Interim measures, enforcement of extraterritorial ad hoc arbitration

By Zhang Guanglei and Celeste Shi, Jingtian & Gongcheng

A valid arbitration agreement should include a “selected arbitration committee” under China’s Arbitration Law, but ad hoc arbitration remains excluded. In this context, whether extraterritorial ad hoc arbitration, as a form of international arbitration, can be recognised by mainland courts matters greatly to parties to cross-border transactions.

Interim measures in mainland China

Generally speaking, there is no legal basis for the parties to an extraterritorial ad hoc arbitration to apply to mainland courts for interim measures. The Civil Procedure Law and the Arbitration Law provide only for application for interim measures in domestic or foreign-related arbitration cases, without mentioning extraterritorial institutional arbitration and ad hoc arbitration cases.

Zhang Guanglei
Jingtian & Gongcheng

On 1 October, 2019, the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong SAR became effective, providing a clear operational basis for parties to arbitral proceedings in Hong Kong to apply for interim measures in mainland China. However, further reflecting the conservatism and prudence of mainland courts in interim measures concerning extraterritorial ad hoc arbitration, article 2 of the arrangement provides that “‘arbitral proceedings in Hong Kong’ referred to herein shall be seated in the HKSAR and be administered by specified institutions or permanent offices”, clearly excluding ad hoc arbitration from the scope of interim measures.

For example, in the case Su 72 Cai Bao No.216 (2021), the Nanjing Maritime Court held that parties to arbitral proceedings in Hong Kong may apply to mainland courts for interim measures, but ad hoc arbitration was not included. Hence, the application for interim measures was rejected.

Mainland courts, however, do not absolutely deny interim measures for extraterritorial ad hoc arbitration, which is mainly reflected in the maritime field. According to the Special Maritime Procedure Law and its judicial interpretations, parties to extraterritorial maritime arbitration are entitled to apply to the maritime court for preservation of the vessel, cargo, fuel and marine materials of the respondent, but applications for other property remain subject to the relevant provisions of the Civil Procedure Law. Property for which interim measures may be implemented in extraterritorial maritime arbitration is limited to the above four types on the mainland.

In practice, courts have different interpretations on this issue. For example, in Yong Hai Fa Zhong Bao Zi No.1 (2010), the Ningbo Maritime Court, according to article 17 of the Special Maritime Procedure Law and article 21 of its judicial interpretations, froze the funds of the respondent for an extraterritorial ad hoc arbitration. Other cases where the maritime court decided to freeze the deposits of parties to extraterritorial maritime ad hoc arbitration by invoking the general provisions of the Civil Procedure Law on interim measures include Guang Hai Fa Bao Zi No.42 (2014) and Hu Hai Fa Hai Bao Zi No.76 (2015).

Enforcement in mainland China

Courts in mainland China may recognise and enforce ad hoc arbitral awards, which is clearly provided for in international conventions, relevant inter-regional arrangements and China’s laws. For example, article 1 of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards provides that the term “arbitral awards” shall include awards made by arbitrators appointed for each case; after the execution of the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong SAR (the Enforcement Arrangement), the Supreme People’s Court clearly stated in the Notice on Issues Concerning the Enforcement of Hong Kong Arbitral Awards in Mainland China that: “where parties apply to courts for enforcement of ad hoc arbitral awards made in the Hong Kong SAR … the courts shall examine the application according to the provisions of the Enforcement Arrangement”.

Article 1 of the Arrangement Concerning Mutual Recognition and Enforcement of Arbitral Awards between Mainland China and the Macau SAR and article 2 of the Provisions on Recognition and Enforcement of Arbitral Awards in Taiwan also provide that application may be made to mainland courts for recognition and enforcement of arbitral awards made by arbitrators under Macau arbitration regulations and ad hoc arbitration tribunals in Taiwan. The SPC further clarified in the judicial interpretations of the Civil Procedure Law that: “If one party applies to the court for recognition and enforcement of the arbitral award made by an interim ad hoc tribunal outside the PRC, the court shall handle it in accordance with article 283 of the Civil Procedure Law.”

The recognition and enforcement of extraterritorial ad hoc arbitral awards is conditional on the recognition of the validity of ad hoc arbitration clauses by a mainland court.

Celeste Shi
Jingtian & Gongcheng

In the recognition and execution of extraterritorial ad hoc arbitration, the person against whom the arbitral award was given may question the validity of the ad hoc arbitration terms. As mainland courts determine the validity of extraterritorial ad hoc arbitral terms based on the applicable laws agreed on by the parties or the laws of the jurisdiction giving the arbitral award, the arbitration agreement is likely to be deemed valid. However, if the mainland court had previously handled any relevant disputes on arbitration agreement validity, it may also base its decision on article 18 of the Choice of Law for Foreign-related Civil Relationships and its relevant interpretations. If the parties failed to select their applicable laws or a seat of arbitration, mainland courts may still invalidate the ad hoc arbitral terms based on mainland laws. In such cases, application for extraterritorial ad hoc arbitration to be recognised and executed in mainland China may be denied due to conflict with the rulings of the mainland court.

In recent years, the SPC’s Opinions on the Provision of Judicial Safeguards for the Construction of Pilot Free Trade Zones and the Revision Draft for Comment of the Arbitration Law have gradually reflected the trend of integrating international arbitration and exploring ad hoc arbitration. We look forward to seeing legislators establish a systematic structure for interim measures concerning extraterritorial arbitration in mainland courts, in order to achieve development with both extraterritorial ad hoc arbitration in the judicial system and the mainland’s own ad hoc arbitration practice.

Zhang Guanglei is a partner and Celeste Shi is an associate at Jingtian & Gongcheng. Zhang is also an arbitrator of the Hong Kong International Arbitration Centre and Shanghai International Arbitration Centre


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