On January 25, the Singapore International Arbitration Center announced the opening of a representative office in the Shanghai Pilot Free Trade Zone (“Shanghai FTZ”) to forge closer ties with mainland China.
Its Shanghai office will help promote its international arbitration services to Chinese users (long ranked in the top five foreign users) and endorse the development of international arbitration and global practices with mainland Chinese arbitration commissions through training workshops and networking events for arbitrators and practitioners. It will not offer case management services on the mainland.
A recent judgment by the Shanghai Intermediate People’s Court recognized and enforced a foreign arbitration award in an arbitration related to a contract dispute between two wholly foreign-owned enterprises (“WFOEs”) incorporated in the Shanghai FTZ and conducted by SIAC as a non-Chinese arbitration commission.
The court decision is based on the dispute not being a domestic dispute, but an uncommon “foreign-related” dispute, as the contract was carried out in the Shanghai FTZ and the parties were two WFOEs in the Shanghai FTZ. The court considered these two factors to be “other circumstances” relevant to determining the foreign-related nature, making the arbitration agreement/clause valid.
This is the first known Chinese court decision to resort to “other circumstance” to define foreign-related elements. However, although it is a positive sign that the court considered the exceptional situation of the case rather than adhering to the criteria for judging similar types of cases, its practical impact may be limited due to the specificities of the case.