"The Singapore Experience vs. Shanghai Style Arbitration"

Shanghai and Singapore join forces to build an international arbitration city circle in the Asia Pacific

On 6 August 2021, the Shanghai International Arbitration Centre (SHIAC) and the Singapore International Arbitration Centre (SIAC) co-hosted the "2021 Shanghai-Singapore - The International Arbitration Hubs in the Asian Pacific Areas" seminar in Shanghai. The theme of the seminar was " The International Arbitration Hubs in the Asian Pacific Areas", with discussions on the recent development of arbitration in China and Singapore, the creation of arbitration venues and hot topics in international arbitration practice, with the aim of promoting comprehensive and in-depth exchanges and cooperation between China and Singapore in international commercial arbitration.

Mr. Ma Yi, Deputy Director of SHIAC said that the strengthening of international arbitration exchanges between Shanghai and Singapore is an important task undertaken by both sides under the Shanghai-Singapore Council mechanism. The continuous development of international commercial arbitration in both places has served as a positive model for regional and international cooperation between the two sides. At present, Shanghai has developed into the mainland city with the largest number of arbitration institutions and the most abundant arbitration resources in China. Driven by the ever-improving arbitration rules in Shanghai and Singapore, Shanghai will become a popular place for arbitration in China in the future.

The seminar pointed out that China should further integrate the arbitration forces in the Yangtze River Delta, benchmark them against the Regional Comprehensive Economic Partnership Agreement, conduct stress tests within the Yangtze River Delta Free Trade Zone based on the key elements of this agreement, and develop experience and practices that lead the development of the industry and are replicable and replicable, in order to help promote the establishment of the Asia-Pacific Arbitration Union.

The formal establishment of The Institute of International

 Arbitration of The China International Economic and Trade 

Arbitration Commission

The Institute of International Arbitration of CIETAC ("Institute") was officially established on 20 August. To further enhance the theory and practice of arbitration in China, promote the building of China's foreign-related legal talent, facilitate domestic and international arbitration exchanges, contribute to the "Eastern experience" of China's arbitration rule of law, and serve the "One Belt, One Road" construction.

With the theme of "Arbitration and Other Alternative Dispute Resolution", the Institute relies on the rich expert resources of the CIETAC. The Institute is a new comprehensive research platform with digitalization, informatization, and wisdom, which integrates the teaching of arbitration courses, training of arbitration talents, scientific research on arbitration, and construction of arbitration rule of law. The Institute, which operates both online and offline, aims to promote synergy and innovation between the theoretical and practical sectors of arbitration, to jointly build a world-class arbitration research institution, talent training base, and dispute resolution thinks tank, and to contribute to the continuous development of arbitration in China.

The first sports commercial arbitration court was established in China

In July 2021, the inauguration ceremony of the Xi'an Arbitration Commission's Sports and Commercial Arbitration Court and the Forum on Building the Rule of Law in Sports were held at Chanba, Xi'an.

Xu Wenxin, Director of the Xi'an Arbitration Commission, said that the Commission will bring together and integrate sports and legal arbitration professionals and quality resources, build a professional platform, continuously improve the mechanism for resolving sports and commercial disputes, combine the core work of building the Xi'an International Arbitration Centre, and aim to develop in line with international sports arbitration rules, so as to give full play to the advantages of arbitration in handling sports and commercial disputes.

The Xi'an Arbitration Commission Sports Commercial Arbitration Court is the first professional sports arbitration court in China. Its establishment not only fills the gap of a professional arbitration institution for sports-related commercial disputes in China, but also serves the practical need for China's sports dispute resolution to be in line with international practices, and is an objective need for China's development from a large sports country to a strong sports country.

No. 1 Intermediate People's Court:

Where the parties to a non-foreign-related case agree to submit the relevant dispute to the Hong Kong International Arbitration Centre for arbitration, the arbitration clause shall be deemed invalid.

Relevant Provisions:

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

Article 17. An arbitration agreement shall be deemed invalid in any of the following circumstances:

(1) items provided for arbitration exceed the legally regulated scope of arbitration; ……

Article 20. Where the parties concerned have a differing opinion upon the validity of an arbitration agreement, a request may be made for an award to be made by the arbitration commission or a judgment made by the People's Court. Where one party requests an award to be made by the arbitration commission and the other party requests a judgment from the People's Court, it shall be judged by the People's Court.

Where the parties concerned have a differing opinion upon the validity of an arbitration agreement, this shall be raised before the arbitration tribunal commences the first hearing.

The Supreme People's Court (2012) Min Si Tu Zi No. 2 "Reply to the request for instructions on the case of Jiangsu Aerospace Wanyuan Wind Power Equipment Manufacturing Co., Ltd. and Elm Wind Power Blade Products (Tianjin) Co., Ltd.'s application for confirmation of the validity of the arbitration agreement dispute"：

"Since the arbitration jurisdiction is a power granted by the law and no law in China contains any provision that the parties may submit their disputes without foreign elements to foreign arbitration institutions or arbitration temporarily outside China, there is no legal basis for the parties in this case to submit their disputes to the International Chamber of Commerce for arbitration."

Case Description:

The Applicant, Tianjin Municipal Waste Separation and Disposal Centre, is an institution under the Tianjin Municipal Environment Management Committee of the People's Republic of China, and the Respondent, Tianjin Dama South Environmental Protection Engineering Co., Ltd. is a Sino-foreign cooperative enterprise established under the laws of the People's Republic of China and domiciled in Nanhe Industrial Zone, Xiqing District, Tianjin. On 31 October 2004, the parties signed the Tianjin Panlou Domestic Waste Transfer Station Operation Agreement (the “Agreement”), Article 21 thereof stipulates that the formation, validity, interpretation and performance of this Agreement and the resolution of disputes shall be governed by the laws of the People's Republic of China. However, where there is no applicable PRC Law in respect of any specific matter relating to this Agreement, reference shall be made to general international practice. Article 22 provides that, if any dispute arising from the implementation of, or in connection with, this Agreement, cannot be resolved through consultation between the Parties within ninety (90) days after one Party's receipt of notice of such dispute from the other Party, any other Party may refer the dispute to the Hong Kong International Arbitration Centre (“HKIAC”) for arbitration. The Agreement was entered into in Tianjin.

On 17 October 2020, the Respondent applied to the HKIAC for arbitration. On 4 January 2021, the Applicant applied to the court to confirm that the arbitration agreement was invalid.

Court’s View:

The Court is of the view that the domicile of the Respondent in this case is located in Xiqing District, Tianjin, and the Applicant applied for the confirmation of the arbitration agreement as invalid, and the Court has jurisdiction. The arbitration clause entered into by the parties in the Agreement agreed that the relevant disputed matters be submitted to the HKIAC for arbitration, but both parties were Chinese legal persons, the subject matter was in China, and the Agreement was also concluded and performed in China, without the constitutive elements of foreign-related civil relations, and the Agreement was not foreign-related. The law applicable to the Agreement and the arbitration clause contained therein shall be determined to be Chinese law, whether or not the parties have expressly agreed to it. As arbitration jurisdiction is a power conferred by law, and Chinese law does not provide for parties to refer disputes that do not have foreign-related elements to arbitration institutions outside China, there is no legal basis for the parties to agree to submit the relevant disputes to arbitration by the HKIAC, and the arbitration clause in question should be held invalid.

In view of the above, in accordance with Articles 17(1) and 20 of the Arbitration Law of the People's Republic of China, it was ruled as follows: The arbitration clause agreed in the Agreement signed by and between the Applicant, Tianjin Municipal Waste Separation and Disposal Centre and the Respondent, Tianjin Dama South Environmental Protection Engineering Co., Ltd. shall be deemed as invalid.

Shanghai No. 1 Intermediate People's Court:

Where the law does not authorize the setting aside of an arbitral mediation, the court shall not exercise it beyond the provisions of the law.

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:

Shanghai No. 1 Intermediate People's Court filed the case on March 24, 2021 for the application of Shanghai Baoyan Seafood Catering Management Co., Ltd. ("Baoyan") and the respondent Yingzhong Tongda (Tianjin) Information Service Co., Ltd. ("Yingzhong") for revocation of arbitral awards and conducted a review.

The applicant, Bao Yan, claimed that the Shanghai Arbitration Commission (2019) Shanghai Zhong Case No. 4318 Mediation Letter violated the principle of voluntariness. During the arbitration of the case, the legal representative of the claimant received harassing phone calls, which made him make a wrong decision when he was physically and mentally exhausted, in violation of the principle of voluntariness; the content of the conciliation letter violated the law; the arbitration procedure violated the statutory procedure, and during the hearing of the arbitration case, the claimant applied for the addition of two other subjects in the contract, but the arbitral tribunal did not grant it, in violation of the statutory procedure. Accordingly, Bao Yan Company requested the annulment of the conciliation letter No. 4318 of (2019) Shanghai Zhong Case, based on the provisions of Article 58(1)(5) of the Arbitration Law of China.

The Respondent, Yingzhong defended that according to laws, only the arbitral award could be revoked. However, the arbitral tribunal closed the case based on mediation, and the Applicant Baoyan had no right to apply for revocation of the Mediation Agreement. Besides, the Applicant Baoyan had performed its payment obligation under the Mediation Agreement. Therefore, the claim of the Applicant Baoyan should be rejected.

On 6 December 2019, Yingzhong Company applied for arbitration to Shanghai Arbitration Committee according to the arbitration clause in the Factoring Financing Service Agreement for Catering Optimization Project signed by Yingzhong Company and Baoyan Company as well as other two outsiders, requesting an award that: 1. BaoYan Company returns the account receivable of RMB 1 million; 2. BaoYan Company pays liquidated damages (based on RMB 1 million, from 22 March 2019 to the date of actual settlement, calculated at the rate of one-thousandth of a percent per day); 3. Bao Yan Company to bear the attorney's fees of RMB 10,000. The Shanghai Arbitration Commission accepted the case on 17 December 2019.

On 29 December 2020, under the auspices of the Arbitration Tribunal, the Applicant, Bao Yan Company, and the Respondent, Yingzhong Company, voluntarily reached a Mediation Agreement in respect of the dispute in the case. On December 30, 2020, the Shanghai Arbitration Commission issued a mediation document [2019] Hu Zhong An Zi No.4318, confirming the contents of the mediation agreement signed by both parties.

On January 29, 2021, the Applicant Baoyan Company performed its payment obligation in the Mediation Agreement by paying RMB 856,434.25 to the Respondent Yingzhong Company on January 29, 2021.

Court’s View:

According to Article 58 of the Arbitration Law of the People's Republic of China, "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". The above-mentioned article only provides that an arbitral award may be set aside by a ruling of the people's court if the circumstances listed in the article are met, but it does not provide that the parties may apply to the people's court to set aside the arbitration mediation. The People's Court's judicial supervision of arbitration is based on the principle of limited supervision, and where the law does not authorize the court to exercise the right to set aside an arbitral conciliation, the court may not do so beyond the provisions of the law. Accordingly, the applicant's application to the Court for the annulment of the arbitration mediation lacked a legal basis and the Court could not support it. In view of the fact that the basis for examination of the case was not available, the Court did not examine the various grounds for annulment raised by the applicant.

Accordingly, in accordance with the provisions of Article 60 of the Arbitration Law of the People's Republic of China, it is ruled as follows: the application of the Applicant Shanghai Baoyan Seafood Catering Co., Ltd is rejected.

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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