A Comparative Study On The Implementation Mechanism Of International Commercial Arbitration Awards

With the rapid economic globalization, there have been more and more crossborder disputes, which has consequently highlighted the importance of theinternational commercial arbitration. However, it is known to all that, no matter howperfect the arbitration system is, how decent the arbitration rules and procedures are,how authentic the arbitration award delivers the spirits of fairness, only when aninternational arbitration award itself could be finely enforced in the target countryregardless of counterparty’s refusal or delay of the performance of the internationalcommercial arbitration award, would international commercial arbitration, as animportant dispute resolution, be able to demonstrate its virtual function to duly protectthe interests of conflicting parties and to secure the orderly development ofinternational economic communication/trading.To secure the interests of all parties involved in the international commercialarbitration, various countries have established specific systems for the recognition andenforcement of international commercial arbitration awards, and articulated all kindsof rules to balance the relationship between international commercial arbitration andthe judicial sovereignty based upon their respective legislative and social environment.It is worth noting that, various countries have stipulated different regulations withregard to the definition of international commercial arbitration, the elements whichmay affect the enforceability of the arbitration awards, and the judicial supervisionover the enforcement of arbitration award (in particular, the rules of recognition andenforcement in the judicial supervision).International commercial arbitration has become more and more important toChina, one of the largest international trading countries in the world, in terms of thedispute resolution mechanism in various economic sectors. It is quite inevitable toconfront various disputes in the pace of China’s expand of its international tradingscales. Therefore, to constitute an up-to-date recognition and enforcement system ofinternational commercial arbitration is not only a domestic legislative development oreconomic issue, but is also closely related to the development of China’s overalltrading system. In light of the above, the dissertation will focus on the enforcementof international commercial arbitration awards, discussing and analyzing each stage ofthe enforcement procedure, trying to find out the legal basis and completecomponents/sections of a full recognition and enforcement system in terms ofinternational laws and domestic laws, identifying the legislative differences offoregoing sections from international treaty’s perspective and various domestic laws’perspective, analyzing how such sections function regarding China’s legislativerequirements and judicial practice, and locating the relevant shortcomings if any, etc.Chapter I will focus on the definition of international commercial arbitrationaward. As international commercial arbitration award is the target/object of the enforcement, its definition should be clearly manifested for the purpose of furtherresearch and analysis in terms of relevant international laws and domestic regulations.Thus Chapter I is the basis of the entire dissertation. Arbitration award underinternational commercial arbitration shall all possess the elements of international orforeign nature. Although there are various theories and different interpretations of theterm “International”, in general, there are two kinds of definitions of internationalcommercial arbitration award, the broad interpretation and the narrow interpretation.The broad interpretation indicates that2categories of arbitration awards should beincluded:(1) the content of such arbitration award involves legal relations of differentcountries regardless of the place of arbitration; and (2) such arbitration award whoseplace of arbitration is different from the country it shall be enforced. The narrowinterpretation only refers to the latter category. Nowadays, most modern countrieshave adopted such narrow interpretation relying upon the place of arbitration, whichis quite meaningful to the smooth enforcement of arbitration awards in variouscountries and is helpful to avoid either positive or negative conflicts. As to thedefinition of “commercial”, Chinese domestic law originally applied the way ofenumeration; however, since different kinds of commercial disputes emergeconstantly, Chinese Law has eventually accepted the criteria of “relationship withrespect to contractual or non-contractual economic rights and obligations”.Nevertheless, the writer believes there’s still room to improve such criteria ofdefinition, namely given there’s no violation of statutory requirements, all legalrelationships based upon contractual agreement may be included within the scope of“commercial” disputes under international commercial arbitration.Chapter II will focus on the judicial supervision over the enforcement ofinternational commercial arbitration award. The legislative mechanism of thearbitration award enforcement as a matter of fact is the Judicial supervision over theenforcement of international commercial arbitration award as a matter of fact is theextension of the judicial supervision over the enforcement of international commercialarbitration award, thus the clarification of the definition regarding judicial supervisionover international commercial arbitration would provide solid basis for the subsequentanalysis of following chapters herein. Judicial supervision over internationalcommercial arbitration includes not only judicial intervene (negative implications),but also include supports and assistance. To facilitate the development ofinternational commercial arbitration, except for narrow-sense supervision (includingintervene, verification and control), the domestic laws in various countries haveestablished rules and regulations, and judicial practices to encourage the use ofinternational commercial arbitration. No matter how different the detailed rules andregulations lie in the actual legislation and practice of various countries, both broad-sense judicial supervision and narrow-sense judicial supervision shall share the samenature with regard to the non-initiative of judicial supervision, due process andlimited power of the supervision.Chapter II section3mainly discusses the judicial supervision in various stages of international commercial arbitration, in particular highlighting the post-awardsupervision with respect to the enforcement of arbitration award, including thereasons to revoke an award, re-arbitration, the legal implication of the revocation ofarbitration award, etc. As the non-enforcement of arbitration award will bespecifically discussed in later chapters, it is merely mentioned in this Chapter II.The key point of Chapter II is that, for the purpose to balance the fairness andefficiency, on the one hand, judicial supervision by the court should be in place, onthe other hand, such intervene of judicial supervision should be appropriate andshould never be abused. Appropriate and decent judicial supervision is required bythe development of international commercial arbitration, and is also a good sign ofmodernization of a country’s judicial supervision.Chapter III will focus on the analysis of application rules (kick-off regulations) inrelation to the recognition and enforcement system. This part has been rarelytouched by previous academic studies and documentary analysis. In general, thereare four international treaties involving the application rules of the enforcement ofinternational commercial arbitration award; however these treaties mainly providesregulations with respect to the scope of arbitration, application documents forsubmission, consequently various countries have their sole discretion to regulate theapplication rules in their respective jurisdictions.Different countries usually have different views and adopt different legalprinciples in terms of the nature of international commercial arbitration award.Therefore, the arbitration award could be defined as various objects, such ascontractual debtedness, foreign judgment, or domestic judgment, which may followdifferent application procedures. Except for the discussion of international treatiesand legislative regulations of various countries, Chapter II section3mainly discussesthe important PRC process-related rules and judicial practice under the internationalcommercial arbitration. The writer conducted specific analysis and pointed ourrelevant shortcomings with regard to the institution accepting the application,time-bar to raise the application, documents submitted for application, time-bar toaccept the application and application fee. The writer tends to take the view thatrelevant problems contemplated in the application, which shall be the starting point ofthe entire enforcement process, have not been duly identified or resolved and that’swhy the writer uses a full chapter to discuss the application issue, wish to expandmore room for the legislative development of the enforcement application underinternational commercial arbitration.Chapter IV will focus on the acceptable reasons that a party subject toenforcement could raise against the enforcement of a corresponding internationalcommercial arbitration award, including the reasons such as the arbitration agreementis invalid, the tribunal is beyond its due authority, violation of due process, thecomposition of the tribunal or the procedure of arbitration is improper, the award isnot legally binding or is revoked, etc. The invalidity of an arbitration award usually causes by the lack of pertinent civilcapacity or the lack of written agreement. The criteria to determine the effectivenessof an arbitration agreement varies as the arbitration party concerned might be anindividual, a legal entity or a nation. Nevertheless, it has been widely accepted bymany countries in their respective domestic legislation that the exchange of writingcould be used as a legitimate evidence to prove the existence of written arbitrationagreement between the parties. As to tribunal’s ruling beyond its authority, such israrely the case that the entire arbitration award would be revoked due to tribunal’sruling beyond its authority; usually the court in practice shall carefully distinguishcontents of arbitration award which is subject to tribunal’s due authority and which isnot, so as to deliver a final decision. As to the violation of due process, althoughboth common law system and civil law system confirm that due process is one of thefundamental basis for international commercial arbitration, however, a mereprocedural flaw would not necessarily lead to the refusal of the enforcement.The writer pointed out in the first4sections of Chapter IV that the actual facts inrelation to the defenses raised by the parties concerned in arbitration should be dulynoted. Although different countries have different views on the defenses againstenforcement of an international commercial arbitration award, generally speaking,most countries share common principles with respect to the defenses against theenforcement of an international commercial arbitration award. As a matter of fact,by sharing certain universal defense reasons against the enforcement of arbitration,local courts at the place of enforcement would be able to adhere to the principle ofhighlighting both the basic facts of the case as well as the due procedure of the case.In section5Chapter IV, the writer specifically discusses the legislation andjudicial practice in China, which enables the writer to deliver precise and in-depthcomments and suggestions in relation to defenses reasons under PRC law. In theprocess of reviewing the defense reasons raised by relevant arbitration parties, theoverall legislation of China is generally in line with the New York Convention,however due to the lack of detailed guidance and legal studies in terms of judicialpractice, there are still quite a lot of problems contemplated in China’s arbitrationenforcement system and it requires far more efforts from the PRC legislative body aswell as the judges.Similar to Chapter IV, Chapter V also intends to elaborate diverse challenges withregard to the cross-border enforcement of international commercial arbitration awards.Yet Chapter V will only focus on the defense reasons which require local courts’voluntary review regardless of the attitude of the parties subject to the enforcement.Such mechanism somehow reflects the independent status of judicial authority invarious countries. The writer intends to articulate the boundary of universal defensereasons and the development tendency in practice of the application of thenon-arbitrability rule and public policy rule. AS to the arbitrability principle, through judicial precedents and legislative development, judicial practice in variouscountries has kept influencing and enlarging the scope of items with arbitrability, andconsequently courts at place of enforcement would have smaller and smaller room toapply the non-arbitrability rule to reject the enforcement of an internationalcommercial arbitration award.As to the public policy principle, even the common law system and civil lawsystem apply different legal terminology, yet both of them agree that basic nationalpolicies, principles of law, statutory rules shall be within the scope of public policy.It has been noted that the application and interpretation of public policy becomesmore and more narrowed in practice; furthermore, there’s also emerging ideaintending to replace traditional national interests by international public interests.The writer believes that, with the professionalization of international commercialarbitration and perfection of legislative constructions in various countries, it is lesslikely that the courts at the place of enforcement would refuse an arbitrationenforcement case by applying the public policy/interests principle. It has also beendemonstrated in China’s judicial practice that the appropriate use of public policyprinciple not only proves the improvement of China’s ability to manage judicialactivities but also shows respect to various arbitration institutions.Chapter VI will focus on the remedy system with respect to the refusal of theinternational commercial arbitration award’s enforcement. Based upon the writer’scomparative study on the relevant legislative rules of different countries, the writernotes that most countries have established relevant appeal system as remedy solution;rights of the arbitration parties shall be the basis of arbitration as well as the basis ofthe remedy system in various countries. Regardless of the difference among thelegislation of difference countries, the legislation in most countries shows that appealsystem as a remedy solution is the best choice to protect interests of the arbitrationparties.With regard to the remedy solutions, China applies the “One Final Review”approach (there will be only one judicial review of the enforcement case of ainternational commercial arbitration), and “Reporting System”(all refusal ofenforcement of international commercial arbitration award shall report to the SupremeCourt), which seriously vetoes the rights of prosecution authorities and affects theeffectiveness of the judicial review.It has been well noted that the above mentioned reporting system as theun-official judicial review rules had brought China quite a lot benefits in judicialpractice. Nevertheless, with the repaid development of Chinese internationalcommercial arbitration, the disadvantage of this system becomes more and moreobvious. The writer tend to believe that the right to appeal as one’s basic judicialrights also reflects the public interests, and it is advisable to establish a correspondingappeal system embedded into the current recognition and enforcement system with regard to the international commercial arbitration awards. As to the construction ofappeal system, except for the adoption of relevant domestic procedural rules, it is alsoimportant to pertinently limit the scope of one’s right to appeal, namely the arbitrationparties shall only be allow to appeal to the verdict which refuses the enforcement ofcertain international commercial arbitration award so as to avoid the waste and/or theabuse of the judicial resources and rights, and to achieve the balance and harmonybetween judicial authorities and arbitration.