Commercial Arbitration

Last verified on Wednesday 13th May 2020

Commercial Arbitration: China

Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

DaHui

Infrastructure

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

China

The People’s Republic of China (PRC) ratified the New York Convention (NY Convention) in 1987, with two reservations: the reciprocity reservation and the commercial reservation.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

China

For the recognition and enforcement of awards from Hong Kong SAR, Macau SAR and the Taiwan Region, mainland China has entered into the arrangements of the Supreme People’s Court on the Mutual Enforcement of Arbitral Awards between the mainland and the Hong Kong Special Administrative Region, the Arrangement for the Reciprocal Recognition and Enforcement of Arbitral Awards between the mainland and Macau and the Provisions on the Recognition and Enforcement of Arbitral Awards Rendered in the Taiwan Region.

The grounds for non-recognition or enforcement of arbitral awards for these regions are substantively the same as those in article V of the NY Convention.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

China

The Arbitration Law of the People’s Republic of China (PRC Arbitration Law) governs judicial handling of arbitration matters in the PRC, including all arbitral proceedings with their seat in the PRC. It resembles the UNCITRAL Model Law in many respects, with major differences, including:

  • The PRC Arbitration Law indirectly prohibits ad hoc arbitration, although since the end of 2016, this prohibition may be relaxed for disputes resulting from business in the designated Free Trade Zones in the PRC (FTZs).
  • Except for FTZ-related disputes, the PRC Arbitration Law prohibits arbitration by a foreign arbitration institution unless the dispute has foreign-related elements as defined in the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Law of the People’s Republic of China on the Choice of Law for Foreign-Related Civil Relationships (I).
  • Arbitration institutions cannot order preservation of evidence or assets, a request for which must be forwarded to a competent court.
  • A challenge to an arbitral tribunal’s jurisdiction must be raised before the tribunal’s first hearing. If one party applies to the tribunal to determine jurisdiction and the other party applies to the court, the court will determine the tribunal’s jurisdiction. 

The Supreme People’s Court of the PRC (SPC) has also issued judicial interpretations on matters relating to arbitration, whose interpretations serve as binding legal authority in the PRC (such as the Interpretation of the Supreme People’s Court concerning Some Issues on the Application of the Arbitration Law of the PRC).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

China

There are over 200 arbitration bodies in mainland China, and although any may administer international arbitrations, only about a quarter of them do. Those with the largest international caseload include the China International Economic and Trade Arbitration Commission (CIETAC), the Beijing Arbitration Center (BAC), the Shanghai International Arbitration Centre (SHIAC), and the Shenzhen Court of International Arbitration (SCIA). Articles 31 and 32 of the PRC Arbitration Law provide for any arbitration institution administering an arbitration to act as the appointing authority for that arbitration.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

5. Can foreign arbitral providers operate in your jurisdiction?

China

Foreign arbitral providers have generally been held unable to operate in mainland China owing to the requirements that arbitration institutions be organised and registered with PRC government authorities (articles 10–15 of the PRC Arbitration Law). Moreover, agreements providing for arbitration in mainland China administered by a foreign arbitral body were until recently invalidated for failing to designate an arbitration institution (as required by article 16 of the PRC Arbitration Law). 

However, since a 2013 case (Anhui Longlide Packing and Printing Co, Ltd v BP Agnati SRL), the Supreme People’s Court has consistently upheld the validity of an agreement for ICC arbitration seated in mainland China. The ICC and several other foreign arbitration institutions have now established offices in Mainland China, though they currently function for ‘promotional’ purposes rather than case management.

Although ICC-administered mainland China-seated arbitrations may now be permitted, they may still suffer from several uncertainties and inconsistencies in the legal framework governing them. For example, the nature of an arbitral award, for purposes of annulment and enforcement, rendered in such an arbitration is unclear (although such an ICC award was deemed non-domestic in Duferco SA v Ningbo Art & Craft Import & Export Corp).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

China

There is no specialist arbitration court in the PRC. The competent Intermediate People’s Court generally, though not always, serves as the court of first instance for handling arbitration matters in the PRC.

In 2018, the PRC began establishing International Commercial Courts (two so far; ‘tribunals’ (within the Supreme People’s Court)) to develop a dispute resolution platform in which mediation, arbitration and litigation are efficiently linked, creating a ‘one-stop’ international commercial dispute resolution mechanism. For arbitrations submitted to one of the institutions selected by the International Commercial Court, that court will deal with applications for preservation measures as well as for setting aside and enforcement of awards (article 2 of the Provisions of the Supreme People’s Court on Several Issues Regarding the Establishment of the International Commercial Court). 

As the above recent developments as well as past practice show, the judiciary of the PRC is supportive of arbitration, although lower level courts, particularly in smaller cities or rural regions, remain less familiar with arbitration procedures.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

China

Pursuant to article 16 of the PRC Arbitration Law, an arbitration agreement must be in writing, whether in the contract or separate, and contain the following:

  • an expression of the parties’ intention to apply for arbitration;
  • an indication of the matters to be resolved through arbitration; and
  • a designation of an arbitration commission. 

As such, an arbitration agreement can cover future disputes. In addition, according to article 17 of the PRC Arbitration Law, any of the following circumstances renders an arbitration agreement null and void: 

  • the matters for arbitration are not arbitrable;
  • a party to the arbitration agreement had or has limited or no capacity for civil conduct; or
  • one party coerced the other party into concluding the arbitration agreement.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

8. Are any types of dispute non-arbitrable? If so, which?

China

Disputes concerning marriage, adoption, guardianship, child maintenance and inheritance are not arbitrable in the PRC (article 3 of the PRC Arbitration Law). In addition, at least certain other disputes are deemed to fall within the jurisdiction of administrative authorities and are, therefore, also non-arbitrable (id), although courts may differ in which disputes they deem ‘administrative’. There are indications that at least some disputes involving antitrust issues are also not arbitrable.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

China

An arbitration clause generally cannot bind a non-signatory, with some exceptions (see, eg, question 11). Neither the legislature nor the judiciary of the PRC has expressly provided for third-party joinder in arbitration. Article 16 of the PRC Arbitration Law would seem to require the written consent of a third party for joinder and the arbitration rules of several PRC arbitration institutions reflect this requirement. For example, the arbitration rules of SHIAC provide as follows:

  • joinder where the third party is subject to the same arbitration agreement as the current parties to the arbitration is possible at the request of either the claimant or the respondent;
  • where the third party is not subject to the same arbitration agreement as the current parties to the arbitration, it or the current parties may request joinder, which requires the consent of all the aforementioned parties; and
  • the arbitral tribunal, or if one has not been constituted, SHIAC, decides on requests for joinder.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

China

As with third-party joinder, the PRC Arbitration Law and related legislation and judicial interpretation are silent on consolidation of arbitration proceedings, but several PRC arbitration institutions have provided for it in their arbitration rules. For example, CIETAC may consolidate two or more pending arbitrations if:

  • all the claims in the arbitrations are made under the same arbitration agreement; 
  • the claims in the arbitrations are made under multiple arbitration agreements that are identical or compatible and the arbitrations involve the same parties as well as legal relationships of the same nature; 
  • the claims in the arbitrations are made under multiple arbitration agreements that are identical or compatible and the multiple contracts involved consist of a principal contract and its ancillary contract(s); or
  • all the parties to the arbitrations have agreed to consolidation.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

11. Is the "group of companies doctrine" recognised in your jurisdiction?

China

PRC law does not recognise the ‘group of companies doctrine’, but article 20 of the Companies Law of the People’s Republic of China provides a basis for piercing the corporate veil: if a shareholder abuses the independent legal status or the shareholder’s limited liability and thereby seriously injures the interests of any creditor, the shareholder will be jointly and severally liable for company debts.

However, the limited grounds for binding non-signatories to an arbitration agreement (see, eg, articles 8–9 of the SPC Interpretation on the PRC Arbitration Law) do not include this doctrine, although parent companies may be bound by an arbitration agreement signed by its branch office.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

12. Are arbitration clauses considered separable from the main contract?

China

Arbitration clauses are separable, according to article 19 of the PRC Arbitration Law and article 57 of the PRC Contract Law.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunals jurisdiction and competence?

China

Under article 20 of the PRC Arbitration Law, both the arbitration institution and the court have the power to determine jurisdiction, a challenge to which should be raised no later than the first hearing. Under institutional rules, the institution may entrust the decision to the tribunal. However, a decision by a PRC court trumps one by a PRC institution/tribunal, provided the request to the court was made prior to the decision of the institution/tribunal (article 20 of the PRC Arbitration Law and article 13 of the SPC Interpretation of the PRC Arbitration Law).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

China

In addition to considerations concerning ad hoc arbitration, designation of foreign arbitration institutions and the formalities for an arbitration clause as mentioned above (see questions 3, 5 and 7), parties should consider the following: 

  • Hybrid dispute resolution clauses (eg, providing for both litigation and arbitration) clauses run high risks of being deemed invalid.
  • It is advisable to incorporate specific evidence rules (eg, the IBA Rules) in the arbitration clause as default PRC arbitral institutions’ evidence rules may be inefficient (eg, some require all submissions be exchanged in hard copy only) or otherwise limiting.
  • It is best to include a definite (irrevocable) agreement on the language of the arbitration (if not Chinese) in the arbitration clause to avoid Chinese being used as a default language during the arbitration proceedings.
  • Foreign parties may wish to include nationality requirements for arbitrators (or at least chief or sole arbitrators) and/or the freedom to elect arbitrators not on the arbitration institution’s panel (to the extent permitted) to better protect their right to choose an arbitrator of their preference.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

China

PRC law does not allow ad hoc arbitration except, as of the end of 2016, when two parties registered in free trade zones agree that the dispute be resolved in a specific place, under specific arbitration rules and by specific people. Although arbitration institutions have begun promulgating specific rules for ad hoc arbitration, including providing for the parties to choose the UNCITRAL Rules, such cases are not yet common.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

China

Under the major PRC arbitration institutions’ rules, if the claimants or respondents fail to jointly appoint an arbitrator, the institution will make the appointment. If the claimants or respondents can, in the arbitration agreement, agree on (a procedure for) one party to make the joint appointment of the arbitrator, the appointment should not default to the institution.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

China

To commence an arbitration, a party must submit, to the relevant arbitration institution, before the expiration of the relevant statute of limitation (which for most claims will either be three or four years), a request for arbitration including the following: the names of the parties, the valid address(es) of the respondent(s), the arbitration agreement(s), the request(s) for relief, the facts, the legal basis and the prima facie evidence.

The request for arbitration in PRC arbitration is like a simplified statement of claim since it will be the only written submission prior to the hearing. In practice, the most detailed and complete written submission is the post-hearing brief or closing submission.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

China

Under article 126 of the PRC Contract Law and article 41 of the PRC Law on Choice of Laws, the parties to a foreign-related contract can choose the substantive law. In the absence of a choice, the laws of the habitual residence of the party whose fulfilment of obligations can best reflect the characteristics of the contract or other laws that have the closest relation with the contract will apply. However, PRC law will apply despite the parties’ choice of another substantive law for the following:

  • Issues relating to Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and Sino-foreign cooperative exploration and development of natural resources to be performed within the territory of mainland China; and
  • Issues relating to the public interest of the PRC, including the protection of the rights and interests of labourers, food or public health safety, environmental safety, foreign exchange control and other financial safety.

PRC law will also apply if the foreign law cannot be ascertained or is silent on certain issues or when the purported foreign connection was concocted to circumvent application of PRC substantive law.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a partys choice of arbitrator?

China

Albeit with a growing number of exceptions, each PRC arbitration institution allows only arbitrators from its panel to be appointed in arbitrations it administers. Appointment of an arbitrator outside the panel is subject to party agreement and confirmation by the institution. In the case of a Chinese national, the arbitrator must have: 

  • passed the national uniform legal profession qualification examination, obtained the legal profession qualification and worked in arbitration for at least eight years;
  • worked as a lawyer or judge for at least eight years;
  • engaged in legal research or legal education and held a senior professional title; or
  • acquired knowledge of law, engaged in professional work in the field of economy and trade and held a senior professional title.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

China

Article 67 of the PRC Arbitration Law provides that an arbitration institution may appoint non-nationals with special knowledge in the fields of law, economy and trade, science and technology and other relevant professions to act as arbitrators. Major arbitration institutions, such as CIETAC, BAC and SHIAC, all have foreigners on their panel of arbitrators. PRC law does not impose any further requirements, but arbitration institutions may prescribe their own requirements for including foreign arbitrators on their panels, eg, knowledge of the Chinese language (CIETAC, waivable at its discretion). Foreigner should have a businesses or work visa to participate in arbitration proceedings in mainland China.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

China

Article 32 of the PRC Arbitration Law and relevant rules of each arbitration institution provide for the chairperson (or the president) of the arbitration institution to appoint arbitrators when the parties cannot agree on their appointment.

The courts will not participate in the default appointment of arbitrators.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

China

Arbitrators are not afforded immunity from suit. However, it is unlikely that a party can successfully sue an arbitrator except possibly for a very limited number of grounds expressly provided for by PRC law. Specifically, according to article 38 of the PRC Arbitration Law, arbitrators will be removed by the arbitration institution and assume legal liability if they:

  • contact a party or its representative in private; 
  • accept gifts or entertainment from a party or its representative; or
  • demand or accept bribes, abuse their position for personal benefit or distort the law. 

Criminal liability could attach if an arbitrator intentionally renders a judgment that is severely against the facts and laws (article 399 of the PRC Criminal Law).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

China

PRC law is silent on security for fees. Parties’ payments generally must be made to arbitration institutions, which remit fees to arbitrators, and some arbitration rules require claimants to make advanced payments or deposits when applying for arbitration or in other circumstances.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

China

Lack of impartiality or independence is a ground for challenging arbitrators.

Article 34 of the PRC Arbitration Law provides that an arbitrator must withdraw if he or she:

  • is a party or has a close relationship with a party or its representative;
  • has a personal interest in the case;
  • has another relationship with a party or its representative that may affect her or his impartiality; or
  • accepts dinner invitations or gifts from a party or his or her counsel.

Although the parties may stipulate that the IBA Guidelines on Conflicts of Interest in International Arbitration will be taken into account, in practice the Guidelines are seldom consulted.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

China

The main types of interim relief are asset preservation, evidence preservation and preservation of the status quo.

To obtain interim relief, a party first applies to the applicable PRC arbitration institution, which then forwards the application to a competent court for a decision (article 28 of the PRC Arbitration Law and article 272 of the PRC Civil Procedural Law). 

Special rules for Taiwan and Macau SAR provide for preservation measures for arbitrations seated in those places. On 2 April 2019, SPC and Hong Kong SAR signed the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region, put into effect on 1 October 2019 by an SPC judicial interpretation of 26 September 2019. The arrangement allow parties to arbitrations seated in Hong Kong and administered by the following institutions to seek interim relief from mainland courts: HKIAC; CIETAC Hong Kong Centre; ICC Asia Office; Hong Kong Maritime Arbitration Group; South China International Arbitration Center (HK); and eBRAM International Online Dispute Resolution Centre. The arrangement will not benefit ad hoc arbitrations. The HKIAC has stated that, in 2019, it processed 13 cases under the arrangement, for assets worth a total of 5.5 billion Chinese yuan, and that it is aware of at least five applications being granted, covering assets worth a total of 1.7 billion Chinese yuan; one of the 13 applications appears to have been for evidence preservation.

PRC law does not explicitly provide for anti-suit injunctions. If a party brings a suit to a PRC court in breach of an arbitration agreement, another party may challenge the jurisdiction of the court, which should dismiss the suit if the arbitration agreement is valid. In the case of a foreign-related arbitration agreement, if the court considers the agreement to be invalid, it must report level-by-level to the SPC for approval to render a decision invalidating the agreement (Prior Reporting System).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

China

PRC law is silent on security for costs and no reported case suggests that security for costs have been ordered in relation to an arbitration case seated in Mainland China. In practice, both the administration fees and arbitrator’s fees will be paid in advance by the claimant in a lump sum before the arbitration institution will officially register the case, so at least for such costs, the respondent would not have a need to apply for security.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

China

Mandatory rules are provided for in the PRC Arbitration Law and related laws and judicial interpretations, as well as arbitration institutions’ rules, though the latter can usually be modified by party agreement. For example, articles 21–23 of the PRC Arbitration Law govern the submission of a party’s request for arbitration while article 45 mandates that any evidence shall be produced at the start of the hearing.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

China

Article 42 of the PRC Arbitration Law provides that a default award may be rendered where a respondent fails to appear after written notice or leaves the hearing before its conclusion without the arbitral tribunal’s permission. Good practice is for the arbitral commission or tribunal to document its service of written notice onto the respondent and, the latter failing to participate, perform a review and detailed evaluation of the merits of the case to render a default award.  

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

China

Documentary evidence is the most common type of evidence, with testimonial evidence being seldom introduced in arbitrations. Both PRC law and arbitration institutions’ rules provide limited guidelines for the taking of evidence in arbitration. Articles 43 and 45 of the PRC Arbitration Law stipulate simply that the parties shall provide evidence in support of their arguments, that it shall be made available for examination (at hearings) and that the arbitral tribunal may collect evidence on its own and refer issues for appraisal.

Arbitration rules only slightly further specify these provisions (or in some cases modify them, eg, article 42(2) of the CIETAC Rules (2015) setting out a framework for examination of evidence in documents-only arbitrations), eg, providing for arbitrators’ discretion in deciding on the timelines of evidence submissions (see, eg, article 37(2) of the SHIAC Arbitration Rules (2015)). 

In practice, parties and arbitrators consult the IBA Rules, PRC Civil Procedure Law (especially for domestic arbitration) and CIETAC’s Guidelines on Evidence, though there is no quality source of information regarding the frequency of these practices.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

China

Courts may make orders for the preservation of evidence (see questions 6 and 25), but are otherwise not involved in the obtaining of evidence. 

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

China

PRC law only provides that the parties bear the burden of producing evidence (at the hearing, where it can be examined) to prove their claims and defences and that tribunals may request or collect evidence on their own initiative (articles 43 and 45 of the PRC Arbitration Law). Rules of arbitration institutions add little to nothing on document production. Finally, arbitral tribunals have no power to compel document production and arbitration institutions theoretically can forward to courts only those requests that are for evidence preservation, not production. In practice, each party usually attaches its own supporting evidence with its submissions and no other document production is undertaken.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

32. Is it mandatory to have a final hearing on the merits?

China

A hearing on the merits is mandatory unless the parties agree otherwise (article 39 of the PRC Arbitration Law). Some exceptions are provided under institutional rules. For example, for CIETAC cases with the amount in dispute below 5,000,000 yuan, the tribunal may decide whether to hold a hearing after consulting the parties.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

China

PRC law does not prohibit hearings or procedural meetings from being conducted elsewhere and several arbitration institutions provide for this practice in their rules.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Award

34. Can the tribunal decide by majority?

China

PRC law provides that decisions are to be rendered by majority, failing which the presiding arbitrator has the authority to make a final decision.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

China

PRC law is silent on the types of remedies and relief an arbitral tribunal may grant. In practice, tribunals may grant any remedy a PRC court may grant, except interim relief, a request for which will be forwarded to the competent court (see question 25).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

China

Article 53 of the PRC Arbitration Law permits a dissenting opinion to be entered into the record. Some institutional rules clarify that the dissenting opinion will be recorded in a separate document, not as part of the award. Dissenting opinions are not common in practice.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

China

An award should include the claims, facts of the dispute, grounds of the award, relief awarded, allocation of costs and date of the award and be signed by the arbitrators and sealed by the institution. The facts and grounds may be omitted by the party’s agreement.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

China

PRC law does not provide time limits for rendering an award, though most arbitration institutions do (eg, six months and three months, from the formation of the tribunal, in ordinary and summary proceedings, respectively, at CIETAC).

For typographical and clerical errors and omissions of matters already decided by the tribunal, the parties can request the tribunal to make corrections no more than 30 days from receipt of the award. 

Parties seeking to set aside an award should apply to the competent court no more than 6 months from receipt of the award.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

China

Article 9 of the Measures on Arbitration Fees provides that, in principle, the losing party bears the arbitration fees, with the arbitral tribunal to allocate fees proportionately if a party partially wins and partially loses. Institutional rules generally further this by explicitly empowering the arbitral tribunal to order a losing party to cover the winning party’s reasonable costs incurred and by setting forth factors to be considered in making fee and cost allocations. 

In practice, PRC arbitral tribunals only award costs actually incurred, excluding any cost to be incurred (eg, fees contingent on the outcome of the case), and impose a high burden of proof even for actual costs (eg, Letters of Engagement and invoices).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

China

PRC law does not provide for such interest, and though it may be agreed upon by the parties, there is no customary rate. However, under article 253 of the PRC Civil Procedural Law and relevant SPC Interpretations, if a party defaults on a payment obligation under the award, statutory interest will accrue on the principle at the daily rate of 0.0175 per cent, which can be claimed in the enforcement proceeding.

Whether statutory interest applies to costs is not settled under PRC jurisprudence.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

China

No. Arbitral awards are final, binding and not subject to appeal.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

42. Are there any other bases on which an award may be challenged, and if so what?

China

A party may apply to a court to set aside or refuse to enforce an arbitral award, and the grounds for each are identical but differ for domestic, foreign-related and foreign awards.

For a domestic award, courts shall set it aside or refuse enforcement if: 

  • there was no valid arbitration agreement;
  • the matters decided in the award fall outside the scope of the arbitration agreement or the authority of the arbitration institution;
  • the constitution of the tribunal or the arbitration procedure violates statutory requirements;
  • the evidence on which the award was based was forged;
  • a party withheld evidence sufficient to affect the impartiality of the arbitration;
  • an arbitrator demanded or accepted bribes, abused his or her position for personal benefit or distorted the law; or
  • the award is contrary to public interest.

For a foreign-related award, courts shall set it aside or refuse enforcement if:

  • there was no valid arbitration agreement;
  • the respondent was not notified of the appointment of arbitrators or the conduct of the procedure or given an opportunity to present its case (if not the respondent’s fault);
  • the composition of the arbitral tribunal or procedure violated the arbitration rules;
  • the matters decided in the award fall outside the scope of the arbitration agreement or the authority of the arbitration institution; or
  • the award is contrary to public interest.

For a foreign award subject to the NY Convention, courts shall refuse enforcement only on the grounds provided for in the NY Convention. (Awards from Hong Kong SAR, Macau SAR and Taiwan are subject to special provisions (see question 2), but the set-aside and non-enforcement grounds mirror those of the NY Convention.) 

However, any court intending to set aside or refuse enforcement of an award may not do so until it reports the case up to and receives approval from a higher level court (the Prior Reporting System): in the case of domestic awards, the ultimate approval authority is the High People’s Court except if the disputing parties are from different provinces or the ground for setting aside or refusing enforcement of the award is that it runs counter to public interest, in which cases only the Supreme People’s Court can approve the annulment or refusal of enforcement; in the case of foreign-related and foreign awards, the ultimate approval authority is always the Supreme People’s Court.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

China

No. Article 13 of the PRC Civil Procedural Law allows parties to dispose of their civil and litigation rights to the extent allowed by law, while it has been commonly understood that litigation rights are public, not private, rights, and agreements curtailing these rights are invalid. However, in one 2017 case, the SPC held an agreement freezing the right to sue for a certain period of time to be valid, because it merely delayed the exercise of a litigation right.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

China

PRC courts will not enforce an award that has been set aside by a competent court in the seat of arbitration.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

China

PRC has adopted a pro-arbitration attitude in enforcing foreign/foreign-related arbitral awards. Revisions of the Prior Reporting System (see question 41) impose further requirements on courts that intend to set aside or refuse enforcement of awards, such that higher courts have even more oversight, while the SPC has consistently shown itself a competent and pro-arbitration enforcer of international awards. For example, while lower courts often attempt to rely on the ground of “public policy” to set aside or refuse enforcement of an award, the SPC has narrowly constrained the use of this ground to the extent that it is almost unavailable.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

China

There are no PRC legal provisions on state or sovereign immunity. However, as stated by PRC governmental offices in two Hong Kong cases, foreign states enjoy absolute immunity, which will protect them even if they sign contracts in business capacities, in the enforcement stage (FG Hemisphere Associates LLC v Democratic Republic of Congo & Ors [2010] 2 HKC 487). This immunity does not extend to state-owned enterprises except in extremely extraordinary circumstances, where the enterprise was authorised to act on behalf of the state (TNB Fuel Services SDN BHD v China National Coal Group Corporation HCCCT 23.2015).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

China

Arbitration proceedings are to be conducted in private unless the parties agree otherwise, but it does not expressly subject the parties or arbitrators to any duty of confidentiality. Institutional Rules may fill in the gap, for example, by imposing a duty on participants to keep the arbitration confidential (unless the parties and arbitral tribunal agree otherwise).

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

China

Neither PRC law nor institutional rules provide specifically for the confidentiality of evidence and pleadings in an arbitration, but the general confidentiality provisions (see question 47) should cover evidence and pleadings.  

Any fact confirmed in an arbitral award may be relied on in civil litigation proceedings.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

China

While a PRC lawyer acting as counsel in an arbitration proceeding seated in China will be bound by standards in several laws and related codes of conduct, these are not generally considered to apply to foreign lawyers participating in a China-seated arbitration. As for arbitrators, major arbitration institutions have issued their own codes of conduct, providing, for example, for the timeliness of an arbitrator’s work.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

China

For a typical arbitration administrated by a PRC arbitration institution, counsel and arbitrators should be aware of the following, inter alia:

  • original copies of evidence must be shown at hearings for the other party to examine;
  • testimonial evidence is generally treated with less weight than documentary evidence;
  • cross-examination is rarely seen and PRC arbitrators are not familiar with procedures such as re-direct;
  • rounds of written submission are comparably limited;
  • submissions and correspondence are exchanged in hard copies (unless agreed otherwise) through the arbitration institution (with no direct communication with the other party or tribunal); and
  • documents (powers of attorney, certificates of incorporation, arbitral award, etc) originating abroad need to be translated, notarised and legalised before submission to PRC courts.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

China

PRC law imposes no prohibitions specifically on third-party funding. Further, there have been no reported court cases concerning third-party funding in mainland China (and arbitration fees and legal costs are generally lower than those in common law jurisdictions). However, Chinese laws and institutional rules governing confidentiality and conflicts of interests between arbitrators and agents of a party should apply (see questions 24 and 47).

The authors gratefully acknowledge the assistance of Amy Li and Tina Ye in writing this chapter.

Answer contributed by Arthur Ma, Mark Young, Dimitri Phillips and Sharon Yang

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