (see question 13.1).

No. Neither the Arbitration Law nor the Civil Procedure Law contains any provision that permits the parties to exclude the powers of the court by agreement.

Under Chinese law, the costs of the arbitration (ie, the administrative fees charged by the arbitral institution and the arbitrators’ fees) “in principle shall be borne by the losing party” (see Article 1 of the Measures on Arbitration Fees to be Charged by Arbitration Commissions (1995)). Where “one party wins part of the case and loses the other part”, the arbitral tribunal will allocate the costs of the arbitration “in proportion according to the degree of liability of each party” (Article 9 of the Measures on Arbitration Fees to be Charged by Arbitration Commissions).

With regard to other expenses, including attorneys’ fees, the rules of the major arbitral institutions further specify that the arbitral tribunal “has the power to decide in the arbitral award, having regard to the circumstances of the case, that the losing party shall compensate the winning party for the expenses reasonably incurred by it in pursuing the case”, including but not limited to attorneys’ fees, the costs of preservation measures, travel and accommodation expenses and notarial fees (eg, see Article 52 of the China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules 2015). In deciding whether the prevailing party’s expenses incurred in pursuing the case are reasonable, the arbitral tribunal shall “take into consideration various factors such as the outcome and complexity of the case, the workload of the winning party and/or its representative(s), the amount in dispute, etc” (Article 52 of the CIETAC Arbitration Rules 2015; see also Article 47 of the Shanghai International Economic and Trade Arbitration Commission Arbitration Rules 2015; Article 64 of the Shenzhen Court of International Arbitration (SCIA) Arbitration Rules 2019; Article 52 of the Beijing Arbitration Commission (BAC) Arbitration Rules 2019).

Under Chinese law, an agreement between the parties as to the allocation of arbitration costs (ie, the administrative fees charged by the arbitral institution and the arbitrators’ fees) is not binding on the arbitral tribunal (Article 9 of the Measures on Arbitration Fees to be Charged by Arbitration Commissions). Nevertheless, Chinese law does not prevent the tribunal from taking the parties’ agreement into account when allocating costs (eg, see Articles 64(2) and (4) of the SCIA Arbitration Rules 2019; Articles 52(2) and (4) of the BAC Arbitration Rules 2019).

With regard to the allocation of attorneys’ fees and other party expenses, Chinese law is silent and thus imposes no restrictions on party agreement.

There are no laws or regulations that expressly permit or prohibit third-party funding of arbitration in China. The arbitration rules of major Chinese arbitral institutions are also silent on third-party funding, except that the investment arbitration rules of the China International Economic and Trade Arbitration Commission (CIETAC) and the Beijing Arbitration Commission (BAC) each contain a provision permitting third-party funding in investor-state arbitrations (Article 27 of the CIETAC International Investment Arbitration Rules 2017; Article 39 of the BAC International Investment Arbitration Rules 2019).

Under Article 54 of the Arbitration Law, an award must:

• be rendered in written form;
• be signed by the arbitrators;
• be affixed with the arbitration commission seal; and
• state the date of the award.

Further, the arbitration rules of major arbitral institutions contain additional procedural requirements for an award, including the time limit within which an award must be rendered (see question 12.2) and a requirement that the award state the place (seat) of arbitration.

As for substantive requirements, under Article 54 of the Arbitration Law, an arbitral award must state:

• the arbitration claims;
• the matters in dispute;
• the grounds on which the award is given;
• the outcome of the award; and
• the allocation of arbitration costs.

Under Article 53 of the Arbitration Law, an award by more than one arbitrator shall be issued “according to the opinions of the majority of arbitrators”, while “dissenting opinions of the minority may be recorded”. Article 53 further provides that: “Where the arbitral tribunal is unable to form a majority decision, the award shall be made in accordance with the opinion of the presiding arbitrator.” A dissenting arbitrator’s decision not to sign the award will not affect the validity, finality or enforceability of the award (Article 54).

The Arbitration Law imposes no time limit within which an arbitral tribunal must render an award. However, certain arbitration institution rules do contain requirements in that regard. For example, an arbitral tribunal sitting in a ‘foreign-related’ arbitration proceeding must generally render its award within six months of the date on which the arbitral tribunal is formed (Article 48 of the China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules 2015; Article 50(1) of the Shenzhen Court of International Arbitration (SCIA) Arbitration Rules 2019; Article 44(1) of the Shanghai International Economic and Trade Arbitration Commission (SHIAC) Arbitration Rules 2015; cf Article 59 of the Beijing Arbitration Commission (BAC) Arbitration Rules 2019, requiring an award to be rendered within 75 days of the tribunal’s constitution).

The arbitral institution generally may, in its discretion, extend the time limit for rendering an award where it deems such an extension necessary under the circumstances (Article 50(4) of the SCIA Arbitration Rules 2019; see also Article 48(2) of the CIETAC Arbitration Rules 2015, stating that “the President of the Arbitration Court may extend the time period if he/she considers it truly necessary and the reasons for the extension truly justified”; Article 59 of the BAC Arbitration Rules 2019; and Article 44(3) of the SHIAC Arbitration Rules 2015).

Yes. Under Chinese law, the procedure applicable to award enforcement proceedings depends on the type of award at issue. Chinese awards and foreign awards are subject to different enforcement regimes.

In distinguishing foreign awards from Chinese awards, Chinese courts have historically looked to the nationality of the arbitral institution that administered the arbitration, rather than the seat of the arbitration. Applying this ‘institution standard’, several Chinese courts enforced awards issued by foreign arbitral institutions in arbitral proceedings in China as ‘foreign awards’ under the New York Convention (eg, see Wei Mao International (Hong Kong) Co Ltd v Shanxi Tianli Industrial Co Ltd [2004] Min Si Ta 6 (treating an International Chamber of Commerce (ICC) award rendered in China as a French award). In 2020, however, a Chinese court in Guangzhou held for the first time that such an award should be categorised as a foreign-related Chinese award and be subject to the enforcement regime for Chinese awards, because the place (seat) of arbitration was in China (eg, see Brentwood Industries v Guangdong Fa’anlong [2015] Sui Zhong Fa Min Si Chu 62, treating an ICC award rendered in China as a Chinese award). It remains to be seen whether the Guangzhou court’s decision will be confirmed in upcoming amendments to the Arbitration Law and/or in guidance from the Supreme People’s Court (SPC).

Chinese awards: Enforcement proceedings of Chinese awards are governed by the Arbitration Law and the Civil Procedure Law (Articles 62 and 63 of the Arbitration Law; and Article 237 of the Civil Procedure Law for purely domestic Chinese awards; and Article 71 of the Arbitration Law and Article 274 of the Civil Procedure Law for foreign-related Chinese awards) For further details on the distinction between domestic and foreign-related Chinese awards under Chinese law, see question 1.2.

Foreign awards: For awards rendered outside mainland China (ie, ‘foreign awards’), a separate enforcement regime applies.

For foreign awards in general, enforcement proceedings are governed by the New York Convention or by the reciprocity principle if the award was rendered in a non-contracting state of the New York Convention (Article 283 of the Civil Procedure Law).

For awards rendered in Taiwan or in China’s Special Administrative Regions of Hong Kong and Macau, enforcement proceedings are governed by the relevant special arrangement in place between such jurisdiction and the government of mainland China (Provisions of the SPC on Recognition and Enforcement of Arbitration Awards Issued in Taiwan (2015); Arrangement of the SPC on Mutual Recognition and Enforcement of Arbitration Awards Between the Mainland and Macau Special Administrative Region (2008); Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (2008); Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region).

The Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region was entered into by the SPC and the Hong Kong Department of Justice on 27 November 2020. Among other things, it introduced the following changes and/or clarifications:

• It clarified that all arbitral awards made pursuant to the Arbitration Ordinance of Hong Kong can be recognised and enforced in the mainland pursuant to the supplemental arrangement;
• It eliminated the prior restriction on mainland arbitral institutions covered under the original arrangement, such that all awards made in the mainland are now covered;
• It allows parties to apply for the enforcement of arbitral awards in the mainland and in Hong Kong at the same time; and
• It provides that enforcement courts (both in mainland China and in Hong Kong) may order preservation measures in accordance with applicable law before or after the enforcement of an award.

In addition, the Chinese courts have discretion to suspend recognition and enforcement proceedings of a foreign award if set-aside proceedings are pending overseas at the place of arbitration (Article 83 of the SPC Minutes of the Second National Working Conference on Trial of Foreign-Related Commercial and Maritime Cases (2005); see also Hong Kong Water Solutions v Shenzhen Tall & Stout [2006] Yue 03 Min Chu 366, where the court refused to suspend enforcement proceeding in China on consideration of factors including the failure of the award debtor to post security).

Notably, the Chinese courts have implemented a unique reporting mechanism for award enforcement proceedings, under which a lower court must obtain approval from a higher court before refusing enforcement of a foreign or foreign-related arbitral award (in certain circumstances, a similar reporting duty arises in arbitrations of a purely domestic nature). Ultimately, only the SPC may grant final approval to refuse enforcement of a foreign or foreign-related arbitral award (Articles 2 and 3 of the Provisions of the SPC on Issues relating to the Reporting and Review of Cases Involving Judicial Review of Arbitration).

Enforcement procedure: With respect to the procedure guiding an enforcement proceeding (for both domestic and foreign awards), the steps are generally as follows:

• An enforcement application must first be submitted to the intermediate court at the place where the award debtor or its assets are located. In certain circumstances, the intermediate court (with approval from the higher people’s court) may designate a lower court to hear the application (Article 29 of the SPC’s Interpretation of the Arbitration Law (2006); Article 2 of the Provisions of the SPC on Certain Issues Concerning the Enforcement of Arbitral Awards (2018)).
• Enforcement applications are subject to certain formality requirements under Chinese law, including the following:
• • The applicant must submit a written application, accompanied by the original arbitral award and arbitration agreement, or notarised and authenticated copies thereof, proof of the applicant’s identity and a valid power of attorney for the attorney submitting the application (Articles 18–20 of the Provisions of the SPC on Several Issues Concerning Enforcement by People’s Courts (for Trial Implementation)).
  • “[D]ocuments in a foreign language submitted by the parties concerned shall be accompanied by a Chinese translation” (Article 6 of the Provisions of the SPC on Several Issues Concerning the Trial of Judicial Review of Arbitration Cases (2018)).
  • Upon receiving an enforcement application, the enforcement court must notify the award debtor of the enforcement proceeding within 10 days (Article 22 of the Provisions of the SPC on Several Issues Concerning Enforcement by People’s Courts (for Trial Implementation)).
  • Any application for enforcement must be submitted within a two-year period commencing at the end of the period for voluntary compliance with the award (as specified in the award). If the award does not specify a date by which voluntary compliance must be completed, the two-year period commences on the date when the award becomes final and binding upon the parties (Article 239 of the Civil Procedure Law).

Under Chinese law, a non-party to an arbitration may intervene to oppose enforcement of the arbitral award by filing an application for non-enforcement. To prevail in preventing enforcement of the award, the non-party applicant must prove the following:

• The arbitration was filed maliciously or falsely, thereby impairing the legal rights and interests of the non-party;
• The lawful rights and interests of the non-party that are sought to be protected are still in force and not terminated; and
• The application for non-enforcement has been submitted within 30 days of the date on which the non-party knew or should have known about the enforcement proceedings (Article 9 of the Provisions of the SPC on Several Issues concerning the Handling of Cases regarding Enforcement of Arbitral Awards by the People’s Courts (2018)).

Grounds for refusing enforcement: Enforcement of a foreign-related domestic award may be refused only on the grounds enumerated in Article 274 of the Civil Procedure Law, as follows:

• There is no written arbitration agreement between the parties;
• The respondent was not given notice of its right to appoint an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case for reasons not attributable to its own fault;
• The composition of the arbitral tribunal or the arbitration procedure was not in conformity with the applicable procedural rules;
• The award deals with matters that are outside the scope of the arbitration agreement or are non-arbitrable; or
• The award is contrary to the public interest.

Enforcement of a purely domestic award may be refused on any of the grounds discussed immediately above, as well as three additional grounds under Article 237 of the Civil Procedure Law:

• The evidence on which the award is based was fabricated;
• The prevailing party concealed evidence from the arbitral institution sufficient to affect the fairness of the award; or
• The arbitrator(s) “demanded or accepted bribes, abused their position for personal gain, or perverted the law by the award”.

Enforcement of a foreign award may be refused only on the basis of the grounds enumerated under the New York Convention (if the award was rendered in a New York Convention State) or the reciprocity principle (for non-convention foreign awards) (Article 283 of the Civil Procedure Law).

The grounds for resisting enforcement of awards rendered in Hong Kong, Macau, and Taiwan are enumerated under the relevant special arrangements discussed above and are similar to the grounds for non-recognition under the New York Convention (Article 14 of the Provisions of the SPC on Recognition and Enforcement of Arbitration Awards Issued in Taiwan; Article 7 of the Arrangement of the SPC on Mutual Recognition and Enforcement of Arbitration Awards Between the Mainland and Macau Special Administrative Region; Article 7 of the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region).

Under Chinese law, awards may be set aside based on statutorily enumerated grounds only, which differ depending on the type of award at issue.

A foreign-related domestic award may be set aside only on the following grounds, enumerated in Article 70 of the Arbitration Law, with reference to Article 274 of the Civil Procedure Law:

• There is no written arbitration agreement between the parties;
• The respondent was not given notice of its right to appoint an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case for reasons not attributable to its own fault;
• The composition of the arbitral tribunal or the arbitration procedure was not in conformity with the applicable procedural rules;
• The award deals with matters that are outside the scope of the arbitration agreement or are non-arbitrable; or
• The award is contrary to public policy.

A purely domestic award may be set aside on any of the grounds discussed immediately above, as well as three additional grounds under Article 58 of the Arbitration Law:

• The evidence on which the award is based was fabricated;
• The prevailing party concealed evidence from the arbitral institution sufficient to affect the fairness of the award; or
• The arbitrator(s) “demanded or accepted bribes, abused their position for personal gain, or perverted the law by the award”.

Foreign awards and awards rendered in Hong Kong, Macau, and Taiwan cannot be set aside in China.

The time limit for applying to set aside an award under Chinese law is six months from receipt of the award (Article 59 of the Arbitration Law).

Neither the Arbitration Law nor the Civil Procedure Law expressly addresses this issue, but the prevailing view is that Chinese law does not allow parties to waive or exclude by pre-dispute agreement the right to challenge an award.

Arbitration proceedings in China are not open to the public, unless the parties have agreed otherwise (Article 40 of the Arbitration Law, stating that “an arbitration tribunal shall not hear a case in open session”).

However, the Arbitration Law is silent on the duty of confidentiality of arbitrators or other participants in arbitration proceedings. Confidentiality is addressed in the rules of the major arbitral institutions in China, which stipulate that arbitrators and arbitration participants shall not disclose to any party outside of the arbitration any substantive or procedural matters relating to the arbitration (Article 38 of the China International Economic and Trade Arbitration Commission Arbitration Rules 2015; Article 26 of the Beijing Arbitration Commission Arbitration Rules 2019; Article 66 of the Shenzhen Court of International Arbitration Arbitration Rules 2019; Article 34 of the Shanghai International Economic and Trade Arbitration Commission Arbitration Rules 2015).

Article 40 of the Arbitration Law expressly allows parties to agree to conduct arbitration hearings “in open session”, unless the case “involves state secrets”.

In addition, Chinese law requires listed companies to disclose information regarding arbitration and enforcement proceedings in which they are involved, including the amount in dispute and the outcome of the relevant proceedings (Article 36 of the Guidelines for the Content and Format of Information Disclosure by Companies Offering Securities to the Public No 2 – Content and Format of Annual Reports (2017)).