Enforcing Arbitral Awards in China While Arbitration in Another Country/Region
Can I initiate arbitration proceedings against Chinese companies in my country and then have the awards enforced in China?
You probably don’t want to go to faraway China to sue a Chinese company, and you don’t want to agree in the contract to submit the dispute to an arbitration institution that you don’t know about.
You want to initiate arbitration to resolve the dispute at your doorstep.
However, the vast majority or even all of the assets of Chinese companies are located in China. Therefore, you will probably have to go to China to enforce the arbitral award.
This relates to the recognition and enforcement of foreign arbitral awards in China. Under Chinese law, you will need to engage a Chinese lawyer to assist you in petitioning the Chinese courts to recognize your award, and then have the Chinese courts enforce the award.
Our previous article “Can Foreign Arbitral Awards Be Enforced in China?” mentions that:
Commercial arbitral awards made in the territories of other signatories to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) are enforceable in China. Moreover, China is friendly to foreign arbitral awards.
Therefore, there is no essential difference between the recognition and enforcement of foreign arbitral awards in China and the recognition and enforcement of foreign arbitral awards in other countries.
To help you have a clear understanding, we have prepared the following Q&A.
1. Will Chinese courts recognize and enforce the judgments of my country’s arbitral awards?
The list of countries that are parties to the New York Convention covers the vast majority of countries in the world. As long as your country is a contracting party, the answer is YES.
To see if your country is a contracting party, please check out the List of States at newyorkconvention.org.
2. If Chinese courts can recognize and enforce my arbitral awards, how will the Chinese court review this awards concerned?
A Chinese court shall make a ruling to recognize and enforce an arbitral award in accordance with the law, unless the foreign arbitral award falls under any of the following circumstances:
(1) Invalidity of arbitration agreement
- It refers to situations, among others, where
- The party to the arbitration agreement is under some legal incapacity under the law applicable to it;
- The arbitration agreement shall be deemed invalid under the chosen governing law; or
- Where no governing law has been chosen, the arbitration agreement shall be deemed invalid under the law of the State where the award was made.
(2) The Respondents’ right of defense was not guaranteed
It refers to situations, among others, where
- The person subject to enforcement has not received proper notice of the appointment of an arbitrator or of the arbitration proceedings; or
- The person subject to enforcement fails to defend the case due to other reasons.
(3) The dispute dealt with by the arbitration award is beyond the scope of the arbitration agreement
It refers to situations, among others, where
- The arbitral award deals with a dispute that is not the subject of submission for arbitration or is not covered by the provisions of the arbitration agreement; or
- The arbitral award contains decisions on matters beyond the scope of the arbitration agreement.
(4) There are defects in the composition of the arbitration tribunal or in the arbitration procedure
It refers to situations, among others, where
- The composition of the arbitration tribunal or the arbitration procedure does not conform to the agreement between the parties; or
- In the absence of agreement between the parties, the composition of the arbitration tribunal or the arbitration procedure is inconsistent with the law of the country where the arbitration takes place.
(5) The arbitration award has not yet taken effect or been cancelled
It refers to situations, among others, where
- The arbitral award is not binding on the parties; or
- The arbitral award has been cancelled or suspended by the competent authority of the country where the award was made or the country on which the law on which the award is based.
(6) The matters in dispute shall not be submitted to arbitration
It refers to situations where, according to Chinese law, disputes cannot be settled by arbitration.
(7) The arbitration award contravenes China’s public order
The contents of the arbitral award contravene China’s public order.
It is worth noting that based on past cases before Chinese courts, the grounds for refusal of recognition and enforcement of foreign arbitral awards mainly focus on procedural flaws, such as, “the party did not get a written notice”, “the party failed to defend”, “the composition of the arbitration organization or the arbitration procedures do not tally with both sides of the agreed by the parties, or “in the absence of an agreement between the parties, the composition of the arbitration organization or the arbitration procedures are inconsistent with the laws of the seat of arbitration “.
Less frequently cited is “contrary to public policy”. Even foreign arbitral awards that violate certain mandatory provisions of Chinese law do not necessarily constitute a “violation of public policy”. Violation of public policy only applies to relatively serious circumstances under which enforcement would otherwise constitute a “violation of basic principles of law, violation of state sovereignty, a threat to public security, violation of good customs”.
3. When should I apply to China for recognition and enforcement of my arbitral awards?
If you apply to Chinese courts for recognition of your arbitral awards or for recognition and enforcement at the same time, you should apply to Chinese courts within two years.
(1) Where your arbitral awards provide for the period of debt performance, it shall be counted from the last day of that period;
(2) Where your arbitral awards provide for the debt performance by stages, it shall be counted from the last day of each performance period as stipulated;
(3) Where your arbitral awards does not provide for a period of performance, it shall be counted from the date when this award takes effect.
4. Which court in China should I apply to for recognition and enforcement of my arbitral awards?
You may apply to a Chinese intermediate court of the place where the Chinese company is located or where the property subject to execution is located for recognition and enforcement.
5. To apply to Chinese courts for recognition and enforcement of my arbitral awards, do I have to pay the court fees?
Please read our other post “Time and Expenses – Recognition and Enforcement of Foreign Arbitral Awards in China“.
When you win the case, the court fee shall be borne by the respondent.
6. When I apply to Chinese courts for recognition and enforcement of my arbitral awards, what materials should I submit?
You need to submit the following materials:
(1) The Application Form;
(2) The applicant’s identity certificate or business registration certificate (if the applicant is a corporate body, the identity certificate of the authorized representative or the person in charge of the applicant must also be provided);
(3) The Power of Attorney (authorizing lawyers to act as agents ad litem);
(4) The original arbitral award and a certified copy thereof;
(5) Documents proving that the defaulting party has been duly summoned in case of a default award, unless otherwise stated in the judgment;
(6) Documents proving that an incapacitated person has been properly represented, unless otherwise stated in the award.
If the aforementioned materials are not in Chinese, then you also need to provide the Chinese translation of these materials. The official seal of the translation agency shall be affixed to the Chinese version. In China, some courts only accept Chinese translations provided by agencies listed in their lists of translation agencies, while others do not.
Documents from outside China must be notarized by local notaries in the country where such documents are located and certified by local Chinese consulates or Chinese embassies.
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