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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
This ICC Guide to National Rules of Procedure for Recognition and Enforcement of Foreign Awards under the New York Convention is the third, updated edition to mark the 60th anniversary of the New York Convention. Country Answers, which reflect the state of law at 1 October 2018, have been provided in response to a Questionnaire drawn up by a task force of the ICC Commission on Arbitration and ADR.
A. The Contracting State and the New York Convention
1. Name of Contracting State (also specify jurisdiction(s), if relevant)
Signatory country: the People’s Republic of China (‘PRC’).
Implementing jurisdiction: Mainland China.
Explanatory note: Unless expressly mentioned otherwise, the present Country Answer applies to neither the Special Administrative Region of Hong Kong nor the Special Administrative Region of Macau.
Although China resumed in 1997 its exercise of sovereignty over Hong Kong, the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (the ‘Basic Law’), as an instrument for the implementation of the ‘one country – two systems’ policy, and Art. 31 of the Chinese Constitution prescribe that the capitalist system and way of life in Hong Kong shall remain unchanged for fifty years. It is also stipulated that the laws in Hong Kong, including the common law, law of equity, ordinances, subordinate legislations and customary law, shall be maintained. The prescription on arbitration is obviously part of the laws in Hong Kong and should remain unchanged after the changeover of sovereignty. The New York Convention, it is still applicable in Hong Kong, although now based on the PRC’s ratification of the Convention.
(Source: Basic Law of the Hong Kong Special Administrative Region of the PRC, 4 Apr. 1990 (in effect as of 1 July 1997); Constitution of the PRC, latest revision promulgated on 11 March 2018, and effective as of 11 March 2018.)
With regard to Macau, the PRC resumed sovereignty with effect from 20 December 1999. The same principle of ‘one country - two systems’ applies according to the Basic Law of Macau, and the enforcement of foreign awards in Macau is also subject to the New York Convention on the basis of the PRC’s ratification of the Convention.
(Source: Basic Law of Macau, 31 Mar. 1993, in effect as of 20 Dec. 1999.)
2. Date of entry into force of the New York Convention
22 April 1987.
(Source: Supreme People’s Court’s Notice on the Implementation of China’s Accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 Apr. 1987 (‘SPC's Notice on the New York Convention (1987)’).
3. Has any reservation been made under Art. I (3) of the New York Convention regarding:
(a) reciprocity?
Yes. The PRC has made a reciprocity reservation under the New York Convention, according to which the PRC will only apply the New York Convention to the recognition and enforcement of awards made in the territory of another Contracting State. The recognition and enforcement of arbitral awards made in a non-Contracting State, according to the relevant provisions of the Civil Procedure Law of the PRC, is subject to bilateral treaty, if any, between China and the non-Contracting State or the principle of reciprocity.
(Source: SPC's Notice on the New York Convention (1987); the Civil Procedure Law of the PRC, latest revision promulgated on 27 Jun. 2017 and effective as of 1 Jul. 2017, Art. 283.)
(b) commercial relationships?
Yes. The PRC has made a ‘commercial relationship’ reservation under the New York Convention, according to which the PRC will apply the New York Convention only to disputes arising out of legal relationships, whether contractual or not, which are considered as ‘commercial’ under Chinese law.
The expression ‘contractual and non-contractual commercial legal relations’ used in the reservation made by China refers to ‘economic rights and obligations arising from contracts, torts or in accordance with provisions of laws’. The law does not provide a more specific definition of what is considered ‘commercial’ and what is not, and this is therefore left to the interpretation of the courts.
The Supreme People's Court considers this should include, but not limited to, sale of goods, lease of property, project contracting, contracting and processing, technology transfer, equity joint ventures, cooperative joint ventures, exploration and development of natural resources, insurance, credit, labour services, agency, consulting services, marine/civil aviation/railway/road passenger and cargo transportation, product liability, environmental pollution, marine accidents, and disputes over ownership, etc. It does not however include disputes between a foreign investor and the host State government.
(Source: SPC's Notice on the New York Convention (1987).)
4. In addition to arbitral awards made in the territory of another State, the New York Convention (Art. I(1)) also applies to arbitral awards not considered as domestic awards in the State where recognition and enforcement are sought. Are there any awards rendered in your country that are not considered as domestic awards such that the New York Convention and the answers to this Questionnaire are applicable to them?
This issue is closely associated with the question of whether a foreign arbitration institution could administer arbitration in China. The Supreme People's Court's attitude on this question is not completely settled until today.
First, the PRC law is silent on the legal status of an arbitral award rendered in China by a foreign arbitration institution such as ICC. In practice, there has been on-going debates concerning whether such award should be considered as a foreign award or a non-domestic one. Note that in the past, China recognized the nationality of an arbitral award depending on the place of registration of the arbitration institution administering the case. Furthermore, if an award rendered in China by a foreign institution is considered as a non-domestic award, it remains controversial whether the New York Convention should apply, since China has made a reciprocity reservation under the Convention.
Second, a notable distinction needs to be drawn between the validity of an arbitration clause providing for arbitration in China administered by a foreign institution, and the enforceability of an arbitral award rendered pursuant to such arbitration clause. There have been recent cases showing that the Supreme People's Court has gradually inclined to recognize the validity of such arbitration clauses, but it remains unsettled regarding the enforceability of relevant arbitral awards pursuant to the New York Convention.
The enforcement of arbitral awards rendered in regions of Hong Kong, Taiwan and Macau are subject to the following legal instruments:
Before 1 Jul. 2015, the Supreme People’s Court’s Provisions on the People’s Courts’ Recognition of Civil Judgments Made by Courts in Taiwan Region, promulgated on 15 Jan. 1998 and effective from 26 May 1998 (applicable to arbitral awards according to Art. 19 of the Provisions.)
B. National sources of law
5. What specific sources of law are applicable to recognition and enforcement of foreign awards (e.g. statutes, regulations, codes, directives, other legal instruments)?
(i) Arbitration Law of the PRC, adopted at the Ninth Meeting of the Standing Committee of the Eighth National People’s Congress on 31 Aug. 1994, promulgated by Order No. 31 of the President of the People’s Republic of China on 31 Aug. 1994 and effective as of 1 Sept. 1995;
(ii) Civil Procedure Law of the PRC (‘CPL (2017)’), adopted on 9 Apr. 1991 at the Fourth Session of the 7th National People’s Congress, latest revision issued on 27 Jun. 2017 and effective as of 1 Jul. 2017;
(iii) other laws of the National People’s Congress or its Standing Committee, which include specific provisions on arbitration; and
(iv) judicial interpretations, regulations, opinions and notices issued by the Supreme People’s Court (the ‘SPC’), such as:
C. Limitation periods (time limits)
6.
(a) Is there a limitation period (time limit) applicable to the commencement of legal proceedings for recognition and enforcement of foreign awards?
Yes.
(b) If yes, what is the applicable limitation period (time limit) and when does it start running?
The time limit to file a request for recognition and enforcement of an arbitral award is two years for both individual persons and legal entities. This time limit runs from the last day of the period specified in the award/judgment for its performance. If no period of performance is specified, the time limit is calculated from the day when the award takes effect.
If a party only applies for recognition of an arbitral award without requesting for enforcement of the same, the two years limitation period shall be tolled by the recognition proceeding and restart to run after the People's Court renders an effective ruling on the recognition application.
(Source: CPL 2017, Art. 239; 2015 SPC's Interpretation of the CPL, Art. 547.)
D. National courts and court proceedings
7. What authority or court has jurisdiction over recognition and enforcement of foreign awards?
The competent court is the Intermediate People’s Court at the domicile of the party against whom enforcement is requested or at the place where the property subject to enforcement is located. The tribunal of foreign-related commercial cases of the People’s Court at all levels shall be the special divisions responsible for recognition and enforcement of foreign arbitral awards and other arbitral judicial review cases.
(Source: CPL 2017, Art. 283; see also, SPC's Interpretation of Arbitration Law (2008), Art. 12; Notice of the SPC on the Centralized Handling in Arbitration Judicial Cases.)
At the end of 2017, the Supreme People's Court issued two important judicial interpretations to specifically deal with the so-called ‘judicial review’ of arbitration-related matters, including Chinese courts' review of applications for recognition and enforcement of foreign arbitral awards:
These judicial interpretations are of great importance as they have, inter alia, aligned and uniformed Chinese courts' internal ‘prior-reporting system’ for judicial review of both foreign/foreign-related and domestic arbitral awards.
Art. 3 of the Provisions of the SPC on Deciding Cases of Arbitration-Related Judicial Review has expanded the scope of competent courts having jurisdiction over recognition and enforcement of foreign awards. Pursuant to Art. 3, if the party being enforced against has no assets nor domicile in China, and there is pending lawsuit or arbitration in China that has ‘connection’ with the foreign arbitral award, then the court hearing the relevant lawsuit* or the Intermediate People's Court of the place where the Chinese arbitration institution is located shall have jurisdiction to accept applications for recognition and enforcement of the foreign arbitral award.
* If the court hearing the lawsuit is a basic level court, the competent court shall become its higher level court, that is, the Intermediate People's Court of its direct ancillary; and if the court hearing the lawsuit is a high level court or the SPC, then that court shall have the discretion to decide whether to designate the application to an Intermediate People's Court, or, to reserve the application for its own handling.
Besides, under the context of Belt and Road Initiative (BRI), the SPC established the China International Commercial Court (CICC) on 29 June 2018, as a dispute resolution mechanism installed within the SPC system. Pursuant to Art. 35 of the Procedural Rules for the CICC of the SPC (for trial implementation), promulgated on and effective from 5 Dec. 2018, a party shall be entitled to apply to the CICC for setting aside or enforcement of an arbitration award made by a specific Chinese arbitration institution* in an international commercial case in which the amount in dispute exceeds 300 million RMB or significant influence otherwise exists. As such, the SPC, via the CICC, has gained jurisdiction over the enforcement of foreign-related awards issued within the ‘one-stop dispute solution platform’ afforded by the CICC (see http://cicc.court.gov.cn.)
* Pursuant to Notice on First Group Institutions, the China International Economic and Trade Arbitration Commission, the Shanghai International Economic and Trade Arbitration Commission, the Shenzhen Court of International Arbitration, the Beijing Arbitration Commission, the China Maritime Arbitration Commission, the Mediation Center of China Council for the Promotion of International Trade and the Shanghai Commercial Mediation Center are included in the first group of arbitration and mediation institutions in the ‘one-stop’ diversified international commercial dispute resolution mechanism.
8. What requirements, if any, must be met for the authority or court to accept jurisdiction over recognition and enforcement of foreign awards (e.g. domicile or assets of respondent in the jurisdiction, etc.)?
As noted above, traditionally, for a court to accept jurisdiction, either the domicile or the property (at which enforcement is directed) of the party against whom enforcement is sought, must be located within that court’s jurisdiction.
As expanded by Art. 3 of the Provisions of the SPC on Deciding Cases of Arbitration-Related Judicial Review, where there is no asset or domicile located in China, a court may still exercise jurisdiction if, within its jurisdiction, there is a lawsuit or arbitration with ‘connection’ to the foreign arbitral award. For natural persons, domicile refers to his/her place of registered residence (known as the place of his/her ‘Hukou’); and for legal persons, domicile refers to its principal place of business; where the principal place of business cannot be ascertained, the place of registration shall be considered as its domicile.
(Source: CPL 2017, Art. 283; 2015 SPC's Interpretation of CPL, Art. 3; SPC's Notice on the New York Convention (1987), Art. 3; Provisions of the SPC on Deciding Cases of Arbitration-Related Judicial Review, Art. 3.)
Regarding the enforcement of foreign-related awards by CICC, two requirements must be met, i.e. (i) the foreign-related arbitral awards shall be made by arbitration institutions under the Notice on First Group Institution; (ii) the amount in dispute exceeds 300 million RMB or significant influence otherwise exists as noted above.
9. Is the first decision granting or denying recognition and enforcement obtained through ex parte or inter partes proceedings?
The first decision is obtained through inter partes proceedings.
(Source: 2015 SPC's Interpretation of the CPL, Art. 548.)
10.
(a) Is the first decision granting or denying recognition and enforcement subject to any form of appeal or recourse?
No appeal is possible against the Intermediate People’s Court’s decision granting enforcement.
The situation is more complex when it comes to decisions refusing enforcement of a foreign award. To ensure the application of the New York Convention and to avoid local protectionism, the Supreme People' Court established a ‘Prior-reporting System’ through the SPC's Notice on Several Issues relating to the People's Courts' Handling of Foreign-related and Foreign Arbitration Matters, effective as of 28 Aug. 1995.
Pursuant to the Prior-reporting System, an Intermediate People's Court's decision refusing enforcement of a foreign award must be reported for review, first to the Higher People's Court and eventually to the Supreme People's Court. No reporting to the SPC is required if the Higher People's Court decides to recognize and enforce the award.
The Prior-reporting System was expanded in 1998 (SPC’s Notice on Issues Relating to People’s Courts’ Setting aside of Foreign-related Arbitral Awards) to cover also ‘foreign-related arbitral awards’, i.e. arbitral awards with foreign-related factors rendered in China by Chinese arbitration institutions. The Prior-reporting System is in essence an internal review mechanism of Chinese courts' system to ensure consistent application of the New York Convention at different level of Chinese courts. It has been proved to be successful in practice. As such, by end of 2017 and through the aforementioned two judicial interpretations (i.e. the Provisions of the SPC on Application for Verification and the Provisions on Deciding Cases of Arbitration-Related Judicial Review, see Q.5 and Q.7), the SPC further expanded the system to cover judicial review of all domestic arbitral awards, i.e. arbitral awards rendered in China without any foreign-related factors.
(b) How many levels of appeal or recourse are available against this decision?
See Q.10(a).
11. What is the earliest stage in legal proceedings for enforcement of foreign arbitral awards at which a party can obtain execution against assets (i.e. party actually obtains possession of assets as opposed to simply freezing assets)?
First, a foreign award must be recognized by a People's Court before application for enforcement of the award could be made, as recognition of the award gives the award legal effect under Chinese law.
Second, for enforcement application that properly meets the legal requirements, the court will decide to accept the enforcement application within seven days upon its filing.
Third, after deciding to accept the application for enforcement, the People's Court shall notify the debtor to perform the award within a specified time limit; failing which, the People's Court will then take mandatory enforcement measures.
Therefore, the earliest stage where a party can obtain execution against assets is when the debtor voluntarily performs the notice of enforcement issued by the court after the award has been recognized.
(Source: Provisions of the SPC on Enforcement (1998), Arts. 18, 24, 26.)
E. Evidence required
12.
(a) What evidence must be supplied for recognition and enforcement of foreign awards (e.g. arbitral award, contract containing arbitration clause, affidavits, witness statements, etc.)?
When filing a request for recognition or enforcement of a foreign arbitral award, the party should submit at least the following documents:
Chinese translation must be provided if the document is in a foreign language. Further, in practice, it is necessary to provide the court with basic information of the assets available for enforcement, such as the location of assets, the financial situation of the party being enforced against, etc.
(Source: Provisions of the SPC on Deciding Cases of Arbitration-Related Judicial Review, Art. 6; Provisions of the SPC on Enforcement (1998), Arts. 20, 21.)
(b) Is it necessary to provide the entire document or only certain parts (e.g. entire contract or only arbitration clause)?
It is necessary to provide (i) the award in its entirety and (ii) the relevant pages of the contract containing the entirety of the arbitration clause.
(Source: Provisions of the SPC on Deciding Cases of Arbitration-Related Judicial Review, Art.6; Provisions of the SPC on Enforcement (1998), Art. 21.)
(c) Are originals or duly certified copies required?
Pursuant to the law, the applicant should provide the original or a duly authenticated copy of the award; some courts also request provision of the original or a duly authenticated copy of the arbitration clause/agreement.
(Source: Provisions of the SPC on Deciding Cases of Arbitration-Related Judicial Review, Art. 6.)
(d) How many originals or duly certified copies are required?
This may vary from court to court. Generally speaking, the following are required: (i) one original or one duly authenticated copy of the award (where a certified and notarized copy of the award is submitted, the court may request to see (in order to verify, not to keep) the original); (ii) one original or one duly authenticated copy of the arbitration agreement; for the latter, the same verification of the original may be required.
(Source: Provisions of the SPC on Deciding Cases of Arbitration-Related Judicial Review, Art.6; Provisions of the SPC on Enforcement (1998).)
(e) Does the authority or court keep the originals that are filed?
Normally, the court will keep certified and notarized copies, not the originals.
13.
(a) Is it necessary to provide a translation of the documents supplied?
(Source: Provisions of the SPC on Deciding Cases of Arbitration-Related Judicial Review, Art.6; Provisions of the SPC on Enforcement (1998), Arts. 20 and 21 – although these two articles only expressly mention the award and the application for enforcement, in practice all documents submitted to the court with the application need to be translated into Chinese.)
(b) If yes, into what language?
Chinese.
(c) Is it necessary for the translations to be certified and, if yes, by whom (official or sworn translator, diplomatic or consular agent (of which country?) or some other person)?
Yes. The translation must be certified by an official or sworn translator or by a diplomatic or consular agent and authenticated by the Chinese Consulate or Embassy in the country in which the award was rendered or notarized by a Chinese notarial agency.
(Source: Provisions of the SPC on Enforcement (1998), Art. 21.)
(d) Is it necessary to provide a full translation of the documents or only a translation of certain parts (e.g. entire award or only part setting forth the decisions; entire contract or only arbitration clause)?
The applicant must in principle provide translations of the relevant parts of the documents submitted. Thus, a full translation of the award is necessary, but a translation of just the arbitration agreement/clause, as opposed to the full contract, may be sufficient.
F. Stay of enforcement
14.
(a) Can the authority or court stay legal proceedings for recognition and enforcement pending the outcome of an application to set aside or suspend the foreign award before the competent authority referred to in Art. V(1)(e) of the New York Convention?
Yes. The law is silent on this issue. In the Meeting Minutes of The Second National Conference on Foreign-related Commercial and Maritime Trial Work (the ‘Meeting Minutes’), issued by the SPC on 26 Dec. 2005, the SPC instructed in Art. 83 that if a foreign award has not entered into effect, has been set-aside or suspended of enforcement, the People's Court shall refuse recognition and enforcement of the same; if the foreign award is being set-aside or requested of suspension of enforcement, the People's Court may suspend the recognition and enforcement proceeding. If a foreign court does not suspend the recognition and enforcement under the same circumstances, the People's Court shall follow the principle of reciprocity.
Although the Meeting Minutes is not of the effect of a judicial interpretation, it has been given high importance by the SPC and is most indicative of Chinese highest judiciary's position on this issue.
(b) On what other grounds, if any, can the authority or court stay legal proceedings for recognition and enforcement (e.g. forum non conveniens)?
Generally speaking, in enforcement proceedings, if the party subject to execution provides security, the People’s Court may suspend and defer the time limit for execution, subject to the consent of the party who has applied for execution.
(Source: CPL 2017, Art 231.)
However, under any of the following circumstances, the People's Court shall issue a ruling to suspend the enforcement:
Execution shall be resumed when the circumstances which caused the suspension disappear.
(Source: CPL 2017, Art. 256.)
Under any of the following circumstances, the People’s Court shall make a ruling to suspend the enforcement:
(Source: Provisions of the SPC on Enforcement (1998), Art.102.)
(c) Is the granting of a stay of legal proceedings for recognition and enforcement conditional on the provision of security?
Not necessarily. As indicated in Q.14(b), provision of security is not required for conditions under Art. 256 of the CPL (2017) and Art. 102 of the SPC's Provisions on Enforcement (1998). However, security is required for conditions under Art. 231 of the CPL (2017).
Security can be provided by the party against whom the enforcement is sought, or by a third party. Security can take the form of property or personal guarantee. The valid security period shall be the same as the postponed period of enforcement, but no longer than one year.
(Source: 2015 SPC’s Interpretation of CPL, Arts. 469, 470.)
G. Confidentiality
15.
(a) Do the documents filed in legal proceedings for recognition and enforcement form part of the public record? If yes, can any steps be taken to preserve the confidentiality of such documents?
No. They form part of the court record only, which is not accessible by the public.
(b) If there are hearings on recognition and enforcement, are such hearings confidential? If not, can steps be taken to maintain the confidentiality of the legal proceedings?
PRC: Hearings in China are usually public, except for (i) cases involving State secrets, personal privacy and other matters determined by law; (ii) divorce cases and cases involving commercial secrets may be kept confidential, upon the parties’ request. Thus, if the judge convenes a hearing on the enforcement of an award, it is advisable expressly to request hearings in camera.
(Source: the CPL (2017), Art. 134.)
(c) Are judgments on recognition and enforcement published? If yes, can steps be taken to remove the names of the parties or avoid publication of confidential information (such as business or State secrets)?
PRC: Decisions on recognition and enforcement are usually not published. However, the most important decisions, in particular those of the Supreme People’s Court, are usually published either on the internet, in legal reviews, or in collections of court cases.
In theory, the court may remove the names of the parties, where it considers this appropriate, before publishing a judgment. However, no specific procedure is in place for this purpose.
H. Other issues
16. When, if ever, can a party obtain recognition and enforcement of interim or partial foreign awards?
PRC: Only final awards may be recognized and enforced. Partial awards may be recognized and enforced provided they are final. It is unlikely that China will recognize and enforce an interim arbitral award ordering measures to preserve assets or evidence or ordering a party to take or refrain from certain actions, as such an award is inherently temporary and may be subsequently revoked by the tribunal.
(Source: New York Convention, Art. V(1)(e).)
17. When, if ever, can a party obtain recognition and enforcement of non-monetary relief in foreign arbitral awards (e.g. order requiring a party to deliver up share certificates or other property)?
PRC: As a general rule, it is possible to obtain recognition and enforcement in China of foreign awards granting non-monetary relief including, for instance, mandatory transfer of shares.
(Source: Provisions of the SPC on Enforcement (1998), Arts. 57–60.)
18. When, if ever, can a party obtain recognition and enforcement of only part of the relief granted in foreign awards?
Chinese legislation does not specify whether a party may obtain recognition and enforcement of only part of the relief granted in a foreign award, and jurisprudence has not addressed this question directly. However, where part of the award deals with a dispute not contemplated by or not falling within the terms of the arbitration agreement, or if the award contains decisions on matters beyond the scope of the agreement, and such irregular provisions can be severed from the remainder of the award, then the court may recognize and enforce only the remainder of the award.
(Source: SPC's Interpretation of Arbitration Law (2006), Art. 19 (per analogy).)
19. When, if ever, can a party obtain recognition and enforcement of foreign awards which have been set aside by the competent authority referred to in Art. V(1)(e) of the New York Convention?
Although the New York Convention confers a discretionary power upon the enforcing court on whether to enforce an annulled award, the SPC's Notice on the New York Convention (1987) applied a much stricter standard and requires that the Chinese courts ‘shall’ dismiss the application if any circumstance under Art. V(1) is present, including where the award has been annulled. Such position was echoed in the Meeting Minutes issued by the SPC and noted under Q.14(a) above.
20. Are there any other procedural or practical requirements relating to recognition and enforcement of foreign awards which are worth mentioning (e.g. unusually high court costs, filing fees, stamp duties, obligation to post security as a condition for seeking recognition and enforcement, obligation to identify the assets that will be the object of enforcement, etc.)?
Recognition of a foreign award is subject to a much lower court cost (RMB 500) compared with the much higher amount of fees for enforcement of the same award, which is often a percentage of the amount to be collected.
Theoretically, a People's Court shall render a verdict on whether to recognize and enforce a foreign award within two months from its acceptance of the application. If the verdict grants enforcement, enforcement shall be completed within six months as of the date of the verdict. Otherwise, the court shall report to the Supreme People's Court pursuant to the Prior-reporting System with two months as of the acceptance of the application.
In reality, the relevant periods are often much longer due to the potential complexity in procedures such as service and location of enforceable assets.
(Source: Provisions of the SPC on the Issues of Fees and Review Period for the Recognition and Enforcement of Foreign Arbitral Awards, promulgated on and effective as of 14 Nov. 1998.)
Another notable issue is the location of assets. Before proceeding with enforcement, the court will require the applicant to provide information on the location of the assets against which enforcement is directed and the general financial situation of the defendant. Locating assets in China, including identifying relevant bank accounts, is rather difficult and time-consuming. Therefore, it is advisable to take steps to locate the defendant’s assets as early as possible.
Country Rapporteur: Jingzhou Tao