In less than two years, central and local governments have introduced a number of measures to promote China’s adoption of international arbitration. What exactly has been introduced in national policy and judicial practice?
Since the outbreak of covid-19 in December 2019, all regions of China have made every effort to deal with and control the epidemic, but in the area of commercial arbitration, the pursuit of openness China’s international arbitration has declined, despite the crisis. In less than two years, central and local governments have introduced a number of measures to promote greater openness of China to international arbitration.
At the national policy level, measures specifically include, but are not limited to, the following measures.
On October 21, 2019, the Shanghai Municipal Justice Bureau released the administrative measures for trade offices established by overseas arbitration institutions in the pilot free trade zone of the Lin-gang Special Zone in China (Shanghai). According to administrative measures, from January 1, 2020, legally established non-profit arbitration institutions in foreign countries and the Hong Kong Special Administrative Region (SAR), Macao SAR and Taiwan Region of China , as well as arbitration institutions established by international organizations which China has joined, can apply to the Shanghai Municipal Justice Bureau for registration and establishment of trade offices in the Lin-gang Special Zone of the Shanghai free trade to conduct relevant foreign-related arbitration activities.
On December 28, 2020, the Beijing Municipal Justice Bureau released the administrative measures for the registration of trade offices established by overseas arbitration institutions in China (Beijing) Pilot Free Trade Zone. In accordance with these administrative measures, from January 1, 2021, legally established non-profit arbitration institutions in foreign countries and Hong Kong SAR, Macao SAR and the Taiwan region of China, as well as arbitration institutions established by international organizations to which China has adhered, may, after registration, establish trade offices in China (Beijing) Pilot Free Trade Zone to conduct overseas-related arbitration activities in respect of concerns civil and commercial disputes arising in the areas of, inter alia, international commercial affairs and investment.
On January 8, 2021, the Supreme People’s Court (SCC) issued the opinions on the People’s Court providing judicial services and guaranteeing the construction of the Hainan Free Trade Port. According to the opinions, the state supports international arbitration institutions abroad to establish business offices in the Hainan Free Trade Port to conduct arbitration activities, and supports that companies registered in this free trade port agree to arbitration for disputes at a specific location, and by a specific person, in accordance with specific arbitration rules, and supports and guarantees the application and enforcement of interim measures such as preservation of property, preservation of evidence and preservation of behavior of Chinese and foreign parties, before and during arbitration, in accordance with the law.
With respect to judicial practice, the aforementioned measures specifically include, but are not limited to, the following provisions.
The Arrangement Regarding Mutual Assistance in Court-Ordered Provisional Measures for Arbitration Proceedings by Courts of the Mainland and Hong Kong Special Administrative Region (Arrangement), signed between the PSC and the Government of the Hong Kong SAR, entered into force on October 1, 2019, and has been applied to a large number of international arbitration cases in Hong Kong.
For a long time, with the exception of maritime cases, Chinese courts failed to recognize and enforce the interim relief order in overseas arbitration proceedings. This situation changed with the signing of the agreement on April 2, 2019 between the PSC and the government of the Hong Kong SAR.
According to the arrangement, in the international arbitration proceedings administered by a specific foreign arbitration institution jointly confirmed by the PSC and the government of the Hong Kong SAR, with Hong Kong as the seat of arbitration, the parties concerned can apply to the courts of mainland China for preservation of property.
Since its entry into force, the Arrangement has been widely used in international arbitration proceedings where Hong Kong is the seat of arbitration. Taking data released by the Hong Kong International Arbitration Center as an example, as of February 9, 2021, the Hong Kong International Arbitration Center had processed a total of 37 arbitration preservation claims filed with the mainland courts. Of these, 34 are for the preservation of property, two for the preservation of evidence and one for the preservation of behavior. The total assets involved in all property preservation claims amount to 12.5 billion RMB (approximately US $ 1.9 billion).
Some Chinese courts consider the arbitral award rendered by the arbitral tribunal in international arbitration cases administered by arbitration institutions abroad, and with the seat of arbitration in Mainland China, to be China’s arbitral award. relating to abroad. In China, arbitral awards of different nationalities will be subject to different judicial review and enforcement procedures.
The nationality of the arbitration award is usually determined by the seat of the arbitration. For arbitral awards rendered by the arbitral tribunal in international arbitration cases, where the parties agree that the seat of the arbitration will be in mainland China, but which are administered by an arbitration institution abroad, the courts Chinese previously considered them to be “non-national arbitral awards” as provided for in the New York Convention, and applied the New York Convention for the Recognition and Enforcement of Awards.
This determination has changed in the last judicial practice. In the case handled by the Guangzhou Intermediate People’s Court, where the petitioner Brentwood Industries sought recognition and enforcement of a final award issued by the ICC International Court of Arbitration on March 17, 2014 in Guangzhou, China – regarding Brentwood and the respondents, Guangdong Fa ‘anlong Machinery Complete Set Equipment Engineering, Guangzhou Zhengqi Trading and Guangdong Environment Engineering Equipment General Company – the Guangzhou court determined that: “… the arbitration award is made by a foreign arbitration institution in mainland China, and may be considered foreign from China. related arbitration award… ”. This determination is in accordance with international practice of determining the nationality of arbitral awards according to the standard of the seat, but the application of Chinese national laws to this type of proceeding requires further study in theory and practice.
The author believes that the covid-19 epidemic in China and around the world will eventually stop, but China’s openness to international arbitration will continue to progress.
Chen Xianglin is a partner at Han Kun law firm. He can be contacted on +86 135 2146 9731 or by e-mail email@example.com