CHINA Law and Practice Contributed by: Tim Yimin Liu, Sybil Xueting Yuan and Cassie Wenjing Li, Global Law Office
put the merits aside but examine the validity of the arbitration agreement first. If found valid, the court will dismiss the litigation. Conversely, if the oppos - ing party does not raise an objection to the court’s jurisdiction prior to the first court hearing, the right to arbitration will be deemed waived, and the court will proceed to trial the case. (See Article 26 of the PRC Arbitration Law.) Judicial Attitude In recent years, Chinese courts have established a pro-arbitration and limited-intervention approach. Courts tend to uphold the validity and enforceability of arbitration agreements, and do not intervene unless the arbitration agreement is manifestly invalid or fails to meet the statutory requirements under the PRC Arbitration Law. Negative Jurisdictional Rulings If an arbitral tribunal declines its jurisdiction, this is usually treated as a termination of arbitration proceed - ings. Parties may further resort to court for litigation. If the jurisdiction for arbitration is held by arbitral tribu - nal or the institution, it will be respected by the court. Any further challenge before a court will not be dock - Prior to the first hearing of the arbitral tribunal, a chal - lenge to the jurisdiction of the arbitral tribunal (ie, the validity of the arbitration agreement) must be submit - ted to the court (see Article 20 (2) of the PRC Arbitra - tion Law). This timing of challenge is reinforced as follows (see Article 13 of the SPC’s Interpretation of the Arbitra - tion Law). eted by the Chinese court. 5.3 Timing of Challenge • If a party fails to raise such a challenge prior to the first hearing of the arbitral tribunal, and sub - sequently applies to a court, the court shall not accept the case. • Where the arbitration institution has already ruled on the jurisdiction (ie, validity of the arbitration agreement), any further challenges seeking to either confirm the validity of the arbitration agree -
ment or overturn that ruling will not be accepted by the court. 5.4 Standard of Judicial Review for Jurisdiction/Admissibility In China, parties have the right to challenge the valid - ity of an arbitration agreement either before a court or before the arbitration institution. Therefore, three scenarios may arise. • If a party raises the challenge before the arbitra - tion institution and the institution has rendered a decision on jurisdiction, any subsequent applica - tion by a party to a court to confirm the validity of the arbitration agreement or to annul the arbitration institution’s decision will not be accepted by the court. • If a party brings the challenge before a court, the court will review the issue in its entirety and decide whether the arbitration agreement is valid. • If one party applies to the arbitration institution while the other applies to a court, it is the court – not the arbitration institution – that has the author - ity to review and determine the jurisdictional issue. 5.5 Breach of Arbitration Agreement Where a party commences court proceedings in breach of an arbitration agreement, the opposing party shall raise the existence of the arbitration agreement prior to the first court hearing. If the court confirms that the arbitration agreement is valid and covers the dispute at hand, it will dismiss the court proceedings. However, if the opposing party fails to do so, it will be deemed that the parties have waived their rights to arbitration and accepted the court’s jurisdiction, so the court will proceed with the court trial. Chinese courts generally conduct a prima facie review when assessing the existence and validity of an arbi - tration agreement. For example, if a party attempts to avoid arbitration by alleging forgery of the arbitration agreement or the contract containing it, such argu - ments are usually not upheld by the courts, unless strong and convincing evidence is presented. Overall, Chinese courts take a pro-arbitration stance and tend to respect arbitration agreements. Where
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