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Part III. Comments
Based on the analysis above, the author herein comments on the current issues of the enforceability of foreign related awards, and make suggestions on this topic. Some recent legal development in China will also be discussed.
1. Comments on Current Issues
a. The Reporting Mechanism
As demonstrated above, the reporting mechanism on setting aside or refusal to enforce foreign related awards may, to some extent, urge lower courts to treat foreign related awards more seriously and exercise their discretion more cautiously. Such a mechanism, however, is of an administrative nature; lower courts do not decide independently, but rely on the discretion of higher courts. This is a discouragement of independent judiciary. Also, this mechanism lacks of transparency since parties may not participate. Therefore in the long term this reporting mechanism shall be abolished. Courts shall decide independently if it will enforce foreign related awards.
b. Setting Aside or Refuse to Enforce Foreign Related Awards
As for setting aside or refuse to enforce foreign related awards, the author believes that, first of all, it should be maintained that court should only review the procedural aspects of foreign related awards, and shall not set aside or refuse to enforce a foreign related award due to substantive law issues. Harms to social public interest, of course, may be an exemption.
Secondly, China should modify its legislative language, and grant the court some discretion on procedural defects of a foreign related award. If such procedural are minor and does not affect the general fairness of arbitration, courts shall not set aside the award. Actually this approach shall apply to all arbitration awards.
Thirdly and on the grounds for setting aside or refuse to enforce foreign related awards, the author believes that a more appropriate way is to maintain the current legislation on setting aside of foreign related awards for procedural defects, and further provide that the People’s Court’s may refuse to enforce a foreign related arbitration award ONLY on the ground of social public interest (she hui gong gong li yi), as provided in Article 260 of the Civil Procedure Law. This approach maintains the court’s review of procedural defects in arbitration awards, but once the court refuses to set aside the award in the first place, social public interest will be the only ground for the court to refuse enforcement. It therefore limits a dissenting party’s grounds to challenge the award once it fails in the set-aside motion.
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