Enforcement Of A Foreign Arbitral Award In China: Issues, Criticisms, And Practical Solutions
ENFORCEMENT OF A FOREIGN ARBITRAL AWARD IN CHINA: ISSUES, CRITICISMS, AND PRACTICAL SOLUTIONS
1.) INTRODUCTION
The lack of enforcement of a foreign award in China is frequently pointed out in arbitrational issues . Similar to arbitration systems worldwide, the arbitration committee is not empowered to enforce the award. The step of enforcement are to be done via the courts. As a result, the prevailing party most often must apply to a court to have the award recognized and enforced. Foreign awards that are not paid voluntarily also may be filed with a court to compel enforcement. As China acceded to the New York Convention1958, awards are enforceable in other signatory countries on the basis of reciprocity. While in principle the same should apply in China, in practice, enforcement is problematic.
Almost one in four applications are denied , but anecdotal information implies the number may be much higher . It appears that enforcement is easier to secure in major cities such as Beijing, Shanghai, and Guangzhou, and smaller awards appear more likely to be enforced than larger ones. This fact is not surprising given that the primary reason for non-enforcement appears to be insolvency on the part of the Chinese party. China International Economic and Trade Arbitration Commission (CIETAC) and local commission awards are not enforceable in China under the New York Convention, but rather under Article 260 of China~{!/~}s own Civil Procedure Law, which, much like the New York Convention, allows courts to refuse enforcement only for a limited number of procedural reasons.
The problem lies in the greater relative weight accorded by Chinese judges to foreign awards made by arbitral bodies outside China versus that given to foreign and foreign-related awards coming from within. While courts are required to receive approval from the Supreme People's Court prior to refusing to enforce a foreign arbitral award,...
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