Can Foreign Arbitral Awards Be Enforced in China?
Most of the foreign arbitral awards are enforceable in China.
In 2019, the foreign arbitral awards are recognized and enforced, with a success rate of 87.5%.
In 2018, the success rate is 87.5% too.
China is a contracting state to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), which means that an arbitral award made in other contracting states to the New York Convention can be enforced in China.
For the moment, most countries in the world are contracting states to the New York Convention. If you want to find out if the country where you live is also a contracting state to the New York Convention, please refer to the Contracting States List on the website, newyorkconvention.org.
Moreover, arbitral awards rendered in Hong Kong, Macau, and Taiwan are recognized and enforced pursuant to relevant arrangements between them and Mainland China.
Then, in practice, do Chinese courts show positive attitudes to foreign arbitral awards?
We believe that the answer is YES, and there is supporting data for our judgment.
We have analyzed the cases concerning recognition and enforcement of foreign arbitral awards by Chinese courts in 2018 and 2019. The results are as follows:
In 2019, the Chinese courts have heard a total of 30 cases concerning the recognition and enforcement of foreign arbitral awards.
Chinese courts have recognized and enforced, in whole or in part, foreign arbitral awards in 21 cases; and in three cases, Chinese courts have refused to recognize the awards or rejected the applications; and in the remaining six cases, the applications were either withdrawn by the applicants or concerned jurisdictional disputes.
In other words, a total of 24 cases went to substantive hearings, of which 21 involved the recognition and enforcement of arbitral awards, achieving a success rate of 87.5%.
More information on these cases can be found in our 2019 CJO Report: Recognition and Enforcement of Foreign Arbitral Awards in China.
In 2018, Chinese courts have heard a total of 25 cases in relation to the recognition and enforcement of foreign arbitral awards.
Of these 25 cases:
in 14 cases, Chinese courts recognized ad enforced the foreign arbitral awards;
in 2 cases, the Chinese courts refused to recognize the foreign arbitral awards or dismissed the applications; and
in the other 9 cases, the applications were either withdrawn by the applicant or concerned with jurisdictional disputes.
There are 16 cases that actually proceeded to substantive adjudication. Among them, the foreign arbitral awards are recognized and enforced, with a success rate of 87.5%.
For more information on these cases, please read the 2018 CJO Report: Recognition and Enforcement of Foreign Arbitral Awards in China.
In addition, it should be noted that in accordance with the rule issued by the Supreme People’s Court of China, in supporting arbitration, an internal report and review mechanism is in place. Under this mechanism, if the local court intends to categorically reject the recognition and enforcement of a foreign arbitral award, it should report the case to its higher-level courts, that is, the higher courts. If the high court agrees with its position, it has to report the case to the Supreme People’s Court and obtain its approval before refusing to enforce the judgment.
However, if the district court intends to recognize a foreign arbitration award, it can make its decision on its own without any report.
Clearly, the internal report and review mechanism aims to prevent district courts from summarily rejecting such decisions.
Indeed, the mechanism has made local courts more cautious when refusing to recognize and enforce foreign arbitral awards.
This further demonstrates the friendly treatment of foreign arbitral awards in China.
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