CHINA Law and Practice Contributed by: Yaxing Zhang, Bing San, Yi Cao and Jiahui Zhu, Han Kun Law Offices
Res Judicata and Public Order Conflicts Violation of res judicata
awards compliant with the New York Convention may be recognised and enforced by Chinese courts. When acceding to the New York Convention, China made two reservations, specifically: • China applies the New York Convention only to the recognition and enforcement of awards made in the territory of another contracting state; and • China applies the New York Convention only to disputes arising out of legal relationships, whether contractual or not, which are classified as commer - cial under Chinese domestic law. In essence, for a foreign arbitral award to be recog - nised and enforced in China under the New York Con - vention, it must meet two fundamental requirements: • the arbitral award must have been made in the territory of a contracting state to the New York Convention; and • the legal relationship giving rise to the dispute resolved by the arbitral award must be classified as commercial in nature under Chinese law. Reciprocity Principle For arbitral awards from non-New York Convention states, parties may seek recognition and enforcement under Article 304 of the Civil Procedure Law of the PRC based on the principle of reciprocity. Legal Basis for Recognition and Enforcement of Hong Kong, Macau and Taiwan Arbitral Awards Concerning the recognition and enforcement in Main - land China of arbitral awards issued by arbitral institu- tions in Hong Kong SAR, Macau SAR and the Taiwan region, the SPC has promulgated the following spe - cialised judicial instruments: • Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and Hong Kong Special Administrative Region; • Arrangement Concerning Mutual Recognition and Enforcement of Arbitral Awards Between the Main - land and Macau Special Administrative Region; and • Provisions on Recognition and Enforcement of Arbitral Awards made in the Taiwan District.
A legally effective judgment on the same dispute has been rendered by a Chinese court or a third-country court. Public policy Violation of fundamental principles of Chinese law, or prejudice to state sovereignty, security or public interests. Chinese courts narrowly interpret public policy, applying only to fundamental violations, not legal errors. Special Defences Expiry of enforcement period The respondent proves the application was filed beyond the two-year enforcement limitation period. Excessive damages in violation of public interest Where damages awarded in a foreign judgment sub - stantially exceed actual losses, the court may refuse recognition and enforcement of the excess portion. Arbitration agreement priority For default judgments, the court identifies a valid arbi - tration agreement between the parties, and the absent party did not expressly waive its arbitration rights. Parties dissatisfied with a recognition/non-recognition ruling may apply for reconsideration to the higher court within ten days of service. The higher court shall issue a final ruling within 30 days. 4. Arbitral Awards 4.1 Legal Issues Concerning Enforcement of Arbitral Awards Legal Basis for Recognition and Enforcement of Foreign Arbitral Awards International treaty The recognition and enforcement of foreign arbitral awards in Mainland China is governed by the Conven - tion on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), which entered into force in China on 22 April 1987. As of 2024, the New York Convention has 174 contract - ing states, covering most major jurisdictions. Arbitral
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