On The Legal Aspects Of Access To Overseas Arbitration Institutions

In 2015,the State Council approved the Program for Further Deepening the Reform and Opening-up of the Pilot Free Trade Zone in China(Shanghai),which states that it "supports the entry of internationally renowned commercial dispute resolution institutions" and sets the goal of "accelerating the establishment of a global Asia-Pacific arbitration center".In 2019,the new Lingang Zone of the Shanghai Free Trade Zone took the lead in introducing the "Administrative Measures for the Establishment of Overseas Arbitration Institutions in the New Lingang Zone of the China(Shanghai)Pilot Free Trade Zone",which further establishes the forms,standards,criteria and procedures for the entry of foreign arbitration institutions into China.This further establishes the form,criteria and scope of business of overseas arbitration institutions to enter China,marking the real possibility of overseas arbitration institutions to arbitrate in China from the rule level.Shanghai,as a leader in reform and opening up,has provided a reference for the design of rules for other regions in China on the issue of access to overseas arbitration institutions.Since 2020,Beijing and Hainan Province have introduced policies to support overseas arbitration institutions to operate in their respective regions.It can be seen that access to overseas arbitration institutions is becoming an emerging area of high-level opening up of China’s arbitration service industry to the outside world.The introduction of well-known overseas arbitration institutions can help optimize China’s business environment and bring a "catfish effect" to the development of arbitration in China.However,the process of access to overseas arbitration institutions has been slow and most institutions are still in a wait-and-see mode.A review of the existing rules for access to overseas arbitration institutions reveals that the rules are too loose and uncertain.First,in terms of the form of access,there is no basis for whether an overseas arbitration institution can enter China without establishing a commercial presence.Although China’s policy strongly promotes the establishment of overseas arbitration institutions as "business establishments",business establishments do not have legal attributes,they are not clearly defined as representative offices,unincorporated branches or arbitration institutions with independent legal personality.Through literature research and comparative studies,it is suggested that China should provide the basis for the admission of overseas arbitration institutions in the form of non-commercial presence and suggest a chartered access route,while for business institutions under commercial presence,it is appropriate to position them as arbitration institutions with independent legal personality.Second,the existing criteria of international recognition,legal establishment outside of China for more than five years,and suitability of principals are still inadequate in terms of admission criteria for overseas arbitration institutions.A literature study examines the importance of the independence of arbitration institutions.A comparative analysis also reveals that if the legal culture of an admitted overseas arbitration institution is not compatible with that of the home country,it will be difficult for such an institution to succeed in China and may even cause confusion in the domestic arbitration market.In this regard,it is recommended that two additional admission criteria be added:"independence of the arbitration institution" and "similarity of legal culture".Again,with regard to the scope of business for admission of overseas arbitration institutions,a study of existing regulations,academic opinions and judicial attitudes reveals that the scope of business for admission of overseas arbitration institutions is explicitly defined as "foreign-related arbitration business",but this scope is less attractive to overseas arbitration institutions.The judicial authorities in China are gradually paying attention to some atypical foreign-related situations,but have not yet formed a unanimous opinion.Therefore,it is recommended to include in the scope of foreign-related arbitration the cases where the subject matter of the dispute is a wholly foreign-owned enterprise and where the subject matter is not cleared in the FTZ.As for the inconsistency of judicial discretion,a negative list of foreign-related factors could be established or cases with atypical foreign-related factors could be included in the mandatory search mechanism for such cases.Finally,with regard to the management of overseas arbitration institutions after their admission,the management system based on the public security system and the requirement to report in advance the next year’s activity plan,as provided for in the Law of the People’s Republic of China on the Administration of the Domestic Activities of Foreign NGOs,is not compatible with the nature of arbitration activities,and the existing rules do not meet the need for convenience in the movement of personnel after the admission of overseas arbitration institutions.Therefore,it is recommended that exceptions to the Law of the People’s Republic of China on the Administration of the Domestic Activities of Foreign Non-Governmental Organizations be provided for the admission of overseas arbitration institutions,and that facilitation measures be provided for the movement of personnel after the admission of overseas arbitration institutions.