CHINA Law and Practice Contributed by: Tim Yimin Liu, Sybil Xueting Yuan and Cassie Wenjing Li, Global Law Office
of application of arbitral award enforcement in China’s legal framework.
that the award had already been set aside by the courts in the seat of arbitration. Enforcing an award subject to an ongoing set- aside proceeding The court may adjourn its decision whether to enforce an award if an award is subject to an ongoing set- aside proceeding. Sovereign immunity Prior to the enactment of the Foreign State Immunity Law, due to China’s commercial reservation under the New York Convention, international investment arbi - tration awards with foreign states as respondents and their assets as enforcement targets lacked enforce - ment basis in China. Article 12 of the Foreign State Immunity Law and related notices provide clear legal basis and institu - tional guarantees for applying to Chinese courts for enforcement of international investment arbitration awards against foreign states and their assets. 12.3 Approach of the Courts Chinese courts generally adopt a pro-enforcement stance towards the recognition and enforcement of arbitral awards. Courts will only refuse enforcement of arbitral awards rendered by foreign-related arbi - tral institutions seated in China under limited circum - stances. For reference, see 11.1 Grounds for Appeal and 11.3 Standard of Judicial Review . With respect to public policy, the SPC has adopted a cautious, restrained and conservative approach in the judicial review of arbitral awards. Invocations of “pub - lic policy” by the SPC have been rare and are typi - cally confined to exceptional circumstances – such as when an award contravenes fundamental principles of Chinese law, undermines national sovereignty, or endangers public safety or social morality. A case recorded in the SPC’s public case database (Reference No 2024-10-2-463-001) provides further clarification on the interpretation of “public policy” in the context of recognising and enforcing foreign arbitral awards. According to the ruling of that case, Chinese courts shall apply the public policy excep - tion under the New York Convention narrowly and with
12.2 Enforcement Procedure Enforcement Procedure in China
In China, both domestic arbitral awards and foreign- administered arbitral awards that are deemed to be a Chinese award can be directly enforced by Chinese courts under the PRC Civil Procedure Law, without the need for a recognition process. With respect to the determination of a Chinese arbitral award, Chinese judicial practice has undergone a shift from the “Institution Standard” to the “Seat Standard”. • Institution Standard – In previous years, Chinese courts have ruled the nationality of an award in accordance with the nationality of the arbitration institution that administered the underlying arbitra - tion. For example, an ICC arbitration award seated in China would be a French award, and the recog - nition and enforcement should be pursuant to the New York Convention. • Seat Standard – For example, an ICC arbitration award seated in China would be a Chinese award and such an award would be enforced, confirmed or set aside in a Chinese court pursuant to Chi - nese laws, which reflects the current prevailing approach. The nationality of an award is deter - mined by the seat of arbitration. On the other hand, foreign arbitral awards must be recognised by a Chinese court before they can be enforced in China. The court shall handle the recogni - tion and enforcement applications in accordance with international treaties such as the New York Conven - tion or based on the principle of reciprocity. Enforcing an award that has been set aside An award that has been set aside by the courts in the seat of arbitration may not be enforced in China. According to the Annual Report on Judicial Review of Commercial Arbitration (2023) released by the Supreme People’s Court of China on 9 September 2024, only three applications for recognition and enforcement of foreign arbitral awards were dismissed by Chinese courts in 2023, one being due to the fact
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