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II. Substantive Requirements of Arbitration Agreement
1. Definition of Arbitration Agreement
Model law Article 7(1) defines an “arbitration agreement” as an agreement to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Although this provision is not so straightforward due to difficulties with the terminology employed, such as “legal relationship”, and “dispute” , it does cover both:
(1) an agreement to refer an existing dispute to arbitration; in this case the arbitration agreement will often be in the form of a contract separate from the main contract and be referred to as a “submission agreement” or and ad hoc submission; and
(2) an arbitration clause included in the main contract, by which the parties agree that if a dispute should arise in the future, it will be referred to arbitration.
Comparably, the ad hoc arbitration agreement has been excluded from the PRC arbitration system, to some extent. The PRC Arbitration Law Article 16 provides that an arbitration agreement shall include the following:
An expression of intention to arbitrate;
Matters of arbitration; and
A chosen arbitration commission.
A chosen arbitration commission is required for a valid arbitration agreement in China, unless Article 18 is satisfied. Article 18 of the Arbitration Law attempts to supplement Article 16 and provides that if an arbitration agreement contains no or unclear provisions concerning the matters for arbitration or the arbitration commission, the parties may reach a supplementary agreement. If no such supplementary agreement can be reached, the arbitration agreement shall be null and void. It also follows from the current legislation that an ad hoc arbitration agreement in an international contract will not be valid if Chinese law applies to determine the validity of the arbitration agreement. This is contrary to the trend of supporting arbitration in the legislation of most other jurisdictions. More importantly, the parties cannot freely agree what is a commercial contract and what are protected in other jurisdictions. There might be an argument that an ad hoc arbitration might not be appropriate in the PRC since this would lead to less governmental control. Given that the PRC is reforming its legal and economic system and the country is moving to a society of rule of law, this argument will not stand. However, if ad hoc arbitration system is adopted, certainly, the court’s support in arbitration is necessary.
2. Form of arbitration agreement
As well as the practice of all of the international conventions and most countries on arbitration, the Model Law agreement to Article 7(2) is clearly directive: “arbitration agreement shall be in writing”. Similarly, Chinese law requires the arbitration agreement to be in writing. However, its farther statement “if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunications which provide a record of the agreement” shows that it provides more loose definition of the written form than the traditional writing requirement, such as the New York Convention.
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