Seat of arbitration debate and the New York Convention

With increasing internationalization and a rising number of cross-border disputes, at present, in practice, some parties have been opting to apply to such international arbitration institutions as the Hong Kong International Arbitration Centre (HKIAC), International Chamber of Commerce (ICC), Singapore International Arbitration Centre (SIAC) etc., for arbitration, while also selecting mainland China as the seat of arbitration. However, there is an ongoing debate in industry circles as to how to determine the seat of arbitration and the “nationality” of an award.

Article 1 of the New York Convention sets out the “territory criterion” and “non-domestic criterion”. The New York Convention applies to: (1) arbitral awards made outside the territory of a state; and (2) arbitral awards not considered as domestic awards in the state where their recognition and enforcement are sought.

In domestic practice, generally, only arbitral awards rendered by domestic arbitration institutions are deemed domestic awards, and an attitude of denial is held in respect of the issue of the validity of an award rendered in China by a foreign arbitration institution. Additionally, article 283 of the Civil Procedure Law (CPL) specifies: “Where an award made by a foreign arbitration institution requires recognition and enforcement by a People’s Court of the People’s Republic of China, the party concerned shall directly apply for recognition and enforcement to the Intermediate People’s Court of the place where the domicile or property of the judgment debtor is located. The People’s Court shall handle the matter pursuant to the provisions of the international treaties concluded or acceded to by the People’s Republic of China, or in accordance with the principle of reciprocity.” From this we can conclude that Chinese law still judges the nature of an arbitration institution based on the place where it is located.

Yang Peiming is a partner in the Shanghai office of Llinks Law Offices