"Shanghai Arbitration Association Interim Arbitration Rules" Released

On July 30, 2024, the "Shanghai Arbitration Association Interim Arbitration Rules" were approved at the fifth meeting of the second council of the Shanghai Arbitration Association and released on August 1.

To promote the establishment of a globally-oriented Asia-Pacific arbitration center in Shanghai and create a top-notch business environment characterized by marketization, legal compliance, and internationalization, the Shanghai Arbitration Association has actively advanced innovative practices in arbitration mechanisms. These rules were formulated based on the development needs of arbitration in Shanghai, with reference to international conventions, to be optionally applied by parties involved.

The rules consist of five chapters and 58 articles. Chapter One, General Provisions, contains 10 articles that clarify the basic principles of interim arbitration and features specific to interim arbitration, such as the interim arbitration agreement, place of arbitration, and designated institution. It also sets forth general provisions on service and time limits, arbitration language, confidentiality, and other key aspects of interim arbitration. Chapter Two, Arbitration Procedure, is divided into three sections: Commencement of Arbitration, Constitution of the Arbitral Tribunal, and Hearing, comprising 27 articles in total. Chapter Three, Awards (including decisions), has 6 articles that specify the time limits for awards, the categories of awards and decisions made by the tribunal, and provide explanations on applicable law, interpretation and correction of awards, and supplementary awards. Chapter Four, Expedited Procedures, consists of 6 articles, specifying the scope of cases applicable to expedited procedures and making special provisions on the respondent’s reply period, the constitution and time limits of the interim tribunal, the hearing method, and the award time limits in expedited procedures. Chapter Five, Miscellaneous Provisions, has 9 articles, mainly covering arbitration fees, case file preservation, exemption principles, interpretation authority, and the effective date of the rules. It also includes provisions on arbitration cases involving third-party funding. The appendices provide samples of interim arbitration clauses and arbitrator declaration forms.

CACIA Award Recognized and Enforced in China for the First Time

The Intermediate People's Court of Honghe Hani and Yi Autonomous Prefecture in Yunnan Province, China, recently issued a civil ruling recognizing and enforcing an arbitration award from the Bishkek International Court of Commercial Arbitration and Energy (also known as the Central Asian International Arbitration Court, or CACIA). This case involved an arbitral award in the context of a dispute between a company in Hong Kong, China, and a company in the Honghe Area of the Yunnan Pilot Free Trade Zone, China, in which the parties had opted to apply for arbitration at the CACIA in accordance with the dispute resolution clause of the contract, and the applicant had requested that the Chinese courts recognise and enforce the award made at the CACIA. Both China and the Kyrgyz Republic are signatories to the "Convention on the Recognition and Enforcement of Foreign Arbitral Awards" (hereinafter referred to as the "Convention"). According to the Convention and the Civil Procedure Law of the People’s Republic of China, the applicants are entitled to seek recognition and enforcement of the award in Chinese courts. The materials submitted by the applicants were duly notarized or certified, meeting the requirements of Article 4 of the Convention. After examination, it was determined that the arbitration award did not fall under the circumstances listed in Article 5 of the Convention that would preclude recognition and enforcement, nor did it violate China’s reservations and clauses upon joining the Convention. Therefore, the award should be recognized and enforced.

The issuance and effective enforcement of this civil ruling mark the first time that a CACIA arbitration award has been recognized and enforced in China. This decision reflects the Chinese courts' full respect for international arbitration awards and demonstrates China’s good faith compliance with international treaty obligations. It also highlights the effective integration of China’s judicial system with international arbitration mechanisms. This development is of great significance for promoting cooperation between CACIA and Free Trade Zones and related arbitration institutions in China, enhancing economic and trade cooperation between the Central Asia region and China and Hong Kong, and supporting the maintenance of international trade order.

Beijing International Dispute Resolution Development Center Officially Established

On August 21, the Beijing International Dispute Resolution Development Center (hereinafter referred to as the "Development Center"), the operational entity for the International Commercial Arbitration Center (Beijing), was officially established. According to the deployment of tasks for building the International Commercial Arbitration Center and the newly revised Charter, the Development Center will play a crucial role in fully supporting and ensuring the construction of the International Commercial Arbitration Center.

The Development Center, initiated by the Beijing Arbitration Commission, is a private non-enterprise legal entity under the supervision of the Beijing Municipal Bureau of Justice. Its main functions are to support and ensure the "concentrated development of the arbitration industry in Beijing, collaborative development of arbitration institutions based in Beijing, and the innovative development of international commercial arbitration."

In April 2024, the Beijing Rule of Law Committee issued the "Implementation Plan for the Construction of the International Commercial Arbitration Center (Beijing)," designating the Development Center as the operational entity for the Center’s platform. The Development Center will support the implementation of the Center's "Five Major Functions": facilitating exchanges and cooperation, aggregating resources, promoting arbitration, providing shared services, and developing a talent think tank. Moving forward, the Development Center will leverage the operational platform to establish four major brands: the "Beijing Arbitration International Reception Room," the "International Shared Hearing Center," a "Full-Chain Commercial Dispute Resolution Mechanism," and a "Foreign Legal Services Talent Training Base." These initiatives will serve the construction of the International Commercial Arbitration Center and lead the high-quality development of arbitration in China.

Shizuishan Intermediate People's Court:

Arbitral Awards Made within the Territory by a Foreign Arbitral Institution shall be Applied for Enforcement as Foreign-related Arbitral Awards in the Mainland.

Legal Basis:

"Civil Procedure Law of the People's Republic of China"

Article 304

Where an arbitral award made outside the People's Republic of China which has come into legal effect requires recognition and enforcement by a people's court, a litigant may apply directly to the intermediate people's court at the domicile of the person subject to enforcement or the location of its properties. Where the domicile of the person subject to enforcement or the properties are not located in the People's Republic of China, the litigant may apply to the intermediate people's court at the domicile of the applicant or the location which has an appropriate connection with the ruling of the dispute. The people's court shall handle the matter pursuant to the international treaty concluded or acceded to by the People's Republic of China or under the principle of reciprocity.

Case Description：

T Company, a company from the United Arab Emirates, and Ningxia B Company, a Chinese company, entered into a "Low Sulfur Petroleum Coke Contract" numbered BYPxxx (hereinafter referred to as the "Contract"). Article 20 of the contract stipulated that any disputes arising during the performance of the agreement should be resolved amicably. If amicable resolution fails, the dispute should be finally resolved by three arbitrators under the "ICC Mediation and Arbitration Rules," with Beijing, China, as the seat of arbitration and English as the language of arbitration. A dispute arose between the parties, and T Company applied for arbitration with the ICC Court of Arbitration under Article 20 of the contract. On November 9, 2021, the tribunal rendered award No. 26041/PTA/XZG (hereinafter referred to as the "Arbitration Award") in Beijing, ordering B Company to pay T Company €105,000, plus interest for late payment, legal fees of €9,000, and arbitration fees of $23,000. However, B Company did not comply with the Arbitration Award. T Company then applied to the Shizuishan Intermediate People's Court (hereinafter referred to as the "Court") for recognition and enforcement of the Arbitration Award. On February 18, 2024, T Company amended its application, namely, it withdrew its application for recognition of the Arbitration Award and changed it to an application for the court to enforce the payment element of the Arbitration Award according to law.

B Company argued that T Company failed to submit the necessary documents required for the recognition and enforcement of a foreign arbitration award, specifically the Chinese translation of the award certified by a Chinese consulate or embassy abroad or notarized by a Chinese notary public. Additionally, B Company pointed out multiple violations in the arbitration procedure, including the tribunal’s failure to adhere to the contractual agreement of having three arbitrators, as the case was heard by only one arbitrator; and that the arbitration documents were served solely via email, depriving B Company of its right to a defense. B Company further contended that it had fulfilled the refund agreement reached with T Company, and that the failure to perform the contract was not B Company’s responsibility but rather due to T Company’s delayed payment and inspection issues. B Company argued that the arbitration award violated the principle of fairness and should not be recognized or enforced.

Court's View:

The Court held that the Arbitration Award in question was issued by the ICC in Beijing, China, and constitutes an award rendered by a foreign arbitration institution within China. According to Article 290 of the Civil Procedure Law of the People's Republic of China, if the respondent B Company does not comply with the award, the applicant T Company may directly apply to the intermediate people's court in the location of B Company’s domicile or where its property is located for enforcement, without resorting to the procedures for recognition and enforcement of foreign arbitration awards. During the review process, the applicant modified its request, withdrew the application for recognition of the Arbitration Award, and instead sought enforcement of the specific relief awarded. Therefore, the case should not be reviewed as one for recognition and enforcement of a foreign arbitration award, and the review process should be terminated. The court advised the applicant to directly file an enforcement application with the Enforcement Bureau in accordance with the contents of the award.

In conclusion, pursuant to the provisions of article 157, paragraph 1, subparagraph 11, article 290 and article 304 of the Civil Procedure Law of the People's Republic of China, the Shizuishan Intermediate People's Court ruled to terminate the review of the case.

Lao Court: Refusal to Recognize Macau ICC Arbitration Award to Uphold National Judicial Authority

Case Description：

Sanum Company, a gambling company established in Macau, entered into a series of agreements with Laos's ST Group, Mr. Sithat Xaysoulivong, and ST Vegas Company (hereinafter referred to as "ST Group and others") for the joint construction and operation of slot machine game rooms and casinos. In August 2016, the Singapore International Arbitration Centre (SIAC) ruled that ST Group and others, had breached the contract and awarded Sanum Company $200 million in compensation, along with interest and arbitration costs. Sanum applied to the High Court of Singapore for enforcement of the arbitral award, but ST Group and others asked the court to refuse enforcement, and the High Court of Singapore held that the place of arbitration should be Macau, not Singapore, in accordance with the agreement between the parties and ruled that the award should not be enforced, and the Court of Appeal of Singapore upheld the High Court's judgement, although the Lao parties did not apply for the setting aside of the award of the SIAC in the case in question.

Importantly, the Lao courts have already dealt with relevant disputes between Sanum and the ST Group and others through the judgement procedures of the first instance, the Court of Appeal and the Supreme Court, with final judgements, and in 2012 and 2016, the Lao courts issued judgements in disputes relating to the joint venture agreement and the master agreement, respectively, which ended the legal relationship between the parties and made specific arrangements for the relevant property and investment licences. The Singapore Court of Appeal upheld the High Court's decision. In December 2019, Sanum Company submitted a mediation application to the International Chamber of Commerce (ICC) in Macau, and in January 2020, the parties commenced arbitration proceedings. In October 2023, the tribunal issued award No. 25100/PTA/XZG, ordering ST Group and others, to compensate Sanum Company $170 million, along with interest and arbitration fees. Sanum Company applied to the Lao court for recognition of the award under Article 52 of the 2010 Law on Economic Dispute Resolution, Articles 363 and 364 of the 2012 Civil Procedure Law, and the New York Convention.

ST Group and others, opposed the application, citing the following reasons: 1. The disputes between the parties had already been fully adjudicated by the Lao courts.; 2. The SIAC award was deemed by the Lao courts to be in violation of the Constitution and laws; 3. The ICC arbitration award in Macau contradicted the final judgment already rendered by the Lao courts; 4. The award No. 25100/PTA/XZG violated peace and public order, the Lao Constitution, and laws, and was a duplicative judgment of the Lao courts' final ruling.

Court's View：

The court held that the disputes between Sanum Company and ST Group and others had been finally adjudicated by the Lao courts through the judgement procedures of the first instance, the Court of Appeal and the Supreme Court. Sanum Company had participated in the proceedings of all three court levels without objecting to the jurisdiction of the Lao courts. Additionally, Sanum Company had previously applied to the Lao court in 2017 for recognition of the August 2016 SIAC award, but that application was not supported. The ICC award No. 25100/PTA/XZG, issued in Macau SAR, was based on the contents and evidence of the case that had already been tried and finally adjudicated by the Lao courts, thus violating Article 185(2) of the 2012 Lao Civil Procedure Law, which prohibits re-arbitration after a final court judgment has been rendered, deeming it a procedural violation. Furthermore, the main agreement signed by the parties in May 2007 stipulated that if either party was dissatisfied with the Lao court's mediation and judgment, it could seek further mediation or arbitration from an international dispute resolution body. This clause was found to violate Article 10(3) of the 2012 Lao Civil Procedure Law, which requires the object of a contract to be lawful, and thus it was deemed invalid. According to Article 16(2) of the 2018 Lao Economic Dispute Resolution Law, disputes must be tried or finally judged by the courts, and arbitration without court review is invalid. Article 98 of the 2015 Lao Constitution mandates that all organizations and citizens must respect final court judgments and strictly enforce them.

In conclusion, the Lao court ruled that award No. 25100/PTA/XZG violated the Lao Constitution and the 2012 Civil Procedure Law, among other legal provisions, and could not be recognized.