Study On Agreement On Foreign Arbitration Without Foreign Related Elements

Arbitration is the prevailing method to solve disputes generated from international transactions. The reasons lead to its popularity, except from the deepening of the globalization process and it is inevitable for disputes to arise in cross border transactions, the major reason is because among different countries, especially the differences between the common law system and the civil law system, if different laws applied to the same fact, the outcome maybe totally different. Consequently, arbitration focuses on the basic guiding principles, which are party autonomy and fairness, thus to balance the two parties risk taking and interest allocation. Moreover, the character of arbitration is the award shall be final and binding. This is highly valued by the parties when compared to lengthy court process and appeal process. Arbitration largely reduces the cost and improves the efficiency.Based on the golden principle of party autonomy, the parties will tend to choose the arbitration organizations they deem to be the best. In practice it is not rare that two Chinese parties will refer their dispute to some international arbitration organizations that are out of Mainland China, especially when there is FOEs(Foreign owned Enterprises), they tend to find a third party neutral seat to solve their disputes. However, according to the current Chinese law, FOEs are not foreign legal person but Chinese legal person, the prevailing theory of the Chinese private international law stipulates that only if at least one of the subject and the object as well as the content of the legal issue contains foreign related factor then it will be deemed as foreign related case, that is to say, FOE does not fall into the scope of a qualified subject with foreign related factor. Moreover, if the object and the content of the legal issue also contain no foreign related factor, then choosing a non-domestic arbitral institution will be ruled invalid. Yet we should note that the reasons for not enforcing and recognizing arbitral awards do not contain this. The reply from the Supreme People’s Court enlarged the scope of the reasons that will nullify the arbitral agreement. This approach should draw our attention. Thus this article is going to debate on the cases involve no foreign related factor but referred to non-domestic arbitration. Moreover, the Chinese arbitration law was promulgated in 1990 s, the dramatic changes happened in the two decades force us to reconsider the necessity of amending the arbitration law. This article based on the interpretation of the said issues, tries to offer feasible amendment suggestions.