ZHU Ping: Practice and Thought of Arbitration Judicial Review

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

Ms. ZHU Ping

Deputy Chief Judge of the Civil Adjudication Tribunal No.4 of

Shenzhen Intermediate People’s Court

Good afternoon ladies and gentlemen,

It’s my honor to be here and share pertinent arbitration judicial review practice of the Shenzhen Intermediate People’s Court (hereinafter: the Court). If there is any inappropriate part in my presentation, please feel free to correct me.

The Court has been centralizing the management of arbitration judicial review cases since 2011, i.e. all kinds of arbitration judicial review cases would be heard by the foreign-related civil adjudication tribunal. Specifically speaking, cases of applying for confirming the validity or invalidity of arbitration agreement, withdrawing or non-enforcing arbitral awards rendered by Mainland Chinese arbitration institutions, and recognizing and enforcing Hong Kong, Macao, Taiwan and foreign arbitral awards, are included.

Let me introduce the general information and some features of the cases the Court received from 2012 to 2017. The Court received 2138 all kinds of arbitration judicial review cases totally, which accounted for 34.55% of the cases all the courts in Guangdong Province received. Among them, there were 2007 cases where withdraw or non-enforcement of arbitral awards rendered by Mainland Chinese arbitration institutions were sought, which made this type of cases the most important part of arbitration judicial review cases, 140 cases where withdraw or non-enforcement of foreign arbitral awards were sought, 7 cases where recognition and enforcement of foreign arbitral awards were sought, and 2 cases where recognition and enforcement of Hong Kong, Macao, Taiwan arbitral awards were sought. In total, the Court concluded 2036 cases, which accounted for 34.53% of the cases all the courts in Guangdong Province concluded.

These cases reflect some features. Firstly, domestic arbitration judicial review cases consist of the most important part of all the arbitration judicial review cases handled by the Court, which accounts for 93.45% in total. Secondly, there are more and more foreign arbitral institutions involved in the Court’s cases and ad hoc arbitration are included. Thirdly, the number of the countries and regions involved in the Court’s cases are increasing, European countries, the United States, Japan, Singapore, Hong Kong SAR and Taiwan are included. Fourthly, the Court takes a pro-arbitration approach in favor of arbitral awards as shown by the results. Taking the judicial review cases in which the Shenzhen Court of International Arbitration (hereinafter: the SCIA) are involved as an example, the Court concluded 245 cases in which the SCIA were involved from 2014 to 2017. Therein，94.7% of the cases were concluded in favor of the SCIA by the Court, which reflects the high quality of the SCIA arbitral awards. Fifthly, the majority of the arbitration judicial review cases are cases where applications for confirming the validity or invalidity of arbitration agreement are sought, and cases where undue arbitration procedure is complained. Therefore, correctly verdicting on the validity issue of arbitration agreement and guaranteeing due arbitration procedure are the key factors of arbitration judicial review.

I would like to share some latest practice and experience of the Court. Firstly, the Court has formed a relatively comprehensive arbitration judicial review mechanism. According to the current Chinese law, a collegiate bench shall be formed to hear all kinds of arbitration judicial review cases, but how to hear those cases is not prescribed. In the Court’s practice, it’s unified that court hearing procedure, in which the parties would be requested to answer the questions raised by the bench, would be conducted in all the arbitration judicial review cases. The Court would give the parties reasonable period of time to submit their evidences and defenses and equal chance to state their opinions. Secondly, the Court has standardized judicial documents. Through a long term research, the Court has made model judicial documents consisting of key arbitration judicial review factors for judges’ reference to help improve work efficiency. Thirdly, the Court has been keeping lines of communication open with arbitration institutions, which are mainly reflected in 3 aspects: (1) If necessary, the Court will review the case records and/or contact the pertinent arbitration institution to provide statements to explain relevant facts in accordance with the law; (2) The Court will issue judicial advices to pertinent arbitration institutions to help improve the arbitration mechanism; (3) The Court will issue a review of arbitration judicial review cases annually, and give feedbacks in time to pertinent arbitration institutions.

Next, I’ll use practical cases to share some thoughts of the Court on arbitration judicial review. Firstly, the Court will correctly apply the applicable law to arbitration agreement. In the Marubeni International Petroleum (Singapore) Co., Ltd. v. Shenzhen Petrochemical Industry Group Co., Ltd. Case, the Respondent defended that the arbitration agreement was invalid according to the Chinese law, but the Court applied the English law as the applicable law which was confirmed by both parties and determined that the arbitration agreement was valid. Also, in the Hong Kong Spring Water Co., Ltd. v. Hongbai Home Appliance (Shenzhen) Co., Ltd case, the parties agreed on an “arbitration or litigation” clause, which is invalid according to the Chinese arbitration law, but the Court applied the arbitration law of the USA since the seat of arbitration was in the USA and determined that the arbitration clause was valid eventually. Secondly, the Court will take a pro-arbitration approach in favor of the validity of arbitration agreement. As you know, the ICC revised its arbitration rules in 2012 and did not allow other arbitration institutions to use its arbitration rules, so the Court is inclined to determine the ICC as the only agreed arbitration institution if the parties just agreed on applying the ICC arbitration rules. In the Shenzhen Food Group Co., Ltd. v. Tobo Resources Co., Ltd case, the parties agreed that “Any dispute arising from the performance of the contract may be submitted to arbitration by either party. If the defendant is the buyer, the dispute shall be submitted to Hong Kong International Arbitration Center for arbitration. If the defendant is the seller, the dispute shall be submitted to the Grain and Feed Trade Association for arbitration. All disputes arising from the contract shall be in accordance with the English law.” Even though the parties agreed on two arbitration institutions, the Court determined that the arbitration agreement was valid since the arbitration institution was certain once one party applied for arbitration no matter the party was the buyer or seller. Thirdly, the Court will be in line with the separability of arbitration agreement principle and distinguish the difference between the validity issue of arbitration agreement and contract. Fourthly, the Court will determine whether the arbitration procedure is due according to the applicable arbitration rules. Fifthly, the Court will strictly define the meaning of public policy in case of abuse.

In conclusion, I would like to make three suggestions. Firstly, due arbitration procedure shall be insured. As I have mentioned above, arbitration judicial review is mainly focusing on objections to the validity of arbitration agreement and arbitration procedure. The validity of arbitration agreement can be “saved” before the first oral hearing of the arbitral tribunal, while an arbitral award may not be enforced eventually if the arbitration procedure is undue. Taking the important service procedure as an example, arbitral documents will be deemed to have been properly delivered if they are delivered as the arbitration rules requested, which is beneficial to improve the efficiency of arbitration procedure. However, it will also increase the risk that the parties are not properly informed due to other reasons. The Court suggests it is best that arbitral documents should be delivered to the addressee’s last known mailing address to insure the arbitration procedure fair. Secondly, sufficient remedies for false arbitration shall be provided. The Supreme People’s Court of the PRC issued the Provisions on Several Issues Concerning the Case of People's Courts Enforcing Arbitral Awards in the early of this year, which allow third party to apply non-enforcement of arbitral awards. The Court suggests the arbitral tribunal shall strictly review all the evidences and render the award carefully to avoid false arbitration, as to the cases where there is no dispute or the parties apply the tribunal to confirm their settlement agreement directly. The Court believes that false arbitration can be avoided and healthy development of arbitration can be achieved only if arbitration institutions and people’s courts work together. Thirdly, “Smart Court +” can be used to establish an information platform for arbitration judicial review. The Court will use the Internet and high-tech methods to establish an information platform for arbitration judicial review to achieve mutual benefits for both the arbitration industry and the judicial, optimizing the business environment.

That’s all. Thank you, and again, if there is any inappropriate part in my presentation, please feel free to correct me.