1. What is International Commercial Arbitration?
International commercial arbitration refers to a binding decision made by a temporary arbitration tribunal or a permanent arbitration institution based on an arbitration agreement reached by both parties either before or after a dispute arises. Its main feature is that it is based on the agreement between the parties involved. Arbitration institutions are generally private organizations, and the parties involved have the freedom to choose the location, institution, arbitrators, procedures, and applicable substantive law. Once an arbitral award is made, it is final and takes immediate effect.
2. What are the Legal Basis for Recognizing and Enforcing Foreign Arbitral Awards in China
China decided to join the The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) on December 2, 1986. On April 10, 1987, the Supreme People's Court of China issued the "Notice on Implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Joined by China" ( "Implementation Notice"), which outlined the specific issues and procedures for implementing the New York Convention.
When China joined the New York Convention, it made reservation declarations. To have a foreign arbitral award recognized and enforced in China under the New York Convention, the following basic requirements must be met:
1. The arbitral award must have been made within the territory of a contracting State of the New York Convention.
2. The legal relationship in dispute must be recognized as commercial in nature under Chinese law. (Commercial relationships typically refer to economic rights and obligations arising from contracts, torts, or relevant legal provisions, such as the sale of goods, property leasing, construction contracts, product liability, environmental pollution, maritime accidents, and ownership disputes, but do not include disputes between foreign investors and host governments.)
3. Procedure for Enforcement of Foreign Arbitral Awards in China
3.1 Applicant: According to China's Civil Procedure Law, the party seeking recognition and enforcement of a foreign arbitral award must directly apply to the intermediate people's court at the place where the respondent is domiciled or where the respondent's property is located.
3.2 Jurisdiction: The intermediate people's court at the place where the respondent is domiciled or where the respondent's property is located has jurisdiction over the recognition and enforcement of foreign arbitral awards.
3.3 Submission of Application Materials: According to Article 4 of the New York Convention, the necessary materials for the application include:
o The duly authenticated original award or a duly certified copy.
o The original arbitration agreement, including an arbitral clause in a contract or an arbitration agreement, or a duly certified copy.
o A certified translation of the award if it is not made in the official language of the country where recognition and enforcement are sought.
3.4 Payment of Application Fees: According to China state regulation Measures for the Payment of Litigation Fees , the application fee is charged as follows:
o For cases without an execution amount or value, a fee of 50 to 500 yuan per case.
o For cases with an execution amount or value, a fee of 50 yuan for amounts up to 10,000 yuan, 1.5% for amounts over 10,000 yuan up to 500,000 yuan, 1% for amounts over 500,000 yuan up to 5,000,000 yuan, 0.5% for amounts over 5,000,000 yuan up to 10,000,000 yuan, and 0.1% for amounts over 10,000,000 yuan.
4. Application Period: The application for enforcement of an arbitral award must be made within the period stipulated by law. According to the Civil Procedure Law, the period for applying for enforcement is two years. The suspension or interruption of the period is governed by the relevant provisions on the suspension and interruption of the statute of limitations.
5. Circumstances for Non-recognition and Non-enforcement of Foreign Arbitral Awards
The China Civil Procedure Law stipulates the circumstances under which a foreign arbitral award may not be enforced. The New York Convention also has similar provisions. According to the Implementation Notice, any differences are resolved in favor of the provisions of the New York Convention.
The following is the text of Article V of the New York Convention.
Article V
1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II 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
(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
(c) 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 and enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) 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.
2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or
(b) The recognition or enforcement of the award would be contrary to the public policy of that country.
