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International Arbitration Newsletter January 2021

Date and time :2021-02-01
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Release of the Work Summary for 2020 and Work Plan for 2021 by the China International Economic and Trade Arbitration Commission

The China International Economic and Trade Arbitration Commission (hereinafter referred to as the CIETAC) released its 2020 work summary and 2021 work plan on January 29, 2021.

The report pointed out that in 2020, the CIETAC accepted 3615 cases, a year-on-year growth of 8.5%, and the disputed amount totaled 112.13 billion yuan, which exceeded 100 billion. The types of disputes over the cases are diversified, with 21 types in total, and new types of cases involving equity investment, equity transfer, financial innovation and disputes over service contracts are increasing. In 2021, CIETAC will focus on the “14th Five-Year Plan” and the long-term goal of 2035, face the important period of strategic opportunities for China’s development, seize the opportunities, make scientific plans, and strive to create a new situation in the CIETAC arbitration work and promote the high quality development of arbitration in China.


Xi’an Arbitration Commission made the first arbitration award which applying the Civil Code

On January 4, the Xi’an Arbitration Commission made an award on a construction contract dispute. This is the first arbitration case which applies the Civil Code in Xi’an after the Civil Code was implemented.

In this case, a transportation company (the applicant) and a transportation engineering company (the respondent) had a dispute over the payment of the project. The applicant submitted an arbitration application to the Xi’an Arbitration Commission in accordance with the arbitration clause agreed in the contract between the parties. During the trial of the case, the two parties tried to settle but failed. On January 4, 2021, on the basis of sufficient investigation in the hearing, and after deliberation the arbitral tribunal made an arbitration award in accordance with Articles 2 and 7 of the Arbitration Law of the People’s Republic of China and Articles 7 and 509 (1) of the Civil Code of the People’s Republic of China.

The arbitration award of this case marked the formal entry of Xi’an arbitration into the “Civil Code Era”.


Suzhou International Commercial Court:

Conclusion of the first case of recognition and enforcement of foreign arbitral awards

On January 4, the Suzhou International Commercial Court held a public hearing in accordance with the law to review two disputes over applications for recognition and enforcement of foreign arbitral awards filed by Ukrainian companies and ruled in favor of the applicants. This is the first ruling made by the court to recognize and enforce foreign arbitration awards since its establishment.

“During the review of this case, whether the notice of the arbitral tribunal on the arbitration procedure was effectively served has become the focus of the dispute.” Yang Enqian, the judge of the case, said, “The Respondent’s defense was that there were certain flaws in the Claimant’s materials during the service process. After the collegial panel, it was believed that the information served could directly correspond to the address of the Respondent and all the arbitration materials had been signed and received. Therefore, it was deemed that the service was effective.”

In the two cases, one party is the main system of foreign companies, and Ukraine is a country along the “Belt and Road”. The handling of the case fully reflects the equal protection of the legitimate rights and interests of Chinese and foreign parties, It also shows the judicial attitude of Suzhou International Commercial Court to optimize the market-oriented legal international business environment.


Suzhou International Commercial Court:

Conclusion of the first case of recognition and enforcement of foreign arbitral awards

On January 4, the Suzhou International Commercial Court held a public hearing in accordance with the law to review two disputes over applications for recognition and enforcement of foreign arbitral awards filed by Ukrainian companies and ruled in favor of the applicants. This is the first ruling made by the court to recognize and enforce foreign arbitration awards since its establishment.

“During the review of this case, whether the notice of the arbitral tribunal on the arbitration procedure was effectively served has become the focus of the dispute.” Yang Enqian, the judge of the case, said, “The Respondent’s defense was that there were certain flaws in the Claimant’s materials during the service process. After the collegial panel, it was believed that the information served could directly correspond to the address of the Respondent and all the arbitration materials had been signed and received. Therefore, it was deemed that the service was effective.”

In the two cases, one party is the main system of foreign companies, and Ukraine is a country along the “Belt and Road”. The handling of the case fully reflects the equal protection of the legitimate rights and interests of Chinese and foreign parties, It also shows the judicial attitude of Suzhou International Commercial Court to optimize the market-oriented legal international business environment.


Supreme People’s Court:

Supporting the Building of an international commercial dispute resolution center in Hainan Free Trade Port

On January 15, the Supreme People’s Court held a press conference and issued the “Opinions on the People’s Court Providing Judicial Services and Guarantees for the Building of Hainan Free Trade Port” (hereinafter referred to as Opinions), proposed to promote the establishment of an international commercial dispute resolution center in Hainan. Tao Kaiyuan, vice president of the Supreme People’s Court, notified the drafting background, significance, main content and innovation highlights of the Opinions.

We believe that the release of the Opinions can contribute judicial wisdom and strength to the building of Hainan Free Trade Port. At the same time, it is also expected that Hainan can start the building of an international commercial dispute resolution center as soon as possible, accelerate the building of the international commercial dispute resolution mechanism, and provide a strong guarantee for new advantages in international competition.


Shanghai Maritime Court approved the application for property preservation made by parties in Hong Kong arbitration proceedings

Relevant Provisions:

Civil Procedure Law of the People’s Republic of China:

Paragraph 1 of Article 100: For cases in which the action of a party to the lawsuit or any other reason causes difficulty in enforcement of a judgment or causes other harm to the litigants, a People's Court may, pursuant to an application by a counterparty litigant, rule on preservation of its property or order the counterparty to undertake certain acts or prohibit the counterparty to undertake certain acts; where the litigants do not make an application, a People's Court may rule that preservation measures be adopted where necessary.

Article 102: Preservation shall be limited to the scope of the request or the properties related to the case.

Paragraph 1 of Article 103: Preservation of properties shall adopt seizure, confiscation, freezing or any other method stipulated by the law. Upon preservation of properties, the People's Court shall forthwith notify the party whose properties are being preserved.

Arrangement of the Supreme People’s Court on Mutual Assistance and Preservation in Arbitration Proceedings between the Courts of the Mainland and the Hong Kong Special Administrative Region (hereinafter referred to as Arrangement for Arbitration Preservation):

Paragraphs 1 and 2 of Article 3: The parties to the Hong Kong arbitration proceedings may, before an arbitral award is made, apply for preservation to the intermediate people’s court of the mainland at the domicile of the respondent, the place where the property is located, or the place where the evidence is located, by reference to the Civil Procedure Law of the People’s Republic of China, the Arbitration Law of the People’s Republic of China and the relevant judicial interpretations. Where the place of domicile of the party against whom the application is filed, the place where the property or the place where the evidence is located falls within the jurisdictions of different people’s courts, the party against whom the application is filed shall choose to file the application with one people’s court, rather than two or more people’s courts.

Where a party files an application for property preservation after the relevant institution or permanent office has accepted the arbitration application, the application shall be forwarded by the institution or permanent office.

Paragraph 2 of Article 8: Where, upon examination, the preservation application of the party concerned complies with the legal provisions of the requested party, the court of the requested party shall render a preservation ruling or order, etc.

Case Description:

In May 2018, the Claimant Siyuan Shipping signed a voyage charter contract with the Respondent Shanghai Zunwen, stipulating that the Claimant, as the owner, would charter the MV “WANTONG STAR” to the Respondent and transport a batch of coal from Indonesia to Shanghai. Later, the Respondent cancelled the charterparty without reason, from which the Claimant suffered heavy losses. The Claimant initiated arbitration in accordance with the arbitration clause contained in charterparty on November 30, 2018. During the arbitration, the two parties signed a settlement agreement on May 10, 2019. It is agreed that the Respondent should pay USD 180000 to the Claimant within 30 days after the execution of the settlement agreement. In Article 13 of the settlement agreement, both parties agreed that all disputes arising from this agreement shall be submitted to the Hong Kong International Arbitration Center (HKIAC) for arbitration in accordance with the arbitration rules in effect at the time of applying for arbitration.

After the settlement agreement was reached, the Respondent failed to pay the settlement amount before June 9, 2019 as agreed, and the Claimant therefore filed an arbitration application with the Hong Kong International Arbitration Center on July 16, 2019 and was accepted. In order to ensure the realization of its rights, the Claimant forwarded the application for preservation in the arbitration procedure to the Shanghai Maritime Court on October 2, 2019, applying for freezing the Respondent’s bank account in the sum of USD 268,600 or other equivalents of the Respondent’s property. On October 8, 2019, the Shanghai Maritime Court received a letter from the Hong Kong International Arbitration Center and related application materials. The Shanghai Branch of the People’s Insurance Company of China provided guarantee for Claimant’s application of preservation . The core dispute in this case [(2019) Hu 72 Cai Bao No. 298] is: Should the court approve an application for property preservation in Hong Kong arbitration proceedings?

Court’s View:

The Shanghai Maritime Court held that the Claimant, Siyuan Shipping, was a party to the Hong Kong arbitration procedure. Before the arbitration award was issued, the application for property preservation filed in accordance with the relevant provisions of the Arrangement for Arbitration Preservation complied with the provisions of the law. Therefore, the court ruled to approve the Claimant’s application.


The Intermediate People’s Court of Xuchang, Henan Province:

Failing to notify the parties concerned of the tribunal members after replacement of the presiding arbitrator is in violation of the statutory procedures

Relevant Provisions:

Arbitration Law of the People’s Republic of China

Article 33: Following the formation of the arbitrating tribunal, the arbitration commission shall notify the parties concerned in writing of the composition of the arbitration tribunal.

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:

On September 19, 2019, Zhang Huijuan, as the Claimant, applied to the Xuchang Arbitration Commission for arbitration against Ding Aimin and Zhang Yue, as the Respondents in respect of the housing sales contract dispute. On October 11, 2019, the Xuchang Arbitration Commission served on Zhang Huijuan of the application for arbitration, the arbitration rules of the Xuchang Arbitration Commission, the list of arbitrators of the Xuchang Arbitration Commission, the composition method of the arbitral tribunal and the arbitrators designation letter. On December 20, 2019, the Xuchang Arbitration Commission issued an order of tribunal constitution, in which the chairman of the Xuchang Arbitration Commission appointed Peng Shengli as the presiding arbitrator, and required the Claimant and the Respondent to designate one arbitrator respectively. On January 16, 2020, the arbitrator Peng Shengli as the presiding arbitrator, and Wang Luzeng and Lu Xushen as arbitrators held a hearing. After the arbitration hearing of this case, the presiding arbitrator, Mr. Peng Shengli, applied to withdraw from adjudicating the case. On June 5, 2020, Xuchang Arbitration Commission appointed Wang Xiaowen as the presiding arbitrator. On August 14, 2020, Xuchang Arbitration Commission held another hearing of the case.

The key issue of this case [(2020) Yu 10 Min Te No.11] is: Does the arbitration institution violate legal procedures where it failed to notify the parties of the consititution of the arbitral tribunal after the replacement of the presiding arbitrator?

Court’s View:

For the replacement of the presiding arbitrator in this case, the Xuchang Arbitration Commission shall, in accordance with Article 33 of the Arbitration Law of the People’s Republic of China, promptly notify the parties in writing of the composition of the arbitral tribunal, but after reviewing the arbitration trial files and records obtained by this court, no such written notice was found. Therefore the arbitration proceedings are improper.

The Intermediate People’s Court of Xuchang, Henan Province ruled as follows: Revoke the Xu Zhong Cai Zi [2020] No.32 Award of Xuchang Arbitration Commission.


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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