On 29 December 2017, the Supreme People's Court of China promulgated the Provisions on Certain Issues Related to the Conduct of Judicial Review of Arbitration Cases (hereinafter referred to as the “Judicial Review Provisions") and the Provisions on Issues Concerning Application for Approval of the Arbitration Cases under Judicial Review (hereinafter referred to as the “Approval Provisions"). The two judicial interpretations aim at improving the judicial review system for arbitration cases in China and standardizing the procedural process and the substantive outcome of the judicial review. This article highlights some significance involved in the two judicial interpretations.

I. Unifying the Judicial Review and Reporting Process of Mainland and Foreign-Related Arbitration Cases   

Before the new legislation, China only adopted judicial review and reporting process (including the review on the effectiveness of arbitration agreements, applications for recognition and enforcement of arbitral awards) of arbitration cases involving foreign, foreign-related, Hong Kong/Macau/Taiwan related cases. For mainland arbitration cases (non-foreign, non-Hong Kong/Macau/Taiwan related), no review mechanism had been established. The new legislation now clearly includes the mainland arbitration cases into the judicial review framework in order to avoid potentially diversified standards adopted by different courts or even errors in the process of court scrutiny relating to judicial review of mainland arbitration cases.

According to Article 2 and Article 3 of the Approval Provisions, in case that the arbitration agreement is to be determined as invalid, the application of recognition and enforcement of the arbitration award is to be refused, or the arbitral award is to be set aside, then:

For Foreign-Related Arbitration Cases or Hong Kong, Macau or Taiwan-Related Arbitration Cases

The Intermediate People’s Court or Special People’s Court[1] which accepts the case shall report the case to the Higher People’s Court within the same jurisdiction for approval; if the Higher People’s Court intends to agree with the lower court’s opinion, it shall report the case to the Supreme People’s Court for further approval. After the case reviewed by the Supreme People’s Court, a ruling on invalidity/refusal/setting-aside can then be rendered by the original People’ Court (i.e. the Intermediate People’s Court or Special People’s Court) based on the opinion of the Supreme People’s Court.

For Mainland Arbitration Cases

In principle, the decision-making power of the relevant judicial review shall be exercised by the Higher People’s Court in the same jurisdiction, unless:

  1. The domiciles of the parties locate in different provinces; or
  2. The ground for refusing enforcement or setting aside the arbitral awards is the violation of public interests.

Then, the judicial review process for foreign-related arbitration cases (as mentioned above) shall be applied (i.e. only the Supreme People’s Court has the decision-making power to confirm the ruling on the invalidity/refusal/setting-aside).

II. Clarifying Jurisdiction of the Courts

Jurisdiction of Application to Verify the Validity of the Arbitration Agreement

According to Article 2 of the Judicial Review Provisions, for normal cases, the cases shall be heard by the Intermediate People’s Court or the Special People's Court which has jurisdiction over the designated arbitration institution, the place where the arbitration agreement was signed, or the place where the applicant or the respondent domiciles.

Maritime cases shall be heard by the maritime court which has jurisdiction over the designated arbitration institution, the place where the arbitration agreement was signed, or the place where the applicant or the respondent domiciles. If there is no maritime court within the foregoing mentioned locations, the adjacent maritime shall have the jurisdiction to hear the case.

Jurisdiction of “Relevant Litigation/Arbitration”

Sometimes, under some foreign arbitral awards, the losing parties do not domicile or have property in China. However, the awards may impact the results of some related hearings, therefore, the applicant may only want to have the relevant Chinese court to recognize the foreign arbitral award.

When this happens, it is clarified in Article 3 of the Judicial Review Provisions that such cases shall be heard by the People's Courts which also hear the related case. Moreover, in principle, it shall be the Intermediate People’s Court. Therefore:

If the court which hears the related case is a Basic People’s Court, the application to recognize the foreign arbitral award shall be heard by the Intermediate People’s Court of that Basic People’s Court.

If it is the Higher People’s Court or the Supreme People’s Court which hears the related case, that court may decide to hear the application by itself or hand down the application to the related Intermediate People’s Court. 

Where the applicant files its application to two or more competent People's Courts, the People’s Court which accepts the case first shall have the jurisdiction. (Article 4 the Judicial Review Provisions)

III. Parties Right to Appeal against Courts Decision on the Judicial Review

The Judicial Review Provisions specifies the required documents when the parties file an application for verification of the validity of an arbitration agreement (Article 5), for enforcement or setting-aside of an arbitral award made by domestic arbitration commissions, or for recognition and enforcement of a foreign arbitral award (Article 6). Article 7 further stipulated that if the submitted documents fail to comply with the requirements of Article 5 or Article 6, and after the court’s explanation and instruction, the re-submitted documents still do not comply with the requirements, the application shall be dismissed. However, the applicant can appeal against the ruling of dismissal.

Similarly, Article 8 stipulates that the court may dismiss the application if, after accepting the case, it finds that the application fails to meet the requirements of accepting the case. A party may appeal against that ruling of dismissal (or re-file again— if the re-application complies with the requirements of court, the court shall accept).

IV. Pro-arbitration When Reviewing the Validity of foreign-related Arbitration Agreement

The Judicial Review Provisions has adopted a pro-arbitration attitude when reviewing the validity of foreign-related arbitration agreement. Article 14 stipulates that where, absent the parties’ choice of the governing law, the law of the place of the arbitration institution or the law of the seat of arbitration will bring up different results in respect of the validity of the arbitration agreement, the People’s Court shall apply the law that renders the arbitration agreement valid and confirm the validity of the arbitration agreement. .

This article reflects that a pro-arbitration attitude has been adopted by Chinese courts when reviewing the validity of the arbitration agreement. However, it should be noted that this clause only applies to the review of the validity of foreign-related arbitration agreements. For mainland arbitrations[2], the governing law applicable to the substantive dispute or the validity of the arbitration agreement shall always be Chinese law only and the parties do not have the discretion to choose the governing law.

V. Distinguishing of the Application of Non-foreign-related Arbitral Awards and Foreign-related Arbitral Awards

Article 17 of the Judicial Review Provisions distinguishes the judicial review standard of non-foreign-related arbitral awards made by mainland arbitration institutions and foreign-related arbitral awards made by mainland arbitration institutions (not foreign arbitral awards). 

For Review of Enforcement of Non-Foreign-Related Arbitral Awards Made by Mainland Arbitration Institutions

Article 237 of the Civil Procedure Law of the People’s Republic of China shall apply, application for enforcement shall be refused if the arbitral award fall under any of the following circumstances:

  1. No arbitrations agreement between the parties;
  2. The issue does not fall under the scope of the arbitration agreement or the arbitration institution has no jurisdiction over the case;
  3. The composition of the arbitral tribunal or the arbitration procedures is/are in violation of statutory procedures;
  4. The evidence on which the arbitral award is based is forged;
  5. The counterparty has concealed evidence which has an genuine impact on making a fair arbitral award; or
  6. The arbitrators have perverted the course of justice, committed bribery, or cheated in the arbitration procedures.
  7. Where the enforcement of the arbitral award violates public interest.

For Review of the Enforcement of Foreign-related Arbitral Awards Made by Mainland Arbitration Institutions

Article 274 of the Civil Procedure Law of the People’s Republic of China shall apply, the arbitral awards fall under any of the following circumstances:

  1. No arbitration agreement;
  2. The respondent has not received a notice to appoint arbitrator or has not been informed of the arbitration procedure, or the respondent is unable to present its case due to any reason not attributable to the respondent;
  3. The composition of the arbitral tribunal or the arbitration procedure does not comply with the arbitration rules;
  4. The issue does not fall under the scope of the arbitration agreement or the arbitration institution has no jurisdiction over the case;
  5. Where the enforcement of the arbitral award violates public interest.

It can be seen that the judicial review of non-foreign-related arbitration awards includes review on substance (such as reviewing the involved evidence), while as for foreign-related arbitration awards, the judicial review only focuses on the procedure and the form.