Answer ... Yes. Under Chinese law, the procedure applicable to award enforcement proceedings depends on the type of award at issue. Chinese awards and foreign awards are subject to different enforcement regimes.
In distinguishing foreign awards from Chinese awards, Chinese courts have historically looked to the nationality of the arbitral institution that administered the arbitration, rather than the seat of the arbitration. Applying this ‘institution standard’, several Chinese courts enforced awards issued by foreign arbitral institutions in arbitral proceedings in China as ‘foreign awards’ under the New York Convention (eg, see Wei Mao International (Hong Kong) Co Ltd v Shanxi Tianli Industrial Co Ltd [2004] Min Si Ta 6 (treating an International Chamber of Commerce (ICC) award rendered in China as a French award). In 2020, however, a Chinese court in Guangzhou held for the first time that such an award should be categorised as a foreign-related Chinese award and be subject to the enforcement regime for Chinese awards, because the place (seat) of arbitration was in China (eg, see Brentwood Industries v Guangdong Fa’anlong [2015] Sui Zhong Fa Min Si Chu 62, treating an ICC award rendered in China as a Chinese award). It remains to be seen whether the Guangzhou court’s decision will be confirmed in upcoming amendments to the Arbitration Law and/or in guidance from the Supreme People’s Court (SPC).
Chinese awards: Enforcement proceedings of Chinese awards are governed by the Arbitration Law and the Civil Procedure Law (Articles 62 and 63 of the Arbitration Law; and Article 237 of the Civil Procedure Law for purely domestic Chinese awards; and Article 71 of the Arbitration Law and Article 274 of the Civil Procedure Law for foreign-related Chinese awards) For further details on the distinction between domestic and foreign-related Chinese awards under Chinese law, see question 1.2.
Foreign awards: For awards rendered outside mainland China (ie, ‘foreign awards’), a separate enforcement regime applies.
For foreign awards in general, enforcement proceedings are governed by the New York Convention or by the reciprocity principle if the award was rendered in a non-contracting state of the New York Convention (Article 283 of the Civil Procedure Law).
For awards rendered in Taiwan or in China’s Special Administrative Regions of Hong Kong and Macau, enforcement proceedings are governed by the relevant special arrangement in place between such jurisdiction and the government of mainland China (Provisions of the SPC on Recognition and Enforcement of Arbitration Awards Issued in Taiwan (2015); Arrangement of the SPC on Mutual Recognition and Enforcement of Arbitration Awards Between the Mainland and Macau Special Administrative Region (2008); Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (2008); Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region).
The Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region was entered into by the SPC and the Hong Kong Department of Justice on 27 November 2020. Among other things, it introduced the following changes and/or clarifications:
- It clarified that all arbitral awards made pursuant to the Arbitration Ordinance of Hong Kong can be recognised and enforced in the mainland pursuant to the supplemental arrangement;
- It eliminated the prior restriction on mainland arbitral institutions covered under the original arrangement, such that all awards made in the mainland are now covered;
- It allows parties to apply for the enforcement of arbitral awards in the mainland and in Hong Kong at the same time; and
- It provides that enforcement courts (both in mainland China and in Hong Kong) may order preservation measures in accordance with applicable law before or after the enforcement of an award.
In addition, the Chinese courts have discretion to suspend recognition and enforcement proceedings of a foreign award if set-aside proceedings are pending overseas at the place of arbitration (Article 83 of the SPC Minutes of the Second National Working Conference on Trial of Foreign-Related Commercial and Maritime Cases (2005); see also Hong Kong Water Solutions v Shenzhen Tall & Stout [2006] Yue 03 Min Chu 366, where the court refused to suspend enforcement proceeding in China on consideration of factors including the failure of the award debtor to post security).
Notably, the Chinese courts have implemented a unique reporting mechanism for award enforcement proceedings, under which a lower court must obtain approval from a higher court before refusing enforcement of a foreign or foreign-related arbitral award (in certain circumstances, a similar reporting duty arises in arbitrations of a purely domestic nature). Ultimately, only the SPC may grant final approval to refuse enforcement of a foreign or foreign-related arbitral award (Articles 2 and 3 of the Provisions of the SPC on Issues relating to the Reporting and Review of Cases Involving Judicial Review of Arbitration).
Enforcement procedure: With respect to the procedure guiding an enforcement proceeding (for both domestic and foreign awards), the steps are generally as follows:
- An enforcement application must first be submitted to the intermediate court at the place where the award debtor or its assets are located. In certain circumstances, the intermediate court (with approval from the higher people’s court) may designate a lower court to hear the application (Article 29 of the SPC’s Interpretation of the Arbitration Law (2006); Article 2 of the Provisions of the SPC on Certain Issues Concerning the Enforcement of Arbitral Awards (2018)).
- Enforcement applications are subject to certain formality requirements under Chinese law, including the following:
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- The applicant must submit a written application, accompanied by the original arbitral award and arbitration agreement, or notarised and authenticated copies thereof, proof of the applicant’s identity and a valid power of attorney for the attorney submitting the application (Articles 18–20 of the Provisions of the SPC on Several Issues Concerning Enforcement by People’s Courts (for Trial Implementation)).
- “[D]ocuments in a foreign language submitted by the parties concerned shall be accompanied by a Chinese translation” (Article 6 of the Provisions of the SPC on Several Issues Concerning the Trial of Judicial Review of Arbitration Cases (2018)).
- Upon receiving an enforcement application, the enforcement court must notify the award debtor of the enforcement proceeding within 10 days (Article 22 of the Provisions of the SPC on Several Issues Concerning Enforcement by People’s Courts (for Trial Implementation)).
- Any application for enforcement must be submitted within a two-year period commencing at the end of the period for voluntary compliance with the award (as specified in the award). If the award does not specify a date by which voluntary compliance must be completed, the two-year period commences on the date when the award becomes final and binding upon the parties (Article 239 of the Civil Procedure Law).
Under Chinese law, a non-party to an arbitration may intervene to oppose enforcement of the arbitral award by filing an application for non-enforcement. To prevail in preventing enforcement of the award, the non-party applicant must prove the following:
- The arbitration was filed maliciously or falsely, thereby impairing the legal rights and interests of the non-party;
- The lawful rights and interests of the non-party that are sought to be protected are still in force and not terminated; and
- The application for non-enforcement has been submitted within 30 days of the date on which the non-party knew or should have known about the enforcement proceedings (Article 9 of the Provisions of the SPC on Several Issues concerning the Handling of Cases regarding Enforcement of Arbitral Awards by the People’s Courts (2018)).
Grounds for refusing enforcement: Enforcement of a foreign-related domestic award may be refused only on the grounds enumerated in Article 274 of the Civil Procedure Law, as follows:
- There is no written arbitration agreement between the parties;
- The respondent was not given notice of its right to appoint an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case for reasons not attributable to its own fault;
- The composition of the arbitral tribunal or the arbitration procedure was not in conformity with the applicable procedural rules;
- The award deals with matters that are outside the scope of the arbitration agreement or are non-arbitrable; or
- The award is contrary to the public interest.
Enforcement of a purely domestic award may be refused on any of the grounds discussed immediately above, as well as three additional grounds under Article 237 of the Civil Procedure Law:
- The evidence on which the award is based was fabricated;
- The prevailing party concealed evidence from the arbitral institution sufficient to affect the fairness of the award; or
- The arbitrator(s) “demanded or accepted bribes, abused their position for personal gain, or perverted the law by the award”.
Enforcement of a foreign award may be refused only on the basis of the grounds enumerated under the New York Convention (if the award was rendered in a New York Convention State) or the reciprocity principle (for non-convention foreign awards) (Article 283 of the Civil Procedure Law).
The grounds for resisting enforcement of awards rendered in Hong Kong, Macau, and Taiwan are enumerated under the relevant special arrangements discussed above and are similar to the grounds for non-recognition under the New York Convention (Article 14 of the Provisions of the SPC on Recognition and Enforcement of Arbitration Awards Issued in Taiwan; Article 7 of the Arrangement of the SPC on Mutual Recognition and Enforcement of Arbitration Awards Between the Mainland and Macau Special Administrative Region; Article 7 of the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region).