INTERNATIONAL ARBITRATION 1/3LY
MARKET COMMENTARY 31
MARKET COMMENTARY
ENFORCEMENT IN CHINA: WHAT DOES CASE LAW DEMONSTRATE?
BY MATTHEW LAM AND SAPNA JHANGIANI, PARTNER AND LEGAL DIRECTOR AT CLYDE & CO LLP
Chinese Court Decision Summaries on Arbitration, edited by WunschARB, were published by Kluwer Arbitration in November 2013. These summaries are welcomed, particularly given the paucity of case law analysis currently available in this area. WunschARB comment on some of the trends (positive and negative) discernible from the cases on enforcement; notwithstanding that there is no system of binding precedent in the People’s Republic of China (PRC). Here we explore some of the trends apparent from our own analysis of the cases on enforcement. THE REPORTING REGIME Somewhat counter-intuitively, we start with the negative. One of the trends discerned by WunschARB is the ‘unexpected intervention of higher courts without a clear legal basis’; and we wonder if this derives from the ‘reporting’ regime applicable in the Chinese courts, about which there is much confusion, judging from questions posed on this issue at regional conferences. As far back as 2004, Judge Xiaolong Lu, of the Supreme People’s Court (SPC) of the PRC, addressed the 17th ICCA Congress in Beijing on the recognition and enforcement of foreign arbitral awards in China . Judge Lu described strategies demonstrating the government’s ‘active and supportive policy’ towards the recognition and enforcement of foreign arbitral awards in accordance with the New York Convention and Chinese laws. A key commitment, and prime example, included ensuring that all relevant cases fall under the jurisdiction of the Intermediate People’s Court (IPC); in contrast to the enforcement of domestic awards, which must be pursued at a lower level of court. A hierarchical ‘reporting system’ was also established, whereby IPC decisions declining recognition or enforcement of a foreign award must be reviewed by the Provincial Higher People’s Court (HPC), a higher court, which must in turn report the opinion to the SPC. Hence, refusal by the IPC is only permitted when the SPC agrees. As far as we are aware, this reporting mechanism has been followed and, whilst it has caused some confusion and is perhaps deemed a ‘negative trend’ by WunschARB, the constructive results are clear from some of the trends outlined below.
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