Judicial Review on Arbitral Award
by Wang Zhishuo^*

Arbitration, as a means for dispute resolution which fully respects the principle of parties’ autonomy, is flexible, efficient and able to be executed extraterritorially. Those characters bring arbitration an increasing important role in resolving modern commercial disputes, however, that doesn’t mean that the arbitration result and procedure, which is a dispute resolution means upholding the supremacy of private rights, could wholly evade the supervision and review of public authorities. From the perspectives of protecting the remedial means for the parties and the impartiality of arbitration, it is appropriate to some extend that the court conducts judicial review on Arbitral Award. in present China, such judicial review conducted according to laws is primarily represented in two ways: to set aside or not to enforce an award.

According to the relevant provisions of the Arbitration Law of the People’s Republic of China:
Article 58 If parties concerned have evidences to substantiate one of the following, they may apply for the cancellation of arbitral award with the intermediate people's court at the place where the arbitration commission resides.

1. There is no agreement for arbitration.

2. The matters ruled are out the scope of the agreement for arbitration or the limits of authority of an arbitration commission.

3. The composition of the arbitration tribunal or the arbitration proceedings violate the legal proceedings.

4. The evidences on which the ruling is based are forged.

5. Things that have an impact on the impartiality of ruling have been discovered concealed by the opposite party.

6. Arbitrators have accepted bribes, resorted to deception for personal gains or perverted the law in the ruling.

The people's court shall form a collegial bench to verify the case. Whereas one of the aforesaid cases should be found, arbitral award should be ordered to be cancelled by the court.

Whereas the people's court establishes that an arbitral award goes against the public interests, the award should be cancelled by the court.

Article 59 An application filed by the parties concerned for the cancellation of an arbitral award should be sent within six months starting from the date of receipt of the award.

Article 60 The people's court should rule to cancel the award or reject the application within two months after the application for cancellation of an award is received.

Article 61 After the people's court has accepted an application for the cancellation of an arbitral award and deems it necessary for the arbitration tribunal to make a new award, it shall notify the arbitration tribunal for a new ruling within a certain limit of time and order the termination of the cancellation pr-ocedure. In the case when the arbitration tribunal refuses a new ruling, the people's court shall rule that the cancellation procedure be restored.

According to Article 237 of the newly amended the Civil Procedure Law of the People’s Republic of China:
If a party fails to comply with an award of an arbitral organ established according to the law, the other party may apply for execution to the people’s court which has jurisdiction over the case. The people’s court applied to shall enforce the award.

If the party against whom the application is made furnishes proof that the arbitral award involves any of the following circumstances, the people’s court shall, after review and verification by a collegial panel, make a written order not to allow the enforcement:

(1) the parties have had no arbitration clause in their contract, nor have subsequently reached a written agreement on arbitration;

(2) the matters dealt with by the award fall outside the scope of the arbitration agreement or are matters which the arbitral organ has no power to arbitrate;

(3) the composition of the arbitration tribunal or the procedure for arbitration contradicts the procedure prescribed by the law.

(4) The evidence on which the award is based is forged;

(5) The other party has withheld the evidence which is sufficient to affect the impartiality of the arbitration; or

(6) The arbitrators have committed embezzlement, accepted bribes or done malpractices for personal benefits or perverted the law in the arbitration of the case.

If the people’s court determines that the execution of the arbitral award is against the social and public interest, it shall make an order not to allow the execution.

It is not difficult for us to draw the conclusion from relevant current laws that in China, the judicial review on arbitral awards includes both review in form which is on arbitration procedures and review in substance which is on the content of arbitral awards. From the general trend of arbitral legislation and judicial development in most countries in the world we can tell that the court is gradually reducing its review in substance on arbitral awards, including China, whose newly amended Civil Procedure Law has omitted the two standards for review on arbitration: “the main evidence for ascertaining the facts is insufficient” and “there is definite error in the application of the law” and has gradually moved closer in its standards for reviewing non-enforcement of an award to Article 58 of the Arbitration Law of the People’s Republic of China，which prescribes the standards for setting aside an award. The amended ones are “(4) The evidence on which the award is based is forged; (5) The other party has withheld the evidence which is sufficient to affect the impartiality of the arbitration”, which indicates that China’s judicial review is transforming into the one primary in form and is complemented by review in substance, and also indicates that Chinese judicial system trust and support arbitration.

Nevertheless, there are a few scholars believing that the remained article in the Civil Procedure Law of the People’s Republic of China“…against the social and public interest” as the bottom article is a “shadowing review” in substance, but in the light of the fundamental realities of China and the development of its legal system, it is consistent with China’s circumstances to retain the corresponding articles.

* Case manager form Secretariat of BAC

Determining Justice through Comprehensive Analysis
by Zhang Jianhua (S.J.D) Arbitrator of Beijing Arbitration Commission

Some parties are keen to play such kind of trick: by alleging some specific reasons, such as failing to receive the notice of performance from the other party, they claiming that the proof of the other party is incomplete or its exercise of rights contain some defects so as to defer, prevent or even offset the other party from winning the case. The judges, having no ready-made regulations or precedent cases to follow when handling more and more complicated commercial disputes, are reluctant to take risks, to innovate and consequently defer in cases handling-just as Lord Denning put it “the justice turns sour”.¹

It is impossible for the Supreme People’s Court to hand out judicial interpretations on all issues. As a matter of fact, such kind of issue does not fall into the application of law but determining fact-finding. However, against the background of insufficient study on legal hermeneutics, the lack of research and communication on the methodology of legal application and the shortage in analysis and analytical methodology discourage dispute handlers to form Intimate Conviction

Arbitration is characterized by expert arbitration and the stress is on the significance of time. It more relies on the independent analysis of arbitrators to realize the impartiality and fairness in individual cases. However, to get the impartiality and fairness, it is not necessarily to count on some legal basis on the surface, but on the arbitrator to establish the “determined justice” through his comprehensive analysis based on his life experience and legal training so that can he continue to handle the case impartially.

In an arbitration case concerning the claim of the retention money for a decoration project, the outsourcer, a company from South Korea, counterclaimed that the contractor, a company in Beijing, should reimburse the costs incurred by this contractor when it had to engage another company to do the maintenance work due to the failure of the contractor to do so. The contractor refused to reimburse the costs on the ground that it had never received any notice from the outsourcer. The proof of the outsourcer was merely one-side documentation, which was unable to prove the reception on the part of the contractor.

The arbitral tribunal made the following analysis: the issue of the case was about accomplishing the maintenance work, which was within the warranty period contained in the construction work agreement agreed between the parties. Not as the service of some specific items prescribed by law, the parties did not set forth the provisions concerning the performance of notification in the agreement, and therefore, the usual notification shall be deemed as notification has been made, which could be indicated by documents of notarization, express delivery and inter-city express delivery. It might also be determined by telephone records of a company under normal administrative rules and in normal order.

The arbitral tribunal also held that the contractor assumed the liability for maintenance by virtue of the position of a contractor within the warranty period contained in the construction work. Such a determined position and liability requires it to carefully receive and respond to the notification of the other party and be heeded to the items within the scope of its warranty liabilities. When they were arguing over the specific formalities, not only the outsourcer should indicate that it had made the notification, but the contractor should also be required to produce information concerning the reception of the notification and the response to it. A mere denial of the notification on the part of the contractor shall not constitute a waiver of the requirement. With no justifiable reasons, the contractor shall be liable for the part which shall be maintained by it.

The individual quality of arbitrators and judges plays an important role in the comprehensive analysis of cases. Yet high quality counts on study and communication, as well as authoritative assessment and promotion mechanism.

1 Page 254-255, The First Edition in March of 2000, The Closing Chapter Author: Alfred Thompson Denning (UK), Translators: Liu Yong’an, Li Yan, Beijing, Law Press · China

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