Introduction:

Generally speaking, domestic arbitration is divided into commercial arbitration and labor dispute arbitration. This series of articles on practical research into arbitration judicial review only explores commercial arbitration, namely arbitration arising from “contract disputes and other property rights disputes between citizens, legal persons, and other organizations as equal subjects” as stipulated in Article 2 of the “Arbitration Law of the People’s Republic of China” (hereinafter referred to as the “Arbitration Law”).

This series of articles is divided into three parts: Part 1 provides a brief analysis of remedies available to parties dissatisfied with domestic commercial arbitration awards; Part 2 focuses on the judicial review standards for “whether the parties have an arbitration agreement”; and Part 3 comparatively studies the similarities and differences between applications for revocation of arbitration awards and applications for non-enforcement of arbitration awards, as well as issues concerning system articulation.

01

Raising the Issue

China’s arbitration system implements one arbitration with finality. “An award shall become legally effective from the date it is made” (Article 57 of the Arbitration Law). So, if a party is dissatisfied with a domestic commercial arbitration award, what remedies are available?

02

A Brief Analysis of Remedies

(I) Application for Revocation of Arbitration Award and Application for Non-Enforcement of Arbitration Award

According to China’s current laws, if a party is dissatisfied with a domestic commercial arbitration award, they may apply for revocation of the arbitration award or apply for non-enforcement of the arbitration award, and the statutory grounds for both are substantially the same. Specifically as follows:

Article 58 of the Arbitration Law	Article 244 of the Civil Procedure Law of the People’s Republic of China
If a party presents evidence proving that the award falls under any of the following circumstances, it may apply to the intermediate people’s court where the arbitration commission is located for revocation of the award:	If the respondent presents evidence proving that the arbitration award falls under any of the following circumstances, the people’s court shall, after review and verification by a collegial panel, order non-enforcement:
(1) There is no arbitration agreement;	(1) The parties have not included an arbitration clause in the contract nor reached a written arbitration agreement afterwards;
(2) The matters awarded are not within the scope of the arbitration agreement or the arbitration commission has no jurisdiction over the arbitration;	(2) The matters awarded are not within the scope of the arbitration agreement or the arbitration institution has no jurisdiction over the arbitration;
(3) The composition of the arbitration tribunal or the arbitration procedure violates statutory procedures;	(3) The composition of the arbitration tribunal or the arbitration procedure violates statutory procedures;
(4) The evidence on which the award is based is forged;	(4) The evidence on which the award is based is forged;
(5) The other party has concealed evidence sufficient to affect impartial arbitration;	(5) The other party has concealed from the arbitration institution evidence sufficient to affect impartial arbitration;
(6) The arbitrator has committed acts of bribery, favoritism, or irregularities, or rendered the award by bending the law in arbitrating the case.	(6) The arbitrator has committed acts of corruption, bribery, favoritism, or irregularities, or rendered the award by bending the law in arbitrating the case.
If the people’s court determines that the award violates social public interest, it shall order revocation.	If the people’s court determines that enforcement of the award violates social public interest, it shall order non-enforcement.

From the perspective of legislative history:

In the 1991 and 2007 Civil Procedure Laws, items (4) and (5) for applications for non-enforcement of arbitration awards were “the main evidence for determining facts is insufficient” and “error in application of law.” Clearly, this simultaneously empowered courts to conduct substantive review of arbitration awards. Later, in order to genuinely implement the one-arbitration finality principle of arbitration, avoid situations where people’s courts conduct substantive review of disputes after arbitration institutions have made substantive awards on disputes between parties, and fully leverage the role of arbitration, the 2012 Civil Procedure Law abolished the aforementioned two substantive review grounds, retaining only procedural review grounds. Since then, the statutory grounds for applications for revocation and non-enforcement of arbitration awards in the Civil Procedure Law and the Arbitration Law have been substantially identical. Except for public interest review, all are procedural reviews of awards, basically consisting of factual judgments on procedural matters.

Regarding the application of the above seven statutory grounds in judicial practice, detailed explanations are provided below one by one.

1. The parties have not included an arbitration clause in the contract nor reached a written arbitration agreement afterwards

Article 16 of the Arbitration Law stipulates: “An arbitration agreement includes an arbitration clause included in a contract and an agreement to apply for arbitration reached in written form before or after the occurrence of a dispute. An arbitration agreement shall contain the following: (1) Expression of intent to apply for arbitration; (2) Matters for arbitration; (3) The selected arbitration commission.”

According to Article 18 of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Arbitration Law of the People’s Republic of China,” “no arbitration agreement” refers to the parties having not reached an arbitration agreement. If an arbitration agreement between parties is determined to be invalid or revoked, it shall be deemed as no arbitration agreement.

In judicial practice, regarding the question of “whether the parties have an arbitration agreement,” people’s courts on one hand review from a substantive perspective—for example, whether statutory successors to rights under an arbitration agreement are bound by the arbitration agreement, whether a guarantee contract is bound by the arbitration agreement of the main contract, and whether “arbitration-then-litigation” dispute resolution clauses are valid—while on the other hand reviewing from a procedural perspective whether parties have implicitly accepted arbitration clause jurisdiction, etc. Details will be covered in Part 2.

2. The matters awarded are not within the scope of the arbitration agreement or the arbitration institution has no jurisdiction over the arbitration

Article 13 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Handling of Arbitration Award Enforcement Cases by People’s Courts” [Fa Shi [2018] No. 5] stipulates that the following circumstances shall be recognized as “the matters awarded are not within the scope of the arbitration agreement or the arbitration institution has no jurisdiction over the arbitration”: (1) The matters awarded exceed the scope agreed in the arbitration agreement; (2) The matters awarded are non-arbitral matters according to legal provisions or the arbitration rules selected by the parties; (3) The award content exceeds the scope of the parties’ arbitration claims; (4) The arbitration institution that made the award is not the one agreed in the arbitration agreement. Regarding “non-arbitral matters” mentioned in item (2) above, Article 3 of the Arbitration Law explicitly stipulates that two major categories of disputes cannot be arbitrated: First, disputes concerning marriage, adoption, guardianship, support, and inheritance; second, administrative disputes that should be handled by administrative organs according to the law. It can be seen that in terms of system design, identity relationship disputes and administrative disputes, due to involving personal interests and public interest, their review authority remains exclusively belonging to courts. Because arbitration is different from litigation—arbitration is essentially a private activity and a private adjudication behavior.

Additionally, whether monopoly disputes have arbitrability has been a hot issue of concern domestically and internationally. In the case of Huilimater Ials Co., Ltd. of Hohhot v. Shell (China) Co., Ltd. regarding a horizontal monopoly agreement dispute, the Supreme Court ruled that the anti-monopoly law has obvious public law characteristics, and whether monopoly exists exceeds the rights and obligations between the contracting parties, causing the dispute in this case to no longer be limited to “contract disputes and other property rights disputes between citizens, legal persons, and other organizations as equal subjects,” and thus no longer falls within the arbitrable scope stipulated by the Arbitration Law [See: (2019) Zui Gao Fa Zhi Min Xia Zi No. 47].

In cases handled by the author, the question of “whether an arbitration tribunal has jurisdiction after a party enters bankruptcy proceedings” has also been involved. According to Article 21 of the “Enterprise Bankruptcy Law of the People’s Republic of China,” after a bankruptcy application is accepted by a people’s court, civil actions concerning the debtor may only be filed with the people’s court that accepted the bankruptcy application. However, centralized jurisdiction by the court accepting the bankruptcy application does not exclude the parties’ agreement on arbitration jurisdiction. The arbitration tribunal has the right to conduct arbitration based on the arbitration agreement. Article 8 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People’s Republic of China (III)” [Fa Shi [2020] No. 18] stipulates that if the parties have concluded an arbitration clause or agreement before the bankruptcy application is accepted, they shall apply to the selected arbitration institution to confirm the creditor-debtor relationship.

3. The composition of the arbitration tribunal or the arbitration procedure violates statutory procedures

Article 20 of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Arbitration Law of the People’s Republic of China” stipulates that “violation of statutory procedures” as stipulated in Article 58 of the Arbitration Law refers to violations of arbitration procedures stipulated in the Arbitration Law and possible effects on correct award of the case due to the arbitration rules selected by the parties.

Furthermore, according to Article 14 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Handling of Arbitration Award Enforcement Cases by People’s Courts,” if arbitration procedures stipulated in the Arbitration Law, arbitration rules selected by the parties, or special agreements on procedures between the parties may affect impartial award of the case, and upon review by the people’s court are confirmed to be true, it shall be recognized as “the composition of the arbitration tribunal or the arbitration procedure violates statutory procedures.” If a party claims that legal documents were not served in the manner stipulated by the Arbitration Law or arbitration rules, causing them to fail to participate in the arbitration, or that an arbitrator should have recused themselves but did not according to the Arbitration Law or arbitration rules, which may affect impartial award, and upon review this is confirmed to be true, the people’s court shall support the claim; if the arbitration tribunal served arbitration legal documents in the manner stipulated by the Arbitration Law or arbitration rules and the parties’ agreement, and a party claims non-compliance with civil procedure law provisions on service, the people’s court shall not support such claim. If the applicable arbitration procedure or arbitration rules have been specially reminded, and a party knows or should know that statutory arbitration procedures or selected arbitration rules were not complied with but still participates or continues to participate in the arbitration proceedings without raising objections, and after the arbitration award is made applies for non-enforcement of the arbitration award on grounds of violation of statutory procedures, the people’s court shall not support such application.

In practice, procedural issues generally include circumstances where arbitrator selection violates statutory procedures such as an arbitrator should have recused themselves but did not, or not giving parties the opportunity to select or jointly select arbitrators, as well as circumstances where arbitration procedures violate statutory procedures such as not giving the respondent the答辩 period stipulated in arbitration rules, not notifying parties to participate in court hearings in appropriate manners, and not giving parties the opportunity to present statements and arguments. For example, regarding service issues, in case (2021) Jing Min Zhong No. 936, Yuexing Company claimed its legal representative was detained and the company was sealed up, making it impossible to receive materials, thereby negating the arbitration commission’s service procedures. However, the Beijing Higher People’s Court held that Yuexing Company’s criminal involvement was caused by its own fault. The detention of its legal representative and sealing up of the company did not mean the loss of civil capacity for legal persons. Beijing Arbitration Commission served in a manner complying with the “Arbitration Rules,” and the procedure was legal.

4. The evidence on which the award is based is forged

According to Article 15 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Handling of Arbitration Award Enforcement Cases by People’s Courts,” all three of the following conditions must be simultaneously met to constitute “the evidence on which the award is based is forged”: (1) The evidence has been adopted by the arbitration award; (2) The evidence is main evidence for determining basic facts of the case; (3) The evidence is confirmed through investigation to have been formed or obtained through illegal methods such as fabrication, alteration, or provision of false proofs, violating the objectivity, relevance, and legality requirements of evidence.

5. The other party has concealed from the arbitration institution evidence sufficient to affect impartial arbitration

According to Article 16 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Handling of Arbitration Award Enforcement Cases by People’s Courts,” all of the following conditions must be simultaneously met to constitute “the other party has concealed from the arbitration institution evidence sufficient to affect impartial arbitration”: (1) The evidence is main evidence for determining basic facts of the case; (2) The evidence is only in the possession of the other party but was not submitted to the arbitration tribunal; (3) During the arbitration proceedings, the existence of this evidence was known, and the other party was requested to present it or the arbitration tribunal was requested to order its submission, but the other party, without justified reasons, did not present or submit it. However, if one party conceals evidence in its possession during the arbitration proceedings, and after the arbitration award is made applies for non-enforcement of the arbitration award on grounds that the evidence it concealed is sufficient to affect impartial arbitration, the people’s court shall not support such application.

6. The arbitrator has committed corruption, bribery, favoritism, or irregularities, or rendered the award by bending the law in arbitrating the case

The term “rendering award by bending the law” is broadly defined. Solely from textual interpretation, acts of intentionally违背 (going against) facts and intentionally违背 (going against) law in making awards can both be called “acts of rendering award by bending the law.” To unify judicial review standards, Article 18 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Hearing of Arbitration Judicial Review Cases” [Fa Shi [2017] No. 22] stipulates that “the arbitrator has committed acts of bribery, favoritism, or irregularities, or rendered the award by bending the law in arbitrating the case refers to acts that have been confirmed by effective criminal legal documents or disciplinary actions.” It can be seen that the standard of proof for identifying acts of rendering award by bending the law is very strict.

7. Violation of social public interest

“Public order and good morals” as mentioned in Article 8 of the Civil Code include public order (i.e., social public interest) and good customs. Liu Guixiang (Vice-Minister Level Full-Time Member of the Judicial Committee of the Supreme People’s Court, Level 2 Grand Judge) clearly pointed out at the National Court’s Financial Trial Work Conference on January 10, 2023: “Public order and good morals is an extremely abstract and elastic clause. When judges make judgments and apply it, they should fully elaborate reasons. Prohibitory provisions in regulations concerning maintaining basic financial market order, maintaining financial security, and preventing and controlling systemic financial risks can be used to identify whether public order and good morals are violated” [See the article “Liu Guixiang: On Concepts, Mechanisms, and Legal Application Issues in Financial Civil and Commercial Trial Work,” published in “Legal Application” Issue 1, 2023].

Furthermore, regarding the classification of public interest, Professor Wang Liming believes it mainly includes the following categories: (1) Interests directly related to the common interests of all members of society; (2) Interests of unspecified persons in economic, cultural, educational, and other aspects; (3) Interests related to personal life, health, and freedom connected with basic legal values; (4) Economic order and transaction security.

For example, in Supreme People’s Court Guiding Case No. 199, the arbitration award ruled that the respondent shall compensate US dollars equivalent to Bitcoin, then convert US dollars into RMB. This was deemed a disguised support for exchange transactions between Bitcoin and legal tender, violating state regulations on virtual currency financial supervision and violating social public interest. People’s courts should order revocation of the arbitration award.

Social public interest belongs to matters that people’s courts shall review ex officio, not limited to parties’ applications. Regarding this, Article 11 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Handling of Arbitration Award Enforcement Cases by People’s Courts” and Point 98 of the “Minutes of the National Court’s Symposium on Foreign-Related Commercial and Maritime Trial Work” (Publication Date: January 24, 2022) in the “Arbitration Judicial Review Section” both clearly stipulate, regardless of whether the award was made by a domestic or foreign-related arbitration institution.

(II) Raise Execution Objections and Apply for Dismissal of Arbitration Award Execution Application

In addition to applying for revocation of arbitration awards and applying for non-enforcement of arbitration awards, when an arbitration award enters the execution stage, remedies can actually also be sought through execution objections, but this remedy is easily overlooked.

Article 3 of the “Provisions of the Supreme People’s Court on Several Issues Concerning the Handling of Arbitration Award Enforcement Cases by People’s Courts” stipulates that if the execution content of an arbitration award or arbitration mediation document has one of the following circumstances making execution impossible, the people’s court may order dismissal of the execution application; if part of it is impossible to execute, it may order dismissal of that part’s execution application; if part of it is impossible to execute and that part is inseparable from other parts, it may order dismissal of the execution application: (1) The subject of rights and obligations is unclear; (2) The specific amount of money payment is unclear or the calculation method is unclear making it impossible to calculate a specific amount; (3) The specific item to be delivered is unclear or cannot be determined; (4) The standards, objects, or scope of performance are unclear. If an arbitration award or arbitration mediation document only confirms continuing performance of the contract but does not clarify the rights and obligations of continuing performance, as well as specific content such as the manner and time limit for performance, making execution impossible, it shall be handled according to the preceding paragraph.

There is no doubt that execution content should be clear, and people’s courts can, ex officio, order dismissal of execution applications for unclear execution content. Therefore in practice, it is rare for executed persons or third parties to raise execution objections due to unclear execution content. But in reality, according to Article 225 of the Civil Procedure Law: “If a party or interested party believes that the execution act violates legal provisions, they may raise a written objection to the people’s court responsible for execution,” parties also have the right to raise execution objections.

In case (2022) Jing Fu Fu No. 204, the Beijing Higher People’s Court stated in its opinion: “The bank’s claim that Award No. 0441 has circumstances such as ‘the subject of rights and obligations is unclear’ and ‘the specific amount of money payment is unclear or the calculation method is unclear making it impossible to calculate a specific amount’ was not raised at the objection review stage. This court will not review it in the reconsideration procedure.” This further confirms the possibility of the execution objection remedy.

03

Conclusion

To summarize, judicial supervision over arbitration is limited. Except for social public interest review, it is basically limited to procedural matters and is also prudent. This is related to the system design of China’s encouragement and support for arbitration and other dispute resolution mechanisms to resolve contradictions and disputes. From the perspective of the development trend of the relationship between modern justice and arbitration, judicial support for arbitration continues to strengthen. Under the background of case filing system reform, it generally adheres to the review principle of “loose entry, strict exit.” It is quite difficult to apply for revocation of arbitration awards or non-enforcement of arbitration awards.

Based on this, the author suggests: Before signing a contract, fully understand the legal effect of arbitration agreements and arbitration awards, as well as the similarities and differences between arbitration and litigation, and carefully sign arbitration agreements. If an arbitration award has the statutory circumstances mentioned in this article, timely take corresponding remedies such as applying for revocation of arbitration awards, applying for non-enforcement of arbitration awards, and raising execution objections according to the stage of the case.