ICC Will Release the Incoterms®2020 in September

The International Chamber of Commerce (“ICC”) is expected to release the Incoterms®2020 early in September this year, with the new terms taking effect from the 1st of January 2020. In order to help users around the world understand the rules, preparations are under way to translate Incoterms® 2020 into 27 languages.

ICC will launch a dedicated Incoterms®2020 mobile application (IOS and android) to make it easier for users to access basic information on general rules, as well as providing a platform for other content including news updates, event information and training opportunities. The application also provides users with the ability to contact verified experts, providing real-time advice for enterprises facing pressing Incoterms®2020 issues. In addition, ICC has made several of the application’s features available offline, including a digital version of Incoterms®2020 to facilitate timely guidance.

Supreme People’s Court:

The Local High Court Shall Apply for Approval Before Refusing to Enforce the Arbitration Award on Grounds of Conflict with Social and Public Interest

Relevant Provision:

Article 237 of the Civil Procedural Law of the People’s Republic of China provides, “In the case of an arbitral award of an arbitration institution established pursuant to the law, where one party does not perform, the counterparty may apply to a People’s Court which has jurisdiction for enforcement. The People’s Court which accepts the application shall carry out enforcement. Where the respondent presents evidence to prove that the arbitral award falls under any of the following circumstances, upon examination and verification by the collegiate formed by the People’s Court, a ruling on non-enforcement shall be made: (1) The parties concerned have not included an arbitration clause in the contract or have not entered into a written arbitration agreement subsequently; (2) The arbitration matter does not fall under the scope of the arbitration agreement or the arbitration institution has no right to carry out arbitration; (3) The composition of the arbitral tribunal or the arbitration procedures is/are in violation of statutory procedures; (4) The evidence on which the arbitral award is based is forged; (5) The counterparty has concealed evidence which has an impact on making a fair arbitral award from the arbitration institution; or (6) The arbitrators have committed bribery or favouritism or perverted the law in making the arbitral award when carrying out arbitration of the case. Where the People’s Court rules that enforcement of the arbitral award is against the public interest, a ruling of non-enforcement shall be made.”

Article 3 of the Provisions of the Supreme People’s Court on Issues relating to the Reporting and Review of Cases Involving Judicial Review of Arbitration provides, “For a non-foreign-related case involving judicial review of arbitration or a case not involving Hong Kong, Macao or Taiwan Region as provided for in Paragraph 2, Article 2 hereof, if the high people’s court intends to agree with the intermediate people’s court or the specialized people’s court on the proposed ruling of the invalidity of an arbitral agreement, or not to enforce or to set aside an arbitral award issued by a domestic arbitration institution, under the following circumstances, it shall report to the Supreme People’s Court for review; and the final ruling shall be rendered based on the review opinions given by the Supreme People’s Court. (1) The domiciles of the parties to the case involving judicial review of arbitration are in different provincial administrative regions; (2) Not to enforce or to set aside the arbitral award issued by a domestic arbitration institution on ground of in conflict with social and public interests.”

With respect to the contract dispute between Aksu Shunlong Materials Co., Ltd. and Aksu Regional Transit Real Estate Development Co., Ltd. (2018) Zui Gao Fa Zhi Jian No.177, Aksu Shunlong Materials Co., Ltd. has filed a complaint with the Supreme People’s Court against the decision of the High Court Xinjiang Uygur Autonomous Region (“Xinjiang High Court”) not to enforce the arbitration award. The key issue was whether the local high court may, on grounds of in conflict with social and public interest, refuse to enforce or set aside an arbitration award of the arbitration institution in the mainland of China without the approval of the Supreme People’s Court.

Court’s View:

The Supreme People’s Court set aside the Xinjiang High Court’s decision of not to enforce the arbitral award for the following reasons:

For a non-foreign-related case involving judicial review of arbitration or a case not involving Hong Kong, Macao or Taiwan Region, if the high people’s court intends to refuse enforcement or to set aside an arbitral award issued by an arbitration institution in the mainland of China, it shall report to the Supreme People’s Court for approval, and the final ruling shall be rendered based on the opinions given by the Supreme People’s Court. In this case, Xinjiang High Court failed to report to the Supreme People’s Court for approval before refusing to enforce the arbitration award on grounds of conflict with social and public interests, therefore not in line with the correct legal procedure.

“Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters” was Adopted at the Hague Conference on Private International Law

On July 2, 2019, the closing ceremony of the 22nd Diplomatic Session of the Hague Conference on Private International Law was held at the Peace Palace in the Hague, marking the final conclusion of negotiations on the “Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters” (the “Convention”). Among them, Xu Hong, Vice President of the conference, head of the Chinese delegation and ambassador to the Netherlands, as well as members of the Chinese delegation and about 200 participants from various countries attended the closing ceremony and signed the final document of the conference.

The Convention is the first international instrument to comprehensively establish uniform rules for the international circulation of civil and commercial matters, and systematically stipulates the scope and conditions for the recognition and implementation of foreign civil and commercial matters. The adoption of the Convention will provide more high-quality, efficient and low-cost judicial guarantee for international civil and commercial activities, including international trade and cross-border commerce, and have a far-reaching impact on international civil and commercial judicial cooperation.

In general, the Convention is similar to the “Convention on the Recognition and Enforcement of Foreign Arbitral Awards”, also known as the “New York Convention”, and has four chapters and 32 articles. In principle, it requires member state parties (requested state) to recognize and enforce civil and commercial judgments rendered by courts of other states parties (state of origin), except in cases of specific and express exclusion. This is done with the objective to reduce cross-border litigation costs and improve the convenience of the judicial system between states parties. The main contents of the Convention are as follows:

1.It only applies to civil and commercial matters, which does not include tax, tariff and other administrative matters. In addition, the Convention lists 17 matters that are excluded from the scope of the Convention, including the rights and legal capacity of natural persons, wills and inheritance, passenger and freight transport, privacy, antitrust and competition (except in certain circumstances).

2.The Convention has no substantive review in principle. This is clearly stated in Article 4 of the Convention. The strict restriction of entity censorship is a common rule of almost all international conventions or bilateral treaties in relation to civil and commercial legal documents or arbitration awards that recognize and enforce this. Its main purpose is to avoid repeated discretion and contradictory judgment on the substantive facts and legal issues, and reduce the possibility of refusal to recognize and implement the judgment. Nevertheless, the Convention provides the courts of requested state limited discretion of substantive review for the purposes of applying the Convention. For example, under Article 7, the court of the requested state may conduct a substantive review of the case in determining whether the decision violates the public policy of the state.

3.In terms of jurisdiction, Article 5 of the Convention provides the basis of jurisdiction for recognition and enforcement of judgments. Article 6 specifies the exclusive jurisdiction over the real right of real-estate. As long as the case meets any of the 13 conditions in Article 5, the relevant judgment can be recognized and enforced. The clause actually determines the basis for enforcement from the perspective of the national court on the jurisdiction of the original case, which is why it is called “Indirect Grounds of Jurisdiction”. This provision is in line with the practice of international justice, and assists in avoiding the possibility that parties can select the courts, with the aim that disputes will be settled using a stable litigation mechanism.

4.Article 7 of the Convention, which provides for conditions under which recognition and enforcement may be refused, constitutes the most important component of the Convention. The circumstances specified therein include: (1) the procedural issues concerning service of documents; (2) judgments obtained by fraud; (3) conflicts with public policy of the requested state; (4) as agreed or appointed, the court of the country making the judgment shall have no jurisdiction over the dispute; (5) the judgment of the requested state in conflict with the dispute of the same subject; And (6) previous judgements by other member states over the same dispute. In addition, the article also stipulates that “Recognition or enforcement may be postponed or refused if proceedings between the same parties on the same subject matter are pending before a court of the requested State, where – (a) the courts of the requested State shall accept the case before the Court of First Instance; and (b) there is a close connection between the dispute and the requested State.”. The Convention uses the phrase “may” rather than “shall” to reject, which in effect increases the discretion of the courts of the executing country to achieve greater enforcement of foreign judgements. In addition, from judging the reasons for refusing to recognize and implement, the Convention seems to take a relatively restrained position and only sets the reasons for denying effectiveness from the perspective of procedural defects, public policies and jurisdiction, which could limit the reasons for refusing to a certain extent and is more conducive to the recognition and implementation of the judgment.

5.Article 10 of the Convention provides for liquidated damages, if the damages are determined by a foreign court in the state of origin, including exemplary or punitive damages, and do not compensate a party for actual loss or harm suffered, the court in the requested state may, within this scope, refuse to recognize and enforce the judgment. This article may hope to balance the difference of liquidated damages standards between Anglo-American law system and Continental law system countries, adjusting the factors that hinder the contracting of the Convention caused by the differences in legislative and judicial concepts, and thus attract more countries to join the Convention.

6.With regard to the requirements when making an application for enforcement, Article 12 of the Convention stipulates the documents that the applicant for enforcement must present to the court applied for. However, the Convention does not provide for the corresponding consequences if the documents is not provided as requested. Based on previous experience in handling cross-border judgment enforcement, in the absence of such documents, the application for recognition and enforcement is more likely to be rejected and fail to receive the support of the court.