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4. Setting Aside and Refusal to Enforce: Two Procedural Weapons for Delaying Enforcement?
Article 70 and Article 71 grant the People’s Court the authority to set aside or refuse to enforce foreign related awards on the same grounds provided in Article 260 of the Civil Procedure Law. Neither of the two major procedural laws, however, elaborates the relation between the two remedies against defective arbitration awards. In the past, dissenting parties of a foreign related arbitration award successively motioned the court for both setting aside and refusal to enforce the award so as create delay and further difficulties for enforcement.(8)
On August 23, 2006, SPC issued Provisions on Several Issues in Application of the Arbitration Law of the People’s Republic of China (hereinafter referred to as the “Arbitration Law Provisions”). This new judicial interpretation provides that if the court has refused to set aside an arbitration award, the dissenting party may not motion for refusal to enforce such award on the same ground. (emphasis added) (Article 26).
This new provision may certainly limit the dissenting party’s choices to create obstacles of enforcement. A savvy respondent, however, may still motion the court to refuse enforcement on a different ground even after he fails in setting aside the award. Procedurally speaking, the court still has to spend time and effort to review the motion, and stay the enforcement proceedings even the motion is meritless. The Arbitration Law Provision, therefore, may not completely exclude a party’s manipulation of procedural laws in bad faith.
As demonstrated above, setting aside and refusal to enforce are two parallel remedies for parties to challenge a foreign related arbitration award in mainland China. Therefore some legal professionals have been advocating for abolishing one of them, and reduce the space for deliberate delay of enforcement. (9)
5. Social Public Interest: A Vague Issue
As provided in the Arbitration Law and the Civil Procedure Law, a court may refuse to enforce a foreign related arbitration award on the ground that such enforcement may harm the social public interest (shehui gonggong liyi) of China. There are, however, no clear and legally binding interpretations on the term “social public interest”. The General Principles of Civil Law promulgated in 1986 does not provide any definition, nor do any of the relevant regulations or judicial interpretations. Furthermore, Chinese court decisions do not have binding authority over judges in other cases, making it infeasible to define this term through judicial decisions.
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