Can concession agreement disputes be arbitrated in China?

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Legal provisions in China have been fairly inconsistent when it comes to the question of whether disputes in relation to concession agreements should be referred to civil courts or administrative courts. According to article 12(1)(11) of the amended Administrative Litigation Law of the People’s Republic of China, announced on 1 November 2014, any proceedings commenced by a citizen, legal entity or any other organization on the basis that the administrative agency has failed to legally perform a concession agreement, or has breached the terms of a concession agreement, or has illegally amended or rescinded a concession agreement, must be considered administrative proceedings.

Helena_picIt is also clearly provided in article 12(2) of the Interpretations by the Supreme People’s Court (SPC) on Several Issues Concerning the Application of the Administrative Litigation Law of the People’s Republic of China implemented on 1 May 2015 that “any administrative proceedings brought about by a citizen, legal entity or organization in relation to any of the following administrative agreements shall be heard by the people’s courts (administrative courts): (1) government concession agreement … ”

However, the Public-Private Partnership (PPP) Contract Guidelines (for Trial Implementation) issued by the Ministry of Finance on 30 December 2014 also clearly point out that the nature of the PPP model is fundamentally a civil legal behaviour arising from the government’s procurement of public services from social capital co-operation, and this constitutes a civil legal relationship between two civil subjects. As such, any dispute arising can be resolved either by civil litigation or by arbitration.

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Helena Chen is a partner and chief representative at the Beijing office of Pinsent Masons