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Recognition and Enforcement of Foreign Arbitral Award in China

Recognition and Enforcement of Foreign Arbitral Award in China is very easy now, since China is a signatory of New York Convention. As a China arbitration lawyer, I have extensive exposure in representing foreign clients to apply to Chinese court for the Recognition and Enforcement of Foreign Arbitral Award. The following is an article explaining the legal background of recognition and enforcement of foreign arbitration decision in China.

On 2 December 1986 China elected to accede to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). The New York Convention became effective in China on 22 April 1987.

In acceding to the New York Convention, China adopted both the reciprocity reservation and the commercial reservation. The former provides that China will recognise and enforce only those arbitral awards made in other states that are signatories to the Convention. The commercial reservation limits the scope of recognition and enforcement only to arbitral awards that have been rendered in commercial cases.

It is noteworthy that article V(2)(b) of New York Convention provides that signatory states may refuse to recognise and enforce arbitral awards that are contrary to the state’s ‘public policy.’ For purposes of the this ‘public policy exception,’ the Chinese courts have generally accepted the terminology in article 258 of Civil Procedural Law of PRC, which provides that a court may refuse the enforcement of an arbitral award if it determines that the award is against the ‘social and public interest’ of China. As the definition and scope of this term are somewhat ambiguous, it is important to be aware of this restriction, and consult your lawyers for more detailed advice, when seeking the recognition and enforcement of an arbitral award in China.

 

China is also a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention or Washington Convention). However, China has only submitted to the jurisdiction of ICSID for disputes concerning compensation for expropriation and nationalisation.

While the New York Convention covers China’s relationship with most foreign countries, China has also entered into special bilateral arbitration arrangements with Taiwan, Hong Kong and Macau.

On 24 January 2000, the Supreme People’s Court of PRC (the SPC) gave effect to the Arrangement for the Reciprocal Enforcement of Arbitral Awards between the Mainland and Hong Kong (the 2000 Arrangement). The 2000 Arrangement provides that the recognition and enforcement of arbitral awards rendered in Hong Kong may be refused by courts in Mainland China only on the grounds identical to those listed in article V of the New York Convention. It also obligates the Hong Kong courts to enforce any arbitral awards made by one of the recognised 180 China arbitration commissions (thus excluding arbitral awards rendered in ad hoc arbitration proceedings). Practically speaking, the effect of the 2000 Arrangement is that arbitral awards rendered in Hong Kong are treated just like arbitral awards rendered in any signatory to the New York Convention, and thereby makes Hong Kong a comparatively safe place to arbitrate against Chinese parties.

Since it is unclear whether ad hoc arbitral awards made in Hong Kong are included in the 2000 Arrangement, the SPC issued a Notice Regarding the Enforcement of Hong Kong Arbitral Award in Mainland China on 30 December 2009. This Notice clarifies that the courts in Mainland China will recognise and enforce both ad hoc arbitral awards rendered in Hong Kong and awards made by the International Chamber of Commerce (ICC) or other foreign institutions in Hong Kong.

SPC’s Provisions on the People’s Courts’ recognition of Civil Judgments Made By Courts in Taiwan Area, issued by the SPC on 22 May 1998, provides that arbitral awards rendered by Taiwanese arbitration institutions shall be recognised and enforced in China. Likewise, the Arrangement for the Reciprocal Recognition and Enforcement of Arbitral Awards between the Mainland and Macau, which came to effect on 12 December 2007, sets the rules for mutual recognition and enforcement of arbitral awards made in Mainland China and Macau.

This article is reproduced from http://www.globalarbitrationreview.com/know-how/topics/61/jurisdictions/27/china/ except the starting paragraph.

 
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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.