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The restatement of the recognition and enforcement of

foreign arbitral awards in China in the post-pandemic era

2020-09-01

摘要：

中国作为国际上日益重要的经济主体，在其法律语境下如何解决国际商事纠纷与国际商事仲裁裁决在其境内的承认与执行的问题，一直在实务中颇受关注。作为国际仲裁领域的重要法律文件之一，《纽约公约》旨在消除外国和非内国仲裁裁决相较于一国的内国仲裁裁决在该国的歧视待遇。自加入《纽约公约》以来，中国政府为日益融入世界经济发展而不断深化对内改革，力图创造良好的营商环境。本文通过梳理中国为全面落实《纽约公约》而做出的持续努力，从国内法律框架形成的动态过程出发，结合各地法院承认与执行国际商事仲裁裁决的实践经验，意在表明，无论是在当前疫情期间乃至后疫情时代，面对全球化收缩并受到质疑的环境，中国都会恪守对《纽约公约》的承诺，并对国际商事仲裁裁决保持积极友好的态度。

With the aim of eliminating discriminated treatments towards foreign and non-domestic arbitral awards vis-à-vis with those domestic ones, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention") was conceived in 1958 ^[1] and has ever since acted as one of the key instruments in international arbitration. As of today, the New York Convention owns 164 contracting parties ^[2]. China has acceded to the New York Convention since April 22^nd, 1987, which could be seen as the inherent requisite as well as the natural outcome of China's ever-deepening reform and opening policy and its increasingly close integration into the world economy. Decades after the accession, the international arbitration has been attached more and more importance in China's legal context as a critical means of settlement of international commercial disputes with the continued efforts made to implement the New York Convention all over the country. Even confronted with the pandemic at present, or in the post-pandemic era, there will be no grounds for China to be in breach of its commitments to the New York Convention.

This Article begins with an overview of the legal framework for the recognition and enforcement of foreign arbitral awards within China (Section I); then followed by the introduction of the judicial review on the application of the recognition and enforcement of foreign arbitral awards (Section II), and finally ended by the presentation of the filing procedures of the application in practice (Section III). The article concludes that China is bound to be a country that will always be friendly to international arbitrations.  

I. LEGAL FRAMEWORK OF RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN CHINA

a. First legal document anticipating the implementation of the Convention in the country

12 days before the date when China formally joined the New York Convention, the Supreme People's Court issued the Notice of the Supreme People's Court on the Implementation of the "Convention on the Recognition and Enforcement of Foreign Arbitral Awards" Acceded to by China ^[3] ("Notice on the Implementation"). Consisting of 5 articles, the Notice on the Implementation addressed 4 major issues regarding the implementation of the New York Convention by all competent people's courts: the interpretation of the reciprocity and commercial reservation declarations, the court having jurisdiction on the application for the recognition and enforcement of foreign arbitral awards, the understanding of Article 5 of the New York Convention, and the time limit for applying for recognition and enforcement of foreign arbitral awards.

As the earliest legal instrument to implement the New York Convention in China, the Notice on the Implementation is regarded to "serves as the basis for implementing that treaty's obligations within China's legal system"^[4]. In today's ruling, the Notice of the Implementation still acts as an important reference and legal grounds for the judges'  judicial review.  

b. Incorporation of the Convention in the civil procedure law

Later in 1991, with the promulgation of the Civil Procedure Law of the People's Republic of China ("Civil Procedure Law"), the recognition and enforcement of foreign arbitral awards have been formally incorporated into China's civil litigation system, mainly attributed to Article 269 ^[5] of the Civil Procedure Law: "If an award made by a foreign arbitration institution must be recognized and executed by a people's court of the People's Republic of China, the party concerned shall directly apply to the intermediate people's court of the place where the party subject to execution is domiciled or where his property is located. The people's court shall handle the matter pursuant to international treaties concluded or acceded to by the People's Republic of China or in accordance with the principle of reciprocity." By virtue of this Article, the recognition and enforcement of foreign arbitral awards issues are rooted in the legislation. Because of the broad coverage of the New York Convention, the principle of reciprocity has never been applied yet in practice in China ^[6]. Thus, pursuant to Civil Procedure Law, the people's courts shall generally rely on the New York Convention to tackle the recognition and enforcement of foreign arbitral awards issues.

c. Reporting system in terms of non-implementation of foreign arbitral awards

To better implement the New York Convention under Chinese context, the Supreme People's Court made an institutional improvement by introducing a reporting system for the denial of and refusal to implement foreign arbitral awards. In 1995, the Supreme People's Court issued the Notice of the Supreme People's Court on the Handling by People's Courts of Issues Concerning Foreign-related Arbitration and Foreign Arbitration ^[7] ("Notice on the Handling"). According to the Notice on the Handling, the people's court shall, before making a ruling to refuse the recognition and enforcement of a foreign arbitral award applied by a party, report it to the higher people's court of its jurisdiction for examination. Further, if the Higher People's Court agrees to refuse to recognize and enforce a foreign arbitral award, it shall submit its examination opinions to the Supreme People's Court; only after the Supreme People's Court revert to the Higher People's Court with its review opinion (the "Reply Letter"), can the Higher People's Court make the ruling in accordance with such opinion.

By means of the reporting system, the denial of and refusal to implement a foreign arbitral award will be under strict examination, which is in tune with the principle and spirit of the New York Convention to promote the equal treatment of international arbitral awards within a contracting state. Moreover, the Supreme People's Court will be able to have access to multiple cases of the application of recognition and enforcement of foreign arbitral awards, as well as to set standards to the interpretation and implementation of the New York Convention so as to eliminate the local protectionism. By the end of 2017, with the issuance of Relevant Provisions of the Supreme People's Court on Issues concerning Applications for Verification of Arbitration Cases under Judicial Review, the Notice on the Handling was converted into judicial interpretation where the detailed implementation requirements of the reporting system are incorporated.

It should be noted that the above-mentioned legal instruments to implement the New York Convention in China are not exhaustive. For example, the Judicial Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law ("Judicial Interpretation of the Civil Procedure Law") promulgated in 2015 has given equal treatment to foreign interim arbitral award as the foreign arbitral award, which can both be applied for the recognition and enforcement in China in accordance with the New York Convention ^[8]. In 2017, the Supreme People's Court issued another judicial interpretation titled Provision on Several Issues concerning Hearing Judicial Review of Arbitration Cases, which stipulates the procedures for courts to conduct judicial review of arbitration cases etc.. ^[9]

It could be seen that the Supreme People's Court plays a leading role throughout the process of the establishment of the legal framework for implementing of the New York Convention. By virtue of laws, judicial interpretations, Notices and Replies issued by the Supreme People's Court, China has established a set of legal instruments to ensure the implementation of the New York Convention throughout the country.

II. JUDICIAL REVIEW ON THE APPLICATION OF THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

a. Reciprocity and commercial reservation

Not all foreign arbitral awards are appropriate for recognition and enforcement by the Chinese courts as China has made both the reciprocity and commercial reservations when acceded to the New York Convention. Therefore, the nature of the foreign arbitral awards will be examined in the judicial review.

Article I & II of the Notice on the Implementation made detailed interpretations to the two reservations. For the reciprocity reservation, China will only apply the New York Convention to the recognition and enforcement of arbitral awards made in the territory of another contracting state; whilst the commercial reservation represents that the New York Convention will only be applied to differences arising out of legal relationships, whether contractual or not, considered commercial under the national law of the People's Republic of China. The Notice on the Implementation further defines the commercial legal relationships under Chinese legal context: "the economic rights and obligations arising from contracts, torts or relevant legal provisions, such as purchase and sale of goods, lease of property, project contracting, processing, technology transfer, equity or contractual joint adventure, exploration and development of natural resources, insurance, credit, labor service, agency, consultation service, marine, civil aviation, railway or road passenger and cargo transportation, product liability, environment pollution, marine accident, and ownership disputes"^[10], but it worth noting that disputes between foreign investors and the host government is excluded.

b. Examination standards

The examination standards for the judicial review of the application for the recognition and enforcement of a foreign arbitral award are stipulated in Article IV of the Notice of the Implementation, which in fact reiterate the principles set by the New York Convention. According to the Notice, the Supreme People's Court requires the court of jurisdiction to recognize the arbitral award as binding and enforce it in accordance with the Civil Procedure Law, "if the court deems that the arbitral award does not fall under the circumstances set out in paragraphs 1 and 2 of Article V of the New York Convention"^[11]; while the recognition and enforcement of an arbitral award shall be refused when the arbitral award is deemed to fall under any of the circumstances set out in paragraph 2 of Article V or the evidence provided by the party against whom the award is invoked proves that the award falls under any of the circumstances set out in paragraph 1 of Article V.

In one-word, Chinese courts do not conduct substantial reviews on foreign arbitral awards. Unless a foreign arbitral award falls under the following circumstances ^[12], the Chinese courts shall recognize or enforce it:

(1) The parties to the agreement were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(2) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or the arbitration proceedings or was otherwise unable to present his case; or

(3) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized or enforced; or

(4) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(5) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

(6) The subject matter of the difference is not capable of settlement by arbitration under the Chinese law; or

(7) The recognition or enforcement of the award would be contrary to the public policy of China.

c. Judicial remedies for the rulings on the recognition and enforcement of foreign arbitral awards

In light of Article 154 of the Civil Procedure Law, rulings shall be applicable to the recognition and enforcement of foreign arbitral awards. However, only rulings on refusal to entertain a case, on objection to the jurisdiction of a court and on dismissal of a complaint are subject to appeal 13, meaning that the rulings on the recognition and enforcement of foreign arbitral awards are final at first instance. Therefore, no protest nor retrial is allowed for such rulings.

As the parties of an arbitral award are not entitled to appeal or apply for a retrial of courts' decisions, for the remedies for the courts' refusal to recognize a foreign arbitral award, the parties may apply for arbitration based on a new arbitration agreement reached by both parties, or may file an action with a people's court ^[14]. Meanwhile, the application for a retrial of a decision denying the enforcement of an arbitral award will be refused, as there is no legal ground to file such application in the Civil Procedure Law ^[15].

From the above, the Civil Procedure Law addressed procedural issues around the application of recognition and enforcement of foreign arbitral awards while the judicial review practices are mainly followed by the instructions of the Notice on the Implementation which interprets the requirements of the New York Convention. To be specific, the judicial reviews focus on the nature of the award (whether it falls under the two reservations) and whether it falls under the circumstances stipulated in Article V of the New York Convention. That is to say, the Chinese courts' discretions are limited to its obligations under the New York Convention, and no substantial review shall be made on a foreign arbitral award.  

III. FILING OF AN APPLICATION OF THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

a. Courts of jurisdiction

As identified in Article 283 of the present Civil Procedure Law, when a party of a foreign arbitral award files an application of recognition and enforcement of such an award, the court of jurisdiction should be the court where the party subject to enforcement has its domicile or where its property is located; while from the perspective of hierarchical jurisdiction, it should be the intermediate people's court.

In fact, as mentioned earlier, the court of jurisdiction issue was first stipulated in the Notice of the Implementation (Article III) ^[16]. This prescription comes out of the context that by the time China acceded to the New York Convention, the rule of law within the country was at a relatively backward level and that lower courts were deemed to be insufficiently competent to tackle such cross-border disputes. This move, however, reflects the determination of the Supreme People's Court to promote the implementation of the New York Convention.  

It is worth noting that the applications of the recognition and the enforcement of a foreign arbitral award are two separate procedures in China. Pursuant to Article 546 of the Interpretation of the Supreme People's Court concerning the "Civil Procedure Law of the People's Republic of China" ^[17]，the party concerned shall first apply to the competent people's court for recognition of a legally binding foreign arbitration award. Only an arbitration award that has been recognized by the people's courts, can it be applied for enforcement. The applications for recognition and enforcement can be filed concurrently or separately. However, if a party only applies for recognition of a foreign arbitration award, the competent people's court will only review and render a ruling on whether to recognize the said arbitration award.

b. Entrusting formalities

In accordance with Article 264 ^[18] of the Civil Procedure Law and Article 523 ^[19] of the Judicial Interpretation of the Civil Procedure Law, foreign parties who files an application for the recognition and enforcement of a foreign arbitral award with a competent people's court, shall submit the following documents:

Identity certificates. For a foreigner, he/she shall provide his/her passports or other documents to prove his/her identities. A foreign enterprise or organization shall produce to the people's courts its identity certificates such as the registration certificate, the certificate of good standing, etc. Besides, for a foreign enterprise or organization, it shall also submit a written document stating the name and position of its authorized representative who signs the documents for litigation, along with those that can prove the position of the authorized representative and a copy of his/her passport.

Power of attorney. In the case where a foreigner or a foreign enterprise/organization entrusts a Chinese attorney or other person to represent a litigation, a power of attorney will be required to submit with the people's courts.

c. Evidence materials

As mentioned above, unless the applied foreign arbitral award falls under the circumstances stated in Article V of the New York Convention, it shall be recognized and enforced in China. Therefore, after courts' reception of the application for recognition and enforcement of an arbitral award, the applicant should provide evidence within the time limit on the fact that there is no such adverse circumstance in the whole process of the arbitration award. In practice, the principal evidence to submit is as follows:

The arbitration agreement or the contract containing arbitration clauses, to certify that the parties have reached an arbitration agreement on the matters in dispute;

The contract on the basis of which the parties shall make certain transactions, to certify that the subject matter in dispute is within the scope of the arbitration agreement.

The arbitral award, to certify the content of the arbitral award and that the award has taken effect.

All correspondence, faxes, mails and delivery receipts, etc. in the process of arbitration (including but not limited to, the application for arbitration, the appointment of the arbitrator or arbitrators, proof, defense, the payment of the arbitration fees, the issuance of the arbitration award, the appeal or compliant, etc.), to certify the integrity and compliance of the arbitration procedures.

The constitution and rules of the arbitration institution or the relevant laws of the country where the arbitration is made, to certify that the composition of the arbitration tribunal and the arbitration procedure are in conformity with the arbitration rules or laws.

d. Notarization and certification

If the aforesaid entrusting formalities as well as the evidence materials are executed or produced outside China's jurisdiction, they shall be notarized by the notary public in the country of domicile of the foreign enterprise or organization and be certified by the embassy/consulate of the People's Republic of China in the said foreign country, or be subject to certification formalities set forth in the relevant treaties signed by and between the People's Republic of China and the said foreign country.

IV. CONCLUSION

Since the acceding to the New York Convention, China has been committed to promoting the domestic implementation of the international treaty under the country's social context.

Through years of reforms and improvements of the judicial system to be compliant with the New York Convention, China conveys its friendly attitude towards foreign arbitration.

Due to the possibility of global enforceability under the New York Convention, the weight of international arbitration as a means of international commercial dispute settlement has been considerably enhanced. China, as an important player in international transactions, has integrated itself into the international rules and is bound to provide a fair and transparent legal environment to foreign investors.

Footnotes：

[1]See Introduction (p.1) of the 2015 revised version of New York Convention published by United Nations Commission on International Trade Law (UNITRAL), available at http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/New-York-Convention-E.pdf.

[2]For the full list of the contracting parties, please refer to: 

http://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards/status2

[3]The Notice on the Implementation was issued on April 10, 1987. Its full text (English version) can be found on the official website of China International Commercial Court, available at: http://cicc.court.gov.cn/html/1/219/199/201/698.html

[4]Roger P. Alford, Julian G. Ku and Bei Xiao, Perceptions and Reality: The Enforcement of Foreign Arbitral Awards in China, Pacific Basin Law Journal, 33(1), p.9, 2016, available at: http://escholarship.org/uc/item/6s1632q5

[5]The Civil Procedure Law has been revised successively in 2007, 2012 and 2017. The stipulation of the recognition and enforcement of foreign arbitral awards is stated in Article 283 of the present Civil Procedure Law in force.

[6]Gao Xiaoli: Positive Practice of Chinese Courts in Recognizing and Enforcing Foreign Arbitral Awards, available at: 

http://cicc.court.gov.cn/html/1/219/199/203/805.html

[7]The English full text of the Notice on the Handling is available at: http://cicc.court.gov.cn/html/1/219/199/201/701.html

[8]See Article 545 of the Judicial Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law, 2015.

[9]Besides, to regulate the fees and period of review for the Recognition and Enforcement of Foreign Arbitral Awards by people's courts in accordance with the provisions of the New York Convention, the Supreme People's Court published Provisions of the Supreme People's Court on the Issue concerning the Fee Collection and the Period of Review for the Recognition and Enforcement of Foreign Arbitral Awards in 1998.

[10] Supra 3 Article II.

[11] Supra 3 Article IV.

[12] These circumstances correspond exactly to those in Article V of the New York Convention.

[13]Rulings shall be applicable to the following: 1. refusal to entertain a case; 2. objection to the jurisdiction of a court; 3. dismissal of a complaint; 4. preservation and preliminary execution; 5. approval or disapproval of withdrawal of an action; 6. suspension or termination of an action; 7. correction of clerical errors in a written judgment; 8. suspension or termination of execution; 9. cancellation of or refusal to enforce an arbitration award; 10. refusal to enforce a document on creditor's rights that has been rendered enforceable by a notary agency; and 11. other matters to be settled by a ruling. An appeal may be filed against a ruling on the matters under Item 1 to Item 3 of the preceding paragraph…

[14]See Reply of the Supreme People's Court regarding the Issue as to Whether a party can Appeal against a Decision to Set Aside an Arbitral award or to Reject the Party's Application, available at: http://cicc.court.gov.cn/html/1/219/199/201/717.html.

[15]See Reply of the Supreme People's Court on the Refusal of a People's Court to Accept a Party's Application for Retrial against the Decision that Denied the Enforcement of the Arbitral Award, available at: http://cicc.court.gov.cn/html/1/219/199/201/728.html.

[16]Supra 3. The application shall be under the jurisdiction of the intermediate people's court at the following place: "(1) If the party against whom the award is invoked is a natural person, the place of his or her household registration or the place of his or her residence; (2) If the party against whom the award is invoked is a legal entity, the place of its principal business office; (3) If the party against whom the award is invoked does not have any household registration, residence or principal business office in China but has any property in the territory of China, the place where the property is located."

[17]The English full text is available at: http://cicc.court.gov.cn/html/1/219/199/201/676.html

[18]"When an alien, stateless person or foreign enterprise or organization without a domicile within the territory of the People's Republic of China appoints a lawyer or another person of the People's Republic of China as his or its agent ad litem, the power of attorney sent or forwarded from outside the territory of the People's Republic of China shall become effective only after it has been notarized by a notary public of his or its state and either has been authenticated by the embassy or a consulate of the People's Republic of China in that state or certification procedures provided for in the relevant treaty between the People's Republic of China and that state have been carried out."

[19] A foreigner intending to participate in a litigation shall produce to the people's court his/her passport and other documents to prove his/her identity. A foreign enterprise or organization intending to participate in a litigation shall produce to the people's court its identity certificates, which shall be notarized by the notary public in the country of domicile of the foreign enterprise or organization and be certified by the embassy/consulate of the People's Republic of China in the said foreign country, or be subject to certification formalities set forth in the relevant treaties signed by and between the People's Republic of China and the said foreign country.

The person representing a foreign enterprise or organization to participate in litigation shall submit to the competent people's court evidence to prove that he has the authority to participate in the litigation as a representative. Such evidence shall be notarized by the notary public in the country of domicile of the foreign enterprise or organization and be certified by the embassy/consulate of the People's Republic of China in the said foreign country, or be subject to certification formalities set forth in the relevant treaties signed by and between the People's Republic of China and the said foreign country. The "country of domicile" referred in this Article shall mean the country of incorporation and registration of the foreign enterprise or organization, and may also refer to a third country in which the foreign enterprise or organization has handled business registration formalities.

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