China’s Supreme People’s Court (SPC) recently issued two pieces of judicial interpretations, namely, the Provisions of the Supreme People’s Court on Certain Issues Related to the Conduct of Judicial Review of Arbitral Cases and the Provisions of the Supreme People’s Court on Certain Issues Related to the Reporting System of Arbitral Cases (collectively, the New SPC Interpretations).
The New SPC Interpretations became effective on 1 January 2018 and aim to strengthen the arbitration regime in China. Among other things, they extend the judicial reporting system in arbitration-related judicial review procedures to arbitral agreements without foreign elements and domestic arbitral awards. They also clarify the applicable laws in deciding the validity of foreign-related arbitral agreements. These measures aim to ensure judicial consistency across PRC courts and give parties located in China increased options for dispute resolution.
WHAT IT MEANS
For Chinese parties or Foreign Invested Enterprises (FIEs) that are regarded as Chinese entities, the New SPC Interpretations are a positive development.
Previously, the internal reporting system established by the SPC applied only in relation to foreign-related arbitral agreements, foreign-related arbitral awards or foreign arbitral awards. Any Intermediate People’s Court intending to invalidate any foreign-related arbitral agreements, set aside foreign-related arbitral awards or deny enforcement of foreign or foreign-related arbitral awards was required to report to the Higher People’s Court. If the Higher People’s Court agrees with the proposed decision, it should report the case to the SPC for final approval. Without the SPC’s final approval, local courts are not allowed to decide against a foreign-related arbitral agreement, a foreign-related award or a foreign award.
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Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at danian.zhang@bakermckenzie.com
