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c. The formation of the arbitration panel or the procedures of the arbitration was not in accordance with the applicable arbitration rules; or
d. The cause of arbitration falls outside of the scope of the arbitration agreement, the arbitration institute does not have jurisdiction or authority over such causes.
Any parties may motion the court to set aside the award, but only the respondent may motion the court to refuse enforcement. A court may also refuse to enforce a foreign related arbitral award if it founds that enforcement will harm social public interest (shehui gonggong liyi).
Scholars and practicing lawyers generally believe that such a judicial review scheme is basically in line with international practice. Similar to the New York Convention, the People’s Court’s review of foreign related awards focuses on procedural defects, not substantive issues e.g. the application of laws.(5)
There are, however, quite some outstanding issues about the People’s Court’s setting aside or refusal of enforcement of foreign related awards. A brief introduction and analysis is set out below.
3. “May” or “Shall”?
Neither the Arbitration Law nor the Civil Procedure Law specifies the court’s discretion in the seriousness of defects of foreign related awards. The language of the Arbitration Law and the Civil Procedure Law merely set out the grounds for setting aside or refusing enforcement of foreign related arbitral awards. It is not clear that the court shall (emphasis added), or may (emphasis added) set aside or refuse to enforce an award. In Chinese, “shall” (yingdang) is mandatory while “may” (keyi) is discretionary. It is, therefore, not clear that if a court may have any space for judicial discretion on the seriousness of the procedural defects in an arbitration award.
In practice, arbitrators have been criticizing that the People’s Court being too rigid on procedural defects. For example, the Guangzhou Arbitration Commission once decided a case 4 months and 3 days after the date of case filing, whilst the applicable arbitration rules provide that arbitration awards shall be made 4 months after the case filing. A dissenting party challenged this award in court. The court decided that the three-day delay has constituted a procedural violation of the arbitration rules, and therefore set aside the award.(6)
Some practicing lawyers have also indicated that comparing with the New York Convention, the Chinese laws employ a very vague language and leave much confusion. This is an issue that needs to be addressed in future legislation.(7)
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