A Study On Legal Issue Of Domestic Dispute Summit To Foreign Arbitral Institution

In recent years, more and more domestic companies submit their disputes to the foreign arbitral institutions, which have agreed in arbitration agreement, even if the parties to the contract, the subject matter and content of the contract didn’t have any foreign elements. Once disputes, the parties would follow the terms of the arbitration agreement, and arbitrate by a foreign arbitral institution. Moreover, one of the parties would require a domestic court of justice to recognize and enforce the arbitration award made by foreign arbitral institution. This has caused a series of problems. The most serious problem is the legal effect of the arbitration agreement that mentioned above.The Jiangsu Aerospace Wanyuan Windpower Equipment Co., Ltd. vs LM Windpower Products(Tianjin) Co., Ltd.(Wanyuan Case) is a very special example of judicial practice. Both parties are Chinese legal person. The subject matter of the contract is in China. The conclusion and performance places of contract are in China. However, the parties have agreed to submit all the disputes to the ICCA in the “trade agreement”. Supreme Court identified that the involved parties were Chinese legal person, the subject matter of the dispute was located in our country, conclusion and performance of contract had occurred in our country. Therefore, there was no foreign element in this dispute. The dispute could not be submitted to a foreign arbitral institution. In summary, the arbitration agreement was invalid.Arbitration agreement is the prerequisite for arbitration. The invalidation of arbitration agreement will lead to arbitration act invalid, thus causing arbitral award cannot be recognized and enforced. This will seriously obstruct the parties to protect their own interests. Therefore, this article chooses to start from the validity of the arbitration agreement, and study the judgment of the Supreme Court. Due to the fact that the validation of arbitration agreement is not related to foreign elements in disputes, and there is no restriction in our legislation to prohibit the submitted behavior to a foreign arbitration institution. The judgment of Supreme Court found unjustifiable. In my opinion, this kind of cases is actually refers to the jurisdiction issue of foreign arbitral institutions, but not the simple validation issue of arbitration agreement. We should investigate this issue from the view of arbitration jurisdiction, and try to point out whether it should be accepted by judicial practice. It is unacceptable that adjudge the arbitration agreement invalid easily.In addition to the introductory part, the paper is divided into three chapters, the main contents are as follows:In the first chapter, the author introduces the Wanyuan case, describes the merits of the case in detail, and extracts legal opinion of three courts, especially investigates the legal opinion of the Supreme Court. The author tries to clarify all the concepts in legal opinion, and deeply explores the legal arguments of Wanyuan case.The second chapter is the main section of this article. Firstly, author attempts to discuss whether the validity of the arbitration agreement is determined by the foreign element of dispute. Secondly, after a comprehensive research of legislation, author attempts to found out if it is illegal to promise that all disputes related should submit to foreign arbitral institution in arbitration agreement. Whether foreign arbitral institution could obtain jurisdiction of domestic disputes from arbitration agreement is legal or not. Finally, author attempts to explore from practical view, in order to give our judicial practice some reference. If domestic disputes submitted to foreign arbitral institution is legal in foreign practice, and if thus arbitration award could be recognized and enforce to implement. Based on the above steps, this article draws a conclusion that arbitration agreement does not invalid.In the third chapter, author tries to find if domestic dispute submitted to foreign arbitral institution should be allowed. This article argues that, in the economic globalization, China should further open arbitration services market. On the one hand, the author summarizes the advantages and benefits of allowing domestic disputes submitted to foreign arbitral institutions. On the other hand, author lists the potential risks to our judicial sovereignty and domestic arbitral institutions of opening arbitration service market under current legal environment, and give rigorous solutions. Finally, author concerns about disadvantages of prohibiting domestic dispute submitted to foreign arbitral institution, in order to explain the necessity of opening the arbitration service market from the negative side.