The Interpretation on the Application of the Civil Procedure Law of PRC (the “Interpretation”) was issued by the Supreme People’s Court on January 30, 2015 and came into effect on February 4, 2015. This Interpretation supplements and clarifies the recognition and enforcement of foreign arbitral awards within the Civil Procedure Law based on years of judicial practice by Chinese courts,

First of all, the Interpretation clarifies that a foreign arbitration award is allowed to be applied for recognition and enforcement simultaneously or separately. Article 546 of the Interpretation provides, where a foreign arbitral award is applied for enforcement by a Chinese court, the applicant must file an application for recognition of such award first.  The court may enforce the award in accordance with provisions of Civil Procedure Law only after the award has been recognized by the court. If the applicant only applies for recognition without enforcement at the same time, the court may only review whether the arbitral award can be recognized and make a ruling accordingly.

Second, the Interpretation clarifies the time limit for applying for recognition and enforcement of foreign arbitral awards. According to Article 547 of the Interpretation, the 2 year’s time limit for enforcement provided in the Civil Procedure Law is applicable for recognition and enforcement of foreign arbitral awards; where an applicant only applies for recognition without enforcement at the same time, the time limit for enforcement application must be re-calculated from the date when the ruling of recognition takes effect.

Third, the Interpretation clarifies review proceeding for recognition and enforcement of foreign arbitral awards. According to Article 548 of the Interpretation, the court must form a collegiate bench to review the application; the court must serve the application on the respondent; and the respondent may state his opinions.

Fourth, the Interpretation clarifies final effect of the rulings on recognition and enforcement of foreign arbitral awards by the court. Article 548 of the Interpretation provides that, the ruling rendered by the court after review takes legal effect once it is served on the respondent. Before the issuance of the Interpretation, there were controversies among the courts, including whether these rulings have final effect, and whether the Party may appeal or apply for retrial for those cases, etc. Liaoning High People’s Court has specially asked  the Supreme People⊙s Court for guidance  on “whether a Party may apply for retrial if it is dissatisfied with the ruling on recognition and enforcement of foreign arbitral awards by the court”; and the Interpretation, inheriting the principle established by the Supreme People’s Court in the Reply to the Liaoning High People’s Court, provides that such rulings are final and can not be applied  for retrial,  and expands such final effect to all kinds of rulings regarding similar cases, including those ruling on rejecting the  recognition and enforcement of foreign arbitral awards. The establishment of the rule of final effect of the rulings has promoted efficiency of recognition and enforcement of foreign arbitration awards and protects legal interest of the party involved more effectively.

Finally, given the fact that ad hoc arbitration is internationally popular nowadays and a substantial number of foreign arbitration awards are rendered by ad hoc arbitration tribunals rather than traditional arbitration organizations, the Interpretation clarifies that arbitration awards rendered by ad hoc arbitration tribunals outside the territory of the PRC can be applied for recognition and enforcement at Chinese courts. According to Article 545 of the Interpretation, where a applicant applies for recognition and enforcement of an arbitral award rendered by an ad hoc arbitration tribunal outside the territory of the People⊙s Republic of China, such application must be examined by the court in accordance with the provisions of the Civil Procedure Law regarding recognition and enforcement of arbitration awards rendered by foreign arbitration organizations. However, the Interpretation doesn’t provide whether the arbitration awards rendered by ad hoc arbitration tribunal inside the territory of the People’s Republic of China can be applied to Chinese courts for recognition and enforcement.

Given the fact that foreign arbitration has been one common way for dispute resolution between Chinese and foreign enterprises, whether and how arbitration awards rendered by foreign arbitration organizations or ad hoc arbitration tribunals can be enforced by Chinese courts significantly affect interests of both Chinese and foreign party involved. The above important rules regarding recognition and enforcement of foreign arbitration awards established in the Interpretation have solved some basic and long-existing dilemmas in this field due to generalization of rules in the Civil Procedure Law, and will have significant meaning for convenience of enforcement of foreign arbitration awards and protection of legal interests of both domestic and foreign enterprises.