Objection to Jurisdiction over Arbitration Case
Wang Ze

In accordance with Article 6 of the existing Arbitration Rules of Beijing Arbitration Commission (effective as of April 1, 2008, hereinafter referred to as Arbitration Rules), the party concerned may have the right to raise opposition to the jurisdiction over arbitration case. The decision on jurisdiction over arbitration case mainly lies in whether the dispute arising shall be settled in the people’s court or arbitration agency. It is called “competent” academically. The decision on jurisdiction over arbitration case may not directly affect the substantive rights of the parties concerned. In other words, despite of the opposition to jurisdiction, it does not mean that arbitration application is untenable, and vice versa. In practice, it is often the case that it is the defendant who raises the opposition to jurisdiction. However, as the defendant is the party whose right is claimed and may perform liabilities for the other party in the future, it is inevitably regarded as delaying time by the applicant by raising opposition to jurisdiction. Nevertheless, it shall be recognized that opposition to jurisdiction is the procedural right endowed to the parties concerned and raising opposition to jurisdiction shows the party concerned has exercised its procedural right during arbitration. The reasonable use of jurisdiction objection system is an actual demonstration of the arbitration procedural rights of the parties concerned. In most cases however, the parties concerned would not raise any jurisdiction objection, as they believe that the dispute shall be settled eventually wherever it is. For these disputes, it is more suitable to settle them by arbitration rather than lawsuit. Therefore, the parties concerned choose not to raise jurisdiction objections. Among the cases accepted in 2011 by Beijing Arbitration Commission, about 5% of the cases raised jurisdiction objections, which could be concluded that it is quite uncommon to raise jurisdiction objection. Thus, it could show that most of the parties concerned are willing to settle their disputes by arbitration.

As for the stipulations on jurisdiction objection in Arbitration Rules, the following points are worthy of attention:

(I) Time for raising jurisdiction objection

According to paragraph (I), Article 6 of existing Arbitration Rules, the jurisdiction objection shall be raised prior to first trial and subject to paragraph (II) hereof, where the party concerned fails to raise the jurisdiction objection as per paragraph (I), Article 6, it shall be deemed as admitting the jurisdiction of arbitration commission over the arbitration case. Failure to raise the jurisdiction objection within the time limit shall be regarded as admitting the jurisdiction of arbitration commission over the arbitration case.

The arbitration proceedings have certain flexibility. Subject to Article 23 of the Arbitration Rules, where the parties concerned agree not to appear in court, or the arbitral tribunal thinks that it is unnecessary to hear in court, which has been agreed by both parties, the arbitral tribunal may, based on the written documents as provided by both parties, to conduct the documentary hearing. In that case, how does the party raise the jurisdiction objection According to paragraph (I), Article 6 of existing Arbitration Rules, as for the case by documentary hearing, the jurisdiction objection shall be raised in writing prior to expiration of first defense. Similarly, subject to paragraph (II) hereof, where the parties concerned fail to raise the jurisdiction objection within the time limit, it shall be deemed as admitting the jurisdiction of arbitration commission over the arbitration case.

In addition to that, it is stipulated in paragraph (I), Article 6 of existing Arbitration Rules that the jurisdiction objection shall be raised in writing, which is important to pay attention to.

(II) Disposal of jurisdiction objection

1. Subject disposing of the jurisdiction objection
It is stipulated in paragraph (IV), Article 6 of existing Arbitration Rules that where the party concerned raised the objection to effectiveness of arbitration agreement or jurisdiction over the arbitration case, it shall be decided by arbitration commission or arbitral tribunal as authorized by arbitration commission. Therefore, the subject disposing of the jurisdiction objection may be the arbitration commission or arbitral tribunal as authorized by arbitration commission.

In practice, if the party concerned raises jurisdiction objection that is only directed to the wording of arbitration clauses it will be unnecessary to resolve in court and could be judged based on the relevant laws and regulations, and by the arbitration commission directly. However, if the jurisdiction objection raised by the party concerned shall be investigated in court, or involves evidences procedures etc., the arbitration commission would authorize the arbitral tribunal to deal with the jurisdiction objection.

2. Form of jurisdiction objection disposal
Where thedisposal of the jurisdiction objection is administered by an arbitration commission, the arbitration commission would make the decision on the jurisdiction objection. However, if the jurisdiction objection is disposed by the arbitral tribunal as authorized by arbitration commission, the arbitral tribunal, subject to paragraph (IV), Article 6 of existing Arbitration Rules, may make the decision in interim award or final award.

3. Procedure of jurisdiction objection disposal
The arbitration commission, on receipt of the written arbitration objection raised by the party concerned, would generally serve the relevant written materials such as jurisdiction objection etc. to the other party. After the other party proposes their opinions on jurisdiction over the case, the arbitration commission shall consider the specific conditions of the case and make the decision on jurisdiction or authorize the arbitral tribunal to decide based on paragraph (IV), Article 6 of existing Arbitration Rules.

The existing laws in China have no system on “self-determination of jurisdiction”; therefore, the arbitral tribunal can only have the right to deal with the jurisdiction objection after being authorized by the arbitration commission based on the Arbitration Rules. Even if the party concerned raises the jurisdiction objection after formation of arbitral tribunal, only the arbitration commission has the right to decide the jurisdiction, or arbitral tribunal may decide only after being authorized by the arbitration commission.

Among the existing laws, from Arbitration Law of the People's Republic of China to Interpretation of the Supreme People's Court concerning Some Issues on Application of the Arbitration Law of the People's Republic of China and the reply of Supreme People’s Court to specific cases, the stipulations on effectiveness of arbitration clauses are increasing with more detailed classification of the issues. However, not all the objections raised by the parties concerned could be included in practice. Therefore, the arbitration commission or the arbitral tribunal as authorized by the arbitration commission is facing new challenges every day. What will never change is that every time an arbitration commission or arbitral tribunal handles disposal of jurisdiction objections, it reflects the wisdom of arbitration commission and arbitral tribunal on facts investigation and applicable laws, etc.

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