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Comparatively, Articles 2 and 3 of Arbitration Act 1994 provide the arbitrability of China, which have no problem in principle. But it is quite arguable with Article 2. It is said, “stipulates that disputes over contract and disputes over property rights and interests between equal entities may be arbitrated’. There are at least two inklings of this provision. First, what does property rights mean? Both 1958 New York Convention Article 2 and Model Law Article 7 defined the arbitration scope includes “whether contractual or not”. Apparently, this extension of non-contractual disputes is much bigger than the property rights disputes’. According to the present Arbitration Act, the out of property right tort is non-arbitrability. Based on the principle of Chinese civil law, the property, normally, only means the tangible property, doesn’t include the intellectual property. Therefore in practice, the intellectual property is not arbitrable. The other problem of this provision is that parties of arbitration are limited by “equal entities”. This provision excludes a large number of disputes to arbitration, such as a simple example, it can’t be submitted to arbitration as to the awards involving in economic actions made by the administration departments of the government on parties because of the unequal status of the arbitral subjects between the government administration departments and the parties. Therefore, it is obviously out of date, and cannot be abreast of requirements of international commercial arbitration.
III. Procedural Options
This discussion of the validity of arbitration agreements under the Model Law would not be complete without considering the issue of procedural options. If A brings an arbitration against B and B states that the arbitration agreement is invalid, must the arbitration be suspended while that issue is resolved in court? B may plausibly say that it would be wasteful to go through a lengthy and expensive arbitration only to find at the end that the entire exercise was nullity. A may plausibly retort that the door to abuse would open if any respondent wishing to avoid arbitration could sidetrack the proceedings for several years, perhaps including the involvement of three levels of courts, simply by arguing that there some defect in the arbitration agreement.
There are merits on both sides of this argument. It was one of the most discussed topics during the preparation of the Model law. The result is to be found in Article 16 of the Model law, which intends to make it impossible to derail arbitral proceedings imply by raising an objection to the “existence or validity” of the arbitration agreement, while granting important discretion to the arbitral tribunal to proceed cautiously in the event it recognises the objection as a serious one, and wishes to avoid the risk of wasting its and the parties’ efforts. The arbitral tribunal is, pursuant to Article 16(3), in a position to exercise this discretion at two decision points. First, it may decide to rule on the objection as a preliminary question, or leave the matter to be dealt with in the award on the merits. Second, in the event that the arbitral tribunal rejects the objection in a preliminary decision and the disappointed applicant takes the issue to court( which it must do within 30 days), the arbitral tribunal “may continue the arbitral proceedings and make an award.”
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