The Chinese Arbitration Framework within which the arbitration is conducted consists of the law, the judicial interpretation and international treaties.
First, the laws adopted by the legislature, in particular the 1994 Chinese Arbitration Law, are the most important sources in relation to the Chinese Arbitration Framework, a copy of which is available below.
Second, in relation to the judicial interpretation, it is important to note that the highest of the four levels of court, the supreme people’s court (SPC), has the power to issue interpretations of questions concerning the application of the laws passed by the legislature. The interpretation of laws plays a very important role in the Chinese Arbitration Framework, in particular in relation to the enforcement of awards. Arbitration laws and procedural laws must always be read in conjunction with the judicial interpretations as the SPC has issued more than 30 interpretations of the arbitration law of 1994.
Finally, the most important international treaties of the Chinese Arbitration Framework are the New York Convention which China ratified in 1986 (came into force in 1987) and the Washington Convention dealing with the settlement of investment disputes ratified in 1992 (and came into force in 1993).
The Chinese Arbitration Framework is characterized by four different enforcement mechanisms in relation to the enforcement of domestic arbitration awards, the enforcement of foreign arbitration awards, the enforcement of foreign-related arbitration awards and the enforcement awards made in Honk Kong, Macau and Taiwan.
In practice, the foreign-related arbitration awards include a foreign element which the domestic arbitration award does not possess and which it becomes necessary to define. In accordance with Chinese law, there is a foreign element when at least one party to the dispute is not Chinese, when there are legal facts regarding the parties’ legal relationship which took place in a foreign country, or when the subject matter of the dispute is situated in a foreign country.
It is interesting to note how the Chinese Arbitration Framework regulates the enforcement of domestic awards in comparison to foreign-related arbitration awards. In the case of domestic arbitration awards, the courts are allowed to review the merits and may, for example, refuse enforcement in the event that the evidence was forged. However, in the case of foreign-related arbitration awards, the courts may only refuse enforcement on the basis of limited procedural grounds.
Naturally, in relation to foreign arbitration awards, the enforcement occurs in accordance with the New York Convention of 1958. When it ratified the New York Convention, China made a reciprocity reservation and a commercial reservation. The SPC’s judicial interpretation concerning foreign arbitration awards includes a notice of implementation of the Convention.
A particularity of the Chinese Arbitration Framework is that there are agreements between mainland China, Honk Kong, Macau and Taiwan and that enforcement of awards made in these regions are governed by the respective arbitration arrangements.