LU Song: New York Convention's Contribution to China's Arbitration Development

Keynote Speech on the 60th Anniversary of New York Convention and “One Belt and One Road” Conference

by Mr. LU Song

Professor of Law，China Foreign Affairs University

Thank you! First of all, I would like to express my thanks to the co-organizers of this event, the Shenzhen Court of International Arbitration and UNCITRAL and the other organizations.  I consider it a privilege for me to be invited to address this esteemed audience.

I would like to join all of you in celebrating the 60th anniversary of the New York Convention. I think we have a common understanding that New York Convention is one of the most successful international conventions adopted in the history of the United Nations. Though it is a successor of the Geneva Protocol and Geneva Convention of the 1920s, it's far more successful. New York Convention lays down a solid foundation for the global recognition, not only the enforcement of arbitration awards but also the enforcement of arbitration agreements.

The New York Convention serves as a driving force for the healthy development of arbitration, not only in the field of commercial arbitration but also today in the investor-state arbitration.

Please allow me to remind you some of the developments which were brought about after China's accession to the New York Convention in 1987. As some speakers mentioned, China's congress has made a decision at the end of 1986 to join the New York Convention, and I think the instrument was submitted to the New York Convention in January 1987. The New York Convention has become effective in China since April 1987. Under the current Chinese legal system, New York Convention becomes part of China's law, and some of the international conventions to which the PRC is a contracting state will be directly applicable by the Chinese courts, and this includes New York Convention.

Also under Chinese law, if the provision of an international convention, which has a direct force in China, is not consistent with the domestic legislation, then the international convention prevails. So the New York Convention has a superior force in Chinese courts. The Chinese judges will look at the provision of the New York Convention, particularly articles V and II, to determine the issue of its own competence, to determine whether to enforce a convention award.

I would also draw your attention to some of the domestic legislation, firstly, the Chinese Civil Procedure Law. The first promulgation of PRC Civil Procedure Law was in 1981 on a trial basis. In that version of Civil Procedure Law, not many provisions on arbitration were included, but the law only permits that disputes occurred in international trade and transport can be resolved by international arbitration. That's all. Since then, there were three major amendments of the Civil Procedure Law, respectively, in 1991, 2007, and 2012. And you will see the 1991 amendment was made after China's accession to the New York Convention and all three amendments incorporate the basic principle of the New York Convention into the Chinese Civil Procedure Law. So nowadays, if you have an international arbitral award which is not subject to the New York Convention, when the PRC Civil Procedure Law applies, the parties can expect that similar principles with the New York Convention will be applicable to the recognition and enforcement of those non-convention awards.

The next one would be China's arbitration law, which was adopted in 1994. Before the adoption of China's arbitration law, there were several types of arbitration in China. Most of them were not based on arbitration agreements, and the arbitration award was not final. The dissatisfied party can then go to the court to ask the judges to re-decide the dispute. The 1994 arbitration law changed the landscape of China arbitration drastically. After the promulgation of that law, all the previous arbitration stopped to exist, except for the foreign-related arbitration. At the time, only the China International Economic and Trade Arbitration Commission and the China Maritime Commission had a practice which was in line with the international practice. So they remained. But all other types of arbitration have been stopped, and you know that China then gradually set up many regional arbitration commissions, now more than 250. The number is impressive. But it's a vast country. So that's the arbitration law.

Next, China has concluded scores of bilateral treaties on judicial assistance with other countries and governments. The first one of this type is the bilateral treaty between China and France, which was concluded one month after the New York Convention became effective to China. It was concluded in May 1987. And you will find in that treaty one article providing the recognition and enforcement of arbitral awards will be done in accordance with the New York Convention. So since then, many bilateral treaties on judicial assistance with China have similar provisions. And, of course, many speakers have mentioned after Hong Kong and Macau rejoined to the Mainland, they become different jurisdictions under one sovereign country. So the New York Convention normally applies between the contracting states, not within a sovereign state. Thanks to an effort and conclusion of the bilateral arrangements between Mainland and Hong Kong/Macau, the recognition and enforcement of arbitral awards in different jurisdictions in China is now being implemented very successfully.

I heard a story, Mr. Yuen SC was actually a witness, when the two sides proposed the draft of the bilateral arrangement, the draft on the terms of recognition and enforcement of arbitral award was almost identical to the New York Convention. So this was a positive impact of the New York Convention on this regional judicial assistance issue.

Then we come to the Chinese court assistance and supervision of arbitration. Mr. Liu Jingdong has just mentioned and given you many concrete examples of how the Chinese judiciary exercised its functions in this regard. Personally, I think the Chinese court has three avenues or instruments in which they support or supervise the arbitration.

Number one is what we call the judicial interpretation. It’s very famous. The Chinese judicial interpretations are somewhat abstract, detailed provisions. But this is very useful, because in terms of the number of cases in China, each year, the civil and commercial court cases, for instance, last year was about 10 millions. If you think about the cases where the Chinese courts have entertained in the last few decades, the numbers are huge. Of course, the common law system has a very good case analysis system, but facing such a big number of cases, you have to analyze. It's a difficult task not only for the judges, but also for the counsel, for the parties. So this is the Chinese way, the Supreme Court summarize typical cases and turns them in more detailed rules in order to guide the lower courts' judicial activities. It's very effective.

Mr. Liu Jingdong has mentioned about the important judicial interpretation. I think Judge Zhang has mentioned this morning the very first one was a Supreme Court circular issued in 1987, right after China's accession to the New York Convention. Then in 2006, the Supreme Court issued a judicial interpretation on China’s arbitration law. Last year and this year, there are three or four very important judicial interpretations issued, but I only have one minute, so the New York Convention has also a profound impact on China's arbitration practice.

Lastly, I would say we have looked backwards on those positive developments inspired by the New York Convention in China. But looking forward, I think the next thing we're going to do is to try to look more to the UNCITRAL Model Law, which are also the other pillar, twin pillars—New York Convention and UNCITRAL Model Law. There are still differences between the Chinese arbitration law and Model Law. I will just mention three areas. Number one, the ad hoc arbitration is not permitted currently in the Mainland. Secondly, the interim measures. A tribunal is so far unable to grant interim measures relating to parties of the arbitral proceedings in the Mainland. The last one, I'm happy to hear Mr. Liu has mentioned, is determining the nationality of the arbitral award on the basis of the place of arbitration or the seat of arbitration, not on the institution's domicile.  

Thank you very much!