Should The Respondent Be Subject To Late Payment Interest During The Period While The Applicant Petitions For Revocation of An Arbitral Award?

【Background】The Applicant and the Respondent in the enforcement action had filed for arbitration to resolve their disputes regarding an entrustment agreement, and an adverse arbitral award is made against the Respondent who is ordered to make certain monetary payment, and any late payment is subject to late payment interest under Article 229 of the PRC Civil Procedural Law. The Applicant disagrees with the arbitral award and petitioned the court to revoke the arbitral award, and the court ordered to dismiss the Applicant’s petition. Later, the Respondent failed to perform its obligations under the arbitral award during the specified period, and the Applicant petitioned the court to enforce the arbitral award. The Respondent challenges the amount of the enforcement, arguing that no late payment interest applies during the period while the Applicant petitions the court to revoke the arbitral award.

【Court of the Enforcement Proceeding】No late payment interest applies.

【Review Court】Late payment interest applies.

【Basis of the Decision】 According to Beijing Superior Court, on the one hand, the petition of the Applicant to revoke the arbitral award does not alter the fact that the Respondent did not perform its obligations according to the arbitral award, and a double amount of late payment interest shall be assessed. On the other hand, were the arbitral award revoked after the Respondent has paid under the arbitral award, the interests of the Respondent is protected by the recovery of execution under relevant laws. Therefore, the petition of the Applicant to revoke the arbitral award is no justification for stopping the Respondent from discharging its obligations under the arbitral award. During the period while the Applicant made the petition for revocation of the arbitral award, the Respondent should also be subject to late payment interest.