Author: Yongming Wu*
| Jurisdictions: China |
Topics: Arbitration Legislation |
On July 30, 2021, the People’s Republic of China’s (“China”) Ministry of Justice published the proposed revisions to China’s Arbitration Law (“the Law”)[1] on its website for public feedback, along with the explanatory notes for such revisions[2]. The proposed revisions make substantial changes to the Arbitration Law which, according to the explanatory notes, bring the Law more in-line with the development of arbitration over the past decades and the practical necessities of arbitration today.
The current Arbitration Law was promulgated in 1994 and has only received amendments on two occasions thereafter, in 2009 and 2017. On both occasions, only individual provisions of the Law were amended. Thus, the Law has remained largely unchanged since its promulgation some 26 years ago. As a result, it has frequently been criticized as being inadequate for meeting modern arbitration needs in China.
The proposed revisions aim to remedy such perceived inadequacies by eliminating some key differences that exist between the Law and international practices. In particular, effort was made to more closely mirror the UNCITRAL Model Law on International Commercial Arbitration. In addition, the proposed revisions make arbitration easier for private parties by encouraging party autonomy and minimizing judicial interference. Most practitioners have received the proposed revisions with enthusiasm.
Some of the proposed revisions’ more significant changes from the current Law are as follows:
- Foreign-related Ad hoc arbitration
Article 91 of the proposed revisions allows parties in a “foreign-related commercial dispute” to either designate an arbitral institution for arbitration or to appoint an ad hoc arbitral tribunal by agreement. This is not allowed under the current regime since, for an arbitration agreement to be valid, it must contain “a designated arbitration commission[]” which excludes ad hoc tribunals (Article 16 of the Law).
- Recognition of the “Seat” of Arbitration
Article 27 of the proposed revisions now expressly recognizes the “seat” of the arbitration and allows parties to specify their intended “seat” of arbitration in the arbitration agreement. In cases where parties did not specify the “seat” or where their specification is unclear, the “seat” will be the place that the arbitral institution conducts the proceedings. Under the current regime, the “seat” of the arbitration is not expressly recognized and an arbitral award issued by a foreign arbitral institution may be treated as a foreign award, regardless of the seat of the arbitration.[3]
- Kompetenz-Kompetenz
Article 28 of the proposed revisions allows the arbitral tribunal to hear challenges to the validity of the underlying arbitration agreement or to the jurisdiction of the arbitral tribunal. If the challenge was made before the arbitral tribunal had been formed, the arbitral institution may decide whether to proceed based on prima facie evidence. If either party to the arbitration goes directly to the court without first presenting the challenge to the arbitral tribunal or the arbitral institution, the court must dismiss the case.
- Interim Measures
Article 43 of the proposed revisions now empowers the arbitral tribunal to order interim measures as the tribunal deems necessary. Under Articles 46 to 49, a party to the arbitration can choose whether to go to a court (including a foreign court with jurisdiction where the enforcement of such interim measures so requires) or the arbitral tribunal to request interim measures. Furthermore, Article 49 provides for the appointment of an emergency arbitrator before the tribunal is formed to decide on interim measures in cases of emergency. Under the current regime, Chinese courts have exclusive power to order interim measures. Arbitral institutions are required to submit requests for interim measures directly to the courts and are unable to take actions on their own (Articles 28 & 46 of the Law). In addition, only interim measures relating to property and evidence are recognized (Articles 28, 46 & 68 of the Law). Injunctions, for example, are not explicitly authorized under the current regime
* Yongming Wu is a student editor at ARIA and a J.D. candidate at Columbia Law School. He also has an LL.B. from the China University of Political Science and Law in Beijing, China.
[1] The proposed revisions can be accessed in its original language (Mandarin) at: http://www.moj.gov.cn/pub/sfbgw/zlk/202107/t20210730_432958.html.
[2] The explanatory notes can be accessed in its original language (Mandarin) at: http://www.moj.gov.cn/pub/sfbgw/zlk/202107/t20210730_432965.html
[3] Article 283, Civil Procedure Law of the People’s Republic of China