Dispute Resolution

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention)

Convention on the Recognition and Enforcement of Foreign Arbitral Awards

(1958New YorkConvention)

 

Min Chow   Attorney

 

In order to catch up with the international trend and regulate the recognition and enforcement of foreign arbitral awards in our country,Chinaentered the 1958 New York Convention on January 22nd, 1987. And the Convention came into effect inChinaon April 22nd, 1987. To facilitate the implementation of the Convention, in April 1987, the Supreme People’s Court issued Circular on Implementing Convention on the Recognition and Enforcement of Foreign Arbitral Awards Entered byChinawhich gives interpretation on the reciprocity reservations made byChinawhen concluding the Convention. Upon resumption of sovereignty over Hong Kong on 1 July 1997, the Government of China extended the territorial application of the Convention toHong Kong, Special Administrative Region. On 19 July 2005,Chinadeclared that the Convention shall apply to the Macao Special Administrative Region of China. From then on, the Convention is applied to allterritoryofChina. The main prescriptions of the Convention are:

 

I. The Application Scope of the Convention.

Chinamade two declarations and reservations when entering the Convention: [1]Chinawill apply the Convention only to recognition and enforcement of awards made in the territory of another contracting State; [2]Chinawill apply the Convention only to differences arising out of legal relationships, whether contractual or not, that are considered commercial under the national law. Therefore, the Convention can only be applied in theterritoryofChinawithin the scope of the above declarations and reservations. As to the meaning of “awards made in the territory of another contracting State”, there is no clear explanation on this according to Chinese laws. In practice, it generally refers to the awards made by the arbitration institution locating at a contracting State.

 

 

II. Requirement for the Arbitration Agreement

According to the Convention, the Convention can only be applied to the case that the parties reach agreement in writing to submit commercial differences for arbitration. The term “agreement in writing” shall include an arbitral clause in a contact or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. In contrast, the arbitral clause prescribed in the Chinese Arbitration Law shall include a specific arbitration institution and intention to submit for arbitration. Hence, the prescriptions of the Convention are not as strict as those in the Chinese law. For example, temporary arbitration is not accepted by Chinese Arbitration Law, but accepted by the Convention. However, if the court rules that the arbitration agreement is void, unenforceable or can not be performed, then the difference can not be submitted for arbitration.

 

 

III. Conditions for Recognition and Enforcement

According to the Convention, the application for recognition and enforcement of foreign arbitral awards shall comply with some formal conditions and not violate some other substantial conditions. Formal conditions include: [1] submission of original copies and duly certified copies of the arbitral awards and the arbitration agreement; [2] if the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The substantial conditions that shall not be violated are: [1] the arbitration agreement under its applicable law is void; [2] the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; [3] the award contains decisions on matters beyond the scope of the submission to arbitration; [4] the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; [5] the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

 

IV. Compulsory regulations of the country where recognition and enforcement is sought.

Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: [1] the subject matter of the difference is not capable of settlement by arbitration under the law of that country; or [2] the recognition or enforcement of the award would be contrary to the public policy of that country.

 

In sum, the Convention makes it possible for one country to recognize and enforce the award made by another country, which greatly improves the efficiency of solving trading, investment and other commercial differences between countries.