China (Shenzhen) Securities Arbitration Center to be established in Shenzhen

On 15 June 2021, the Shenzhen Municipal Committee held a meeting of the Comprehensive Deepening Reform Committee, which considered and adopted in principle the "Trial Measures for the Management of Bonded Bunker Oil Operation for International Vessels in Shenzhen", "Implementation Plan for the Deepening of the Reform of the International Ship Registration System in Shenzhen", "Reform Plan for the Establishment of China (Shenzhen) Securities Arbitration Centre by the Shenzhen International Arbitration Institute and the Shenzhen Stock Exchange", "Opinions on Building a Child-Friendly City through Early Demonstration (2021-2025)" and "Opinions on Establishing a Sound Working Mechanism for the Protection of the Personal Rights and Interests of Women and Children in Shenzhen", etc.

Securities arbitration, also known as arbitration of securities disputes, is a composite of the concepts of securities disputes and arbitration, which, like maritime arbitration, arbitration of environmental disputes, and arbitration of consumer rights, is a specific form of arbitration among many other types.

Securities arbitration is a system whereby, in the event of a dispute between parties on an equal footing relating to the issuance, listing, trading, agency, registration and liquidation of securities, the dispute is referred to the appropriate arbitral body, either by law or pursuant to a prior or subsequent arbitration agreement between the parties, which will decide the dispute in accordance with certain procedures to facilitate its early resolution.

Hefei Arbitration Commission, China (Anhui) Pilot Free Trade Zone, Hefei Arbitration Center Established

On 17 June 2021, the Hefei Arbitration Commission, China (Anhui) Pilot Free Trade Zone (FTZ), Hefei Arbitration Centre was established in the Hefei Economic and Technological Development Zone.

It is understood that in order to support the development of the Hefei Arbitration Centre, the Hefei Arbitration Commission has innovated its system by formulating arbitration rules suitable for the FTZ, introducing temporary measures for foreign-related disputes, an emergency tribunal system and an open roster of arbitrators; forming a professional team of arbitrators to serve the FTZ, selecting and recruiting a group of arbitrators who are professional, highly internationalized and proficient in foreign languages and have rich professional experience and fairness The system of "early and pilot" in the FTZ will be brought into play to promote the establishment of a diversified mechanism for the settlement of foreign-related intellectual property disputes in the FTZ; and the introduction of a "no-closing" holiday court hearing mechanism for arbitration cases in the FTZ, a "commissioner-in-residence" service mechanism, and an "online" service mechanism. The "Online and Offline" service mechanism, the "Online and Offline" dual service model and the "Arbitration Law Delivery" service have been introduced to provide special arbitration services for enterprises in the FTZ.

CIETAC signed a cooperation agreement with the Bangladesh International Arbitration Centre

On 16 June 2021, the China International Economic and Trade Arbitration Commission (CIETAC) and the Bangladesh International Arbitration Centre (BIAC) held an online signing ceremony for the Cooperation Agreement. Under the arrangements of the Cooperation Agreement, the two parties will cooperate intensively in various areas of international commercial arbitration, including joint promotion of international arbitration and other dispute resolution methods, mutual use of sitting facilities, the mutual nomination of arbitrators, joint organization of international arbitration seminars, academic salons and arbitration training, and jointly promote the development of the dispute resolution systems in China and Bangladesh.

China and Bangladesh have frequent trade and economic exchanges, with China being the largest trading partner of Bangladesh worldwide and Bangladesh being the second largest trading partner of China in South Asia. It is of great significance for CIETAC to establish a close cooperation with the Bangladesh International Arbitration Centre. The signing of the Cooperation Agreement has further enhanced the understanding between the two sides, and the two sides will use the Cooperation Agreement as a blueprint to develop more in-depth cooperation and promote international arbitration together.

Beijing No. 4 Intermediate People's Court.The Deregistered Shareholder of the Company as the successor shall be bound by the arbitration clauses signed between the Company and others.

Relevant Provisions:

Arbitration Law of the People’s Republic of China (Revision 2017)

Article 58:

Where the parties concerned can provide evidence disproving the arbitration award in any of the following circumstances, they may request a cancellation of the arbitration award by an intermediate People's Court at the place where the arbitration commission is located:

(1) there was no arbitration agreement;

(2) items for arbitration were not within the scope of the arbitration agreement or were those upon which the arbitration commission had no right to arbitrate;

(3) the establishment of the arbitration tribunal or arbitration procedures are in contravention of legal proceedings;

(4) the evidence upon which the arbitration award is made was counterfeit;

(5) the other party has concealed evidence to the degree that fairness has been affected;

(6) arbitrators have accepted bribes, resorted to deception for personal gain or perverted the course of justice by the award.

Where the People's Court has formed a collegiate bench and has examined and verified that the award was made under one of the aforesaid situations, it shall order the cancellation of the award.

Where the People's Court decides that it should make a ruling to the effect that there has been a violation of the public interest, it shall order the cancellation of the award.

Case Description:

The applicant, Song Jia, claimed that it requested to revoke the (2021) Jing Zhong Cai Zi No. 0408 award of Beijing Arbitration Commission (hereinafter referred to as Bei Zhong) in accordance with the law. Facts and Reasons:

1. Song Jia is not the subject of the Equity Transfer Agreement and there is no arbitration agreement between Song Jia and Media Company. On 30 January 2018, Media Company, and the outsider Beijing Naidu Enterprise Management Company Limited (hereinafter referred to as Naidu Company) signed the Equity Transfer Agreement No. HG001, which stipulates the arbitration clause in Article 13, paragraph 2. Song Jia was a shareholder of Naidu, not a party to the Equity Transfer Agreement. There is no arbitration agreement between Song Jia and Naidu.

2. The award in this case was wrongly applied to the law and did not correspond to the facts. The arbitral award referred to Articles 8 and 9 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Arbitration Law of the People's Republic of China, and found that Bei Zhong had jurisdiction over the case, which was an error in the application of law. This case is a liquidation matter, which is completely different from mergers, demergers, and transfer of debts, and should not be applied by reference to the above-mentioned legal provisions.

3. The signatures on the shareholders' meeting resolution and liquidation report on the liquidation matters and the shareholders' meeting resolution on the cancellation of the company were not signed by Song Jia himself, nor did he authorize others to sign, nor did Song Jia know about this matter.

The media company did not make a statement.

It was found after the hearing that:

Bei Zhong accepted the arbitration case of the dispute between Media Company and Li Chunlei and Song Jia arising from the aforesaid contract based on the arbitration application submitted by Media Company and the contract such as Equity Transfer Agreement signed between Media Company and Naidu Company on 30 January 2018, with the case number (2020) Jing Zhong Case No. 0758.

The arbitration request of Media Company is: 1. Request for an award for Li Chunlei and Song Jia to pay Media Company the amount of RMB2,630,000 for the transfer of equity and RMB1,126,000 for breach of contract .......

According to the ruling 0408, on 18 October 2019, Naidu Company held a shareholders' meeting and decided that: 1. all shareholders unanimously confirm the content of the liquidation report. 2. all shareholders unanimously confirm the cancellation of the company. 3. all shareholders shall be responsible for any outstanding matters after the cancellation of the company. On 18 October 2019, Naidu applied to the industrial and commercial registration authorities for the cancellation of Naidu and made a solemn commitment to truthfully submit relevant materials to the registration authorities to reflect the true situation and to be responsible for the authenticity of the substance of the applicant's materials, with the signature of Li Chunlei at the end. In addition, the liquidation report of Naidu Company dated 18 October 2019 reads: 1. debts and liabilities have been liquidated; 2. various taxes and employees' salaries have been settled; 3. a notice of cancellation has been published in Beijing Evening News newspaper on 6 August 2019. On 18 October 2019, the Notice of Approval of Cancellation issued by the Beijing Dongcheng District Market Supervision Administration stated that Naidu applied for cancellation of registration due to the resolution of dissolution and was approved by the Beijing Dongcheng District Market Supervision Administration and was granted to be cancelled. During the arbitration period, Song Jia did not object to the authenticity of Song Jia's signature in the shareholders' meeting resolution and liquidation report involved in the above-mentioned industrial and commercial registration information of Naidu.

On 18 February 2021, Bei Zhong issued Award No. 0408, which reads: 1. Li Chunlei and Song Jia paid RMB2,630,000 and RMB1,126,000 for breach of contract to Media Company for the transfer of equity; 2. Li Chunlei and Song Jia paid RMB100,000 to Media Company for the attorney's fees incurred by Media Company in connection with the case... ...

Court’s View:

The case was a case of revocation of domestic arbitration, and the Court examined the case in accordance with the provisions of Article 58 of the Arbitration Law of the People's Republic of China.

On the question of whether there was an arbitration agreement between Song Jia and the Media Company. According to the facts ascertained by the Arbitration Tribunal, Naidu and Media Company signed the Equity Transfer Agreement on 30 January 2018 to transfer the Subject Equity Interest, after which the parties completed the industrial and commercial transfer registration of the Subject Equity Interest, and in accordance with the Equity Transfer Agreement, Naidu shall pay the Equity Transfer Amount to Media Company. On 18 October 2019, Naidu was cancelled due to the resolution of dissolution. On the same day, the resolution of the shareholders' meeting made by Naidu promised that "the outstanding matters after the cancellation of the company shall be borne by all shareholders", and Song Jia also signed and confirmed on the resolution of the shareholders' meeting.

According to the above facts, Song Jia should be responsible for the repayment of the debts incurred before the cancellation of Naidu Company in accordance with his promise in the resolution of the shareholders' meeting. Therefore, Song Jia is the successor of the rights and obligations under the Equity Transfer Agreement of Naidu. With reference to Article 8 and Article 9 of the Interpretation of the Supreme People's Court on Several Issues Relating to the Application of the Arbitration Law of the People's Republic of China, based on Song Jia's succession to Naidu's rights and obligations under the Equity Transfer Agreement, the arbitration clause in the Equity Transfer Agreement The arbitration clause in the Equity Transfer Agreement is binding on Song Jia.

As Song Jia did not object to the authenticity of Song Jia's signature in the resolution of the shareholders' meeting and liquidation report in the industrial and commercial registration information of Naidu Company during the arbitration, Song Jia now denies the authenticity of his signature without providing corresponding evidence, and violates the principle of "estoppel", the Court does not grant his application for identification.

In conclusion, Song Jia's application for dismissal on the grounds that there was no arbitration agreement between her and the media company was not based on sufficient evidence and was not supported by the Court. In accordance with the provisions of Article 16 and Article 20 of the Arbitration Law of the People's Republic of China, the Court ruled as follows: Song Jia's application was revoked.

The Intermediate People's Court of Turpan City (Prefecture) of Xinjiang Uygur Autonomous Region:

Where the evidence is falsified, the court initiate a retrial ex officio and revoke the arbitration award again.

Relevant Provisions:

Arbitration Law of the People’s Republic of China (Revision 2017)：

Article 58:

Where the parties concerned can provide evidence disproving the arbitration award in any of the following circumstances, they may request a cancellation of the arbitration award by an intermediate People's Court at the place where the arbitration commission is located:

(1) there was no arbitration agreement;

(2) items for arbitration were not within the scope of the arbitration agreement or were those upon which the arbitration commission had no right to arbitrate;

(3) the establishment of the arbitration tribunal or arbitration procedures are in contravention of legal proceedings;

(4) the evidence upon which the arbitration award is made was counterfeit;

(5) the other party has concealed evidence to the degree that fairness has been affected;

(6) arbitrators have accepted bribes, resorted to deception for personal gain or perverted the course of justice by the award.

Where the People's Court has formed a collegiate bench and has examined and verified that the award was made under one of the aforesaid situations, it shall order the cancellation of the award.

Where the People's Court decides that it should make a ruling to the effect that there has been a violation of the public interest, it shall order the cancellation of the award.

Case Description:

The applicant Xinjiang Xingrui Zhiyuan Culture Media Co., Ltd (hereinafter referred to as: Xingrui Company), the applicant, and Ding Tao, the respondent, applied for the annulment of the arbitral award, and the civil ruling No. (2020) Xin 21 Min Te 5 of this Court has taken legal effect. After discussion and decision by the Judicial Committee of this Court, a civil ruling No. (2020) Xin 21 Min Supervision 2 was made on 5 December 2020 to re-examine the case. The Court formed a separate panel in accordance with the law to review the case. The review has now been completed.

Xingrui Company claimed that it requested the annulment of the Turpan Arbitration Commission's (2019) Tu Zhong Zi No. 37 award. Facts and Reasons: The Turpan Arbitration Commission issued Award No. 37 (2019) Tu Zhong Zi in relation to a dispute between Xingrui Company and Ding Tao over a construction contract. Xingrui Company did not accept the award, claiming that the key evidence on which the award was based and the only evidence agreed upon, such as "any party may submit to the Turpan Arbitration Commission for arbitration", was fabricated by Ding Tao. Therefore, the Turpan Central Court applied for the annulment of the Turpan Arbitration Commission's Award No. 37 (2019) Tu Zhong Zi.

After the retrial review, it was found that:

On 22 September 2020, the Turpan Arbitration Commission made an award (2019) Turpan Zhong Zi No. 37: Xingrui Company paid Ding Tao the outstanding amount of RMB 216,060.16 for labour fees (the remaining interest was calculated at 4.875% per month of interest on loans at the same period of the bank from 12 November 2019 until it was paid in full).

On the question of whether there was an arbitration agreement between the parties. The last part of the Project Settlement Statement submitted by Ding Tao agreed to "arbitration settlement by the Turpan Arbitration Commission". In this regard, Xingrui Company considered that the two parties did not agree on the arbitration jurisdiction, the part was added by Ding Tao for the second time, and formed after its seal. After investigation, Ding Tao prosecution submitted the "engineering settlement" copy and submitted to the appraisal institution of the original there is a difference, copy of the Xingrui company seal above the cross at the "any" "he" "party " is complete without any part missing, but in the photo of the original copy of the Engineering Settlement Statement in the appraisal opinion, it shows that "Ren" "He" "Fang "and Xingrui company seal crossed with missing, and Southwest University of Political Science and Law Judicial Appraisal Center after identification that "...... the above crossed parts after artificial scraping processing (see "picture description 4")" "The examination material handwriting 4 (including arbitration agreement) is added (secondary) printing output formation ...... red seal formed in the same part of the examination material handwriting 4 before the crossed handwriting", plus the case in question "engineering settlement" has been kept by Ding Tao himself, for the formation of scratches and The fact that the second addition is added by Xingrui Ding Tao should bear the corresponding burden of proof. Therefore, only based on the existing evidence cannot confirm that the two sides have reached an arbitration agreement.

Court’s View:

The court held in the retrial that: The main evidence on which the Turpan Arbitration Commission made the (2019) Tu Zhong Zi No. 37 Award was based was the Engineering Settlement Sheet, so whether the Engineering Settlement Sheet in question was a forgery was the focus of the examination of the case.

During the arbitration hearing, the Turpan Arbitration Commission, upon the application of Xingrui, commissioned the Judicial Appraisal Centre of Southwest University of Political Science and Law to appraise the relevant contents of the Engineering Settlement Statement in accordance with the law. The appraisal opinion No. 6345 [2019] issued by the Centre was clear that the part of the Engineering Settlement Sheet on the "calculation of three prices" and the agreement of the arbitration clause were all formed by adding (second) printing output and after the formation of the seal of Xingrui, so the Turpan Arbitration Commission made The main evidence on which the (2019) Turpan Arbitration Committee's award No. 37 was based and the agreement to settle the dispute by arbitration were inaccurate, and the application of Xingrui to set aside the arbitral award was justified and should be supported.

This case was discussed and decided by the Sixth Judicial Committee of the Court, and in accordance with Articles 58, 59 and 60 of the Arbitration Law of the People's Republic of China, it was ruled as follows: The arbitral award (Tu Zhong Zi [2019] No.37) rendered by the Turpan Arbitration Commission was revoked.

This Newsletter is produced by ZLWD International Business Committee and for your reference only.

Editorial Board: Wei LIN  Philip DUAN  Ellen WANG  Lingling GUO

Yuming Li  Ning Ning  Yu Zhuan

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