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2. Coverage of This Essay
This essay does not intend to touch on every facet of enforcement of arbitration awards in China. Rather, this is an analysis of some outstanding issues the enforceability of foreign related awards in mainland China. The author also briefly comments on the recent Chinese legal developments and their impacts on these issues. The Enforceability of foreign and domestic arbitration is not discussed herein.
Part II. Enforcing Foreign Related Awards: Outstanding Issues
1. The Reporting Mechanism
The reporting mechanism has a strong character of administrative reporting and approval. On August 28, 1995 the Supreme People’s Court (hereinafter referred to as the “SPC”) issued “The SPC’s Notice on Handling Issues about Foreign Related or Foreign Arbitration Awards” and therefore established a reporting mechanism for courts in refusing to recognize or enforce foreign related awards. Under this reporting mechanism, if an IPC intends to refuse to recognize and/or to refuse to enforce a foreign arbitration award or foreign related arbitration award, it must submit for the review and approval of relevant HPC. If the HPC agrees with the IPC, then the HPC must report this to the SPC. Only after the SPC approves may the IPC refuse to recognize and/or enforce the arbitration award.
This reporting mechanism was welcomed by parties seeking to enforce foreign related awards. Nevertheless, such a reporting mechanism is rather time consuming since there is no clear deadline for reporting. Also, the transparency of the reporting mechanism is inadequate, as parties to an arbitration award are not allowed to participate in the decision making process.
Moreover, some courts do not report to higher courts so as to avoid the risk of being denied by the SPC. Rather, they delay enforcement as possible as they can. The reporting mechanism, therefore, becomes an obstacle for enforcement in some cases.
2.Setting Aside and Refusal to Enforce Foreign related awards
The Arbitration Law (Article 70 and Article 71) and the Civil Procedure Law (Article 260) jointly provide grounds for the People’s Court to set aside (che xiao) or refuse to enforce (bu yu zhi xing) a foreign related arbitration award:
a. Parties did not incorporate an arbitration clause in their contract, or did not reach a written arbitration agreement afterwards; or
b. The respondent of an arbitration was not notified about the appointment of arbitrators or about the arbitration proceedings, or was not able to present its opinions due to other reasons not attributable to the respondent; or
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