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Arbitration
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Nadia Darwazeh and Friven
Yeoh, 'Recognition and
Enforcement of Awards
under the New York
Convention', Journal of
International Arbitration,
(© Kluwer Law
International; Kluwer Law
International 2008, Volume
25 Issue 6) pp. 837 - 856
P 838 country, two systems” principle enshrined in the SAR's “mini-constitution,” known also
P 839
© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Recognition and Enforcement of Awards under the New
York Convention
Nadia Darwazeh ; Friven Yeoh
(*)
Abstract
In this article, the authors survey the adoption and application of the New York Convention
in Mainland China and Hong Kong, examining in particular whether the pro-enforcement
bias that is intended by the Convention holds true in practice for these jurisdictions.
Since the inception of the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (“New York Convention” or “Convention”) ( 1 ) fifty
years ago, more than 140 states have acceded to the Convention, making it one of the
most successful international conventions in history. By creating a mechanism whereby
arbitral awards are easily enforceable around the world, the New York Convention has
empowered commercial parties with an effective means of resolving their disputes
through a neutral forum, and through a process they trust. It is fair to say that the
Convention has since played a key role in encouraging cross-border trade and commerce.
Indeed, many states even see the adoption of the Convention as a prerequisite step
towards attracting foreign investment. It is, therefore, not surprising that with China's
economic liberalization also came its decision to adopt the New York Convention in 1987.
In the first part of this article, the authors survey the Convention's adoption and
application in mainland China, focusing in particular on a number of significant and
recent enforcement rulings of the People's Courts.
In the second part of the article, the authors trace the application of the Convention in
Hong Kong and contrast the approach of the Hong Kong courts with its mainland
counterparts. When Hong Kong, a former dependent territory of the United Kingdom,
reverted to Chinese sovereignty on July 1, 1997, it became a Special Administrative Region
(SAR) of the People's Republic of China. This meant that it could no longer rely on the
United Kingdom's membership of the New York Convention. However, the continued
application of the New York Convention in Hong Kong was assured by virtue of China
extending its membership of the Convention to Hong Kong. At the same time the “one
as the “Basic Law,” has ensured that the pre-existing English legal system in place in Hong
Kong is retained.
I Mainland China
A Accession and scope of application
China acceded to the New York Convention on January 22, 1987. As with some other
countries, China's accession, which entered into force on April 22, 1987, was subject to the
two reservations permitted under Article I(3) of the Convention: the “reciprocity” and
“commerciality” reservations. ( 2 ) Pursuant to the reciprocity reservation, China will
apply the Convention only with respect to arbitral awards made within the territory of
another contracting state to the Convention. Under the commerciality reservation, China
will apply the New York Convention only to disputes arising out of defined legal relations
which are, as a matter of Chinese law, considered to be “commercial relations,” whether
of a contractual or non-contractual nature. “Commercial relations” are defined by the
Supreme People's Court (SPC) to comprise “relationships arising out of contracts, torts or
relevant provisions of law.” ( 3 ) Examples of such relationships include the purchase and
sale of goods, lease of property, contracts for projects, technology transfer, equity joint
venture, cooperative joint venture, exploratory development of natural resources,
insurance, credit and maritime accidents. ( 4 )
Since acceding to the New York Convention, China has set out to refine its enforcement
procedure and to create a pro-enforcement environment, including through the following
pronouncements:
(i) the Civil Procedure Law, ( 5 ) which sets out the procedure by which the parties shall
apply for recognition and enforcement of a Convention award within mainland
China, ( 6 ) as well as the time limit for doing so; ( 7 )
(ii) the Regulations of the SPC Regarding Certain Issues in Relation to Enforcement
(Effective on Trial Basis), ( 8 ) which prescribe the documentary requirements and
information that need to be provided to the court when applying for recognition
and enforcement;
(iii) the Provisions of the SPC on the Charges and Examination Period for the Recognition
and Enforcement of Foreign Arbitral Awards ( 9 ) were adopted to minimize
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 inaction and delays by the lower courts in dealing with enforcement applications.
They require the People's Court to issue its ruling permitting recognition and
enforcement of an award, or otherwise report up to the higher court any proposal to
refuse enforcement, within two months of accepting the application; and
(iv) the Notice on Matters Concerning the People's Court's Handling of Foreign-Related
Arbitrations and Foreign Arbitrations (“Reporting Up Notice”), ( 10 ) which was issued
by the SPC to provide a check on the local courts and ensure consistency in the
court's enforcement decisions. Pursuant to this Notice, a centralized system of
reporting and review was set up, requiring the lower courts to obtain the SPC's
consent before any ruling to deny enforcement of foreign awards can be issued.

B Enforcement record of the People's Courts

Notwithstanding the legal framework for the implementation of the Convention, China's
enforcement record was patchy in the initial years of the Convention's adoption.
Commentators and practitioners alike lamented the oft misapplication of, or even scant
regard for, the Convention terms. ( 11 ) The complaints included procedural difficulties
and significant delays in enforcement proceedings. ( 12 ) In the words of a former Vice-
Chairman of the China International Economic and Trade Arbitration Commission
(CIETAC), the problems faced by the People's Court in its handling of the New York
Convention were largely twofold: (i) the judges' lack of familiarity with arbitration, much
less international arbitration; and (ii) local protectionism. ( 13 )
The SPC took steps to address these shortcomings by offering judges training on
arbitration law, as well as setting up a centralized mechanism to review decisions to
refuse enforcement by way of the Reporting Up Notice. ( 14 ) Since 2000, China's
enforcement record is said to have shown significant improvement. While there is no
comprehensive system tracking the courts' rulings in China, the SPC noted recently that,
from 2000 to the end of 2007, of the many applications to refuse enforcement, only twelve
P 840 had been successful. ( 15 ) This statistic is indeed very encouraging. However, at the
time of writing, the authors are aware that this year alone, there have been three rulings
in which the SPC refused enforcement under the Convention: two on the basis that the
arbitral procedure was not in accordance with the parties' agreement; ( 16 ) and another
on grounds of violation of public policy. ( 17 ) Below, the authors will discuss these recent
decisions as well as other previous key enforcement cases.

C Case review
1 Applicability of Convention to “Non-Domestic” Awards
Pursuant to Article I(1) of the New York Convention, the Convention applies to the
enforcement of not only arbitral awards that are made in the territory of another state
(“foreign awards”), but also those that are not considered as domestic in the state where
enforcement is sought (“non-domestic awards”). While the phrase “awards not considered
as domestic” is not defined in the Convention, ( 18 ) it is understood that this refers to
those awards which are subject to the Convention not because they are made abroad (a
territorial criterion) but because they are made within the legal framework of another
country, for example, pronounced in accordance with foreign law or involving parties
domiciled or having their principal place of business outside the enforcement
jurisdiction. ( 19 ) However, as noted above, China's accession to the New York Convention
is subject to the “reciprocity” reservation, which means that the Convention will only be
applicable to those awards which are made “within the territory of another contracting
state.” For this reason, it has been assumed that the Convention would not apply to “non-
domestic awards” made within China. Rather, the enforcement of such awards would be
governed by the Civil Procedure Law which sets out its own grounds for refusing
enforcement of an arbitral award. ( 20 ) Curiously, the People's Court has recently ruled,
however, that the Convention is applicable in deciding the enforceability of an award
issued by the International Chamber of Commerce (ICC) pursuant to an arbitration seated
in Shanghai.
P 841
In Wuxi Woco-Tongyong Rubber Engineering Co. Ltd. (“Woco”) v. Zueblin Int'l GmbH (“ZIG”), (
21 ) the relevant arbitration clause provided “Arbitration: ICC Rules, Shanghai shall
apply.” The Wuxi Intermediate People's Court, issuing its ruling denying the enforceability
of the Shanghai award, reasoned that “[a]s the arbitral award was made by the Court of
Arbitration of the ICC, and confirmed by the seal of its Secretariat, it ought to be
regarded as a ‘non-domestic award.’ ” Further, the court said that since Article I(1) of the
New York Convention provides that the Convention “shall also apply to arbitral awards
not considered as domestic awards in the State where their recognition and enforcement
are sought,” the Convention would apply in determining the enforceability of this award.
As a matter of Chinese law, the governing law in that case, such awards are known as
“foreign-related” awards (as opposed to “foreign awards”) which enforcement ought to be
governed by the Civil Procedure Law. This decision to apply the Convention to an award
that is only foreign-related (not foreign) is therefore curious. Further, no attempt was
made to reconcile the court's reasoning with China's “reciprocity” reservation under the
Convention.

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 The court's somewhat unconvincing application of the New York Convention in the Zueblin
case highlights the People's Court's long-standing struggle to deal with arbitrations
conducted in mainland China by foreign arbitration institutions. This issue has its genesis
in Article 16 of the Arbitration Law ( 22 ) which requires that an arbitration agreement
must include “a designated arbitration commission” to be valid. However, Article 10 of
the Arbitration Law states that “arbitration commissions may be established in
municipalities directly under the Central Government … The establishment of an
arbitration commission shall be registered with the administrative department of justice
of the relevant province, autonomous region or municipality directly under the Central
Government.” ( 23 ) Based on a strict interpretation, foreign arbitration institutions such
as the ICC are not “arbitration commissions” within the meaning of the Arbitration Law,
and it is therefore widely assumed that PRC law does not permit foreign arbitration
institutions to conduct arbitrations in mainland China. In the same vein, the Civil
Procedure Law, which deals with enforcement of arbitral awards issued in China, assumes
that awards issued in China are either “domestic” or otherwise “foreign-related” awards
issued by such “designated arbitration commissions.” ( 24 ) In this context, it is also
assumed that awards issued pursuant to an arbitration seated in mainland China
pursuant to arbitrations administered by foreign arbitration institutions are not
enforceable in China. However, the ICC has conducted arbitrations in mainland China. In
fact, a number of cases have come before the People's Courts in which the courts were
P 842 asked to rule on the validity of ICC-administered arbitrations with a mainland China
seat. In those cases, the People's Courts held that because the standard ICC arbitration
clauses invoked by the parties did not expressly refer to the ICC as the administering
institution as required by Article 10 of the Arbitration Law, ( 25 ) the arbitration clauses
were invalid. However, the court has not addressed the more fundamental issue whether
foreign arbitration institutions are allowed to administer arbitrations in mainland China.
( 26 )
In the Zueblin case, the SPC denied enforcement, holding that the arbitration clause was
invalid because it did not specify an administering arbitration institution. ( 27 ) However,
while the issue of the validity of the arbitration agreement was still pending (the SPC did
not issue its ruling until July 8, 2004), the ICC arbitration had pressed ahead and an
arbitral award was issued in favor of ZIG (the award was dated March 30, 2004). It was
against this background that the People's Court was then forced to address the question
of the award's enforceability. As noted above, neither the Arbitration Law nor the Civil
Procedure Law deals explicitly with awards issued in China pursuant to an arbitration
administered by a foreign arbitration institution. It is perhaps under these circumstances
that the People's Court chose to invoke the New York Convention to deal with the
question of enforceability. Enforcement was refused on the basis of Article V(1)(a), namely
that “the arbitration agreement is not valid … under the law of the country where the
award was made.” The end result of Zueblin was not unexpected given that the SPC had in
its July 8, 2004 ruling held that the arbitration agreement was invalid. This decision
highlights the ongoing hostility of the People's Court towards awards issued in China
pursuant to an arbitration administered by a foreign arbitration institution. However, the
court's approach of categorizing such awards as “non-domestic” and relying upon the
Convention to refuse enforcement is highly unconvincing and casts a shadow over the
court's legal reasoning and its ability to apply the New York Convention in accordance
with internationally accepted principles.
2 Non-Enforcement for Procedural Irregularities
There are two other important recent decisions by the People's Court in which Article V(1)
of the New York Convention was relied upon to refuse enforcement.
In April 2008, the Intermediate People's Court of Chengdu, Sichuan Province, issued two
highly anticipated enforcement rulings in relation to the well publicized fallout from the
P 843 Sichuan PepsiCo arbitrations. The Sichuan PepsiCo arbitrations had gained notoriety
among the international arbitration community as a result of the arrest of one of the
tribunal members in these arbitrations, Dr Wang Shengchang (“Dr Wang”), by the Chinese
authorities following the rendering of the final awards on the merits. In both cases, the
tribunal (comprising the same arbitrators) ruled against the state-owned Chinese parties,
feeding speculation that the arrest may have been politically motivated.
The dispute arose from a Cooperative Joint Venture Contract (“CJV Contract”) between
PepsiCo Investment (China) Co. Ltd. (PICL), a wholly owned subsidiary of PepsiCo, Inc.
(“PepsiCo”), and the state-owned Sichuan Province Yun Lu Development Industrial Co.
(“Sichuan Yun Lu”) to establish Sichuan Pepsi-Cola Beverage Company Ltd. (“Sichuan
Pepsi”). Shortly after Sichuan Pepsi was established, PepsiCo entered into a Trademark
License Contract (TLC) with Sichuan Pepsi, pursuant to which Sichuan Pepsi was granted
certain rights to manufacture, sell, and distribute products under trademarks owned by
PepsiCo. The parties also concluded a Concentrate Supply Agreement (CSA) whereby
PepsiCo undertook to sell and deliver to Sichuan Pepsi the concentrates required to
manufacture the licensed products. Disputes subsequently arose between the parties,
with PepsiCo accusing Sichuan Pepsi of undermining PepsiCo's rights under the TLC
through the unauthorized use of trademarks, damaging PepsiCo's goodwill and
reputation, breaching confidentiality, and refusing to furnish sales and other records.
Sichuan Yun Lu was also said to have undergone a change of control without giving prior

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© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 notice to PepsiCo and PICL. Such conduct, it was argued, amounted to material breach
justifying the early termination of the TLC. Termination of the TLC in turn triggered the
termination of the CJV Contract and CSA. PepsiCo filed an arbitration before the
Stockholm Chamber of Commerce (SCC) against Sichuan Pepsi seeking, inter alia, orders
to terminate the TLC and CSA (“TLC/CSA Arbitration”). Simultaneously, PICL commenced
another SCC arbitration against Sichuan Yun Lu claiming that it was also entitled to
terminate the CJV Contract (“PICL Arbitration”). In both cases, the tribunal, by a majority
vote (Dr Wang being in the majority), ruled in favor of PepsiCo and PICL and made
declaratory orders to terminate the CJV Contract, the CSA, and the TLC. Sichuan Pepsi and
Sichuan Yun Lu then sought to have the awards set aside by the Stockholm courts, but
those efforts were ultimately unsuccessful. Not surprisingly, Sichuan Pepsi and Sichuan
Yun Lu then sought to resist the enforcement of the respective awards on their “home
turf” in Chengdu, Sichuan Province. Around this time, Dr Wang was arrested, allegedly on
corruption charges. ( 28 ) In response to PepsiCo and PICL's application for enforcement
of the awards, Sichuan Pepsi and Sichuan Yun Lu argued that the two arbitrators who
decided in favor of PICL and PepsiCo (including Dr Wang) were “obviously biased” and
“under circumstances which required their disqualification,” and accordingly “the justice
P 844 of the outcome of the arbitration was severely affected.” ( 29 ) A central plank of the bias
argument appeared to be that because Dr Wang was a man of questionable integrity,
as evidenced by the corruption charges against him, the integrity of the awards must also
be called into question. Sichuan Pepsi and Sichuan Yun Lu argued that bias manifested
itself in the following ways:
(i) The two arbitrations were filed, and the tribunal permitted the arbitrations to
proceed, before the parties had the opportunity to exhaust the requisite period of
“friendly consultation” (which in the case of the TCL and CSA, was forty-five days and
in the case of the CJV Contract, ninety days). The court held that, accordingly, there
was ground under Article V(1)(d) to refuse enforcement of the awards on the basis
that the arbitral proceedings were not in accordance with the parties' agreement.
The court took this view notwithstanding that (1) the tribunal in the TLC/CSA
Arbitration had by way of a Decision on Jurisdiction concluded that in fact the forty-
five day consultation period precondition had been satisfied; and (2) no objection
had been raised by Sichuan Yun Lu at any time during the PICL Arbitration in
relation to any failure to meet the pre-arbitration consultation period requirement.
(ii) Sichuan Pepsi and Sichuan Yun Lu were not given adequate opportunities to
present their respective cases, and accordingly enforcement should be refused
under Article V(1)(b).
(iii) The tribunal decided matters which were beyond the scope of the parties'
submission to arbitration (e.g., in relation to Sichuan Pepsi's profit distribution),
giving rise to a further ground for non-enforcement under Article V(1)(c).
(iv) The seriousness of the criminal charges leveled against Dr Wang meant that he
ought to have been replaced as arbitrator. The failure to do so resulted in an
outcome which was unfair to Sichuan Pepsi and Sichuan Yun Lu. In these
circumstances, the composition of the tribunal was not in accordance with the law
of the seat of the arbitrations (i.e. the law of Sweden) and enforcement of the
awards must be refused under Article V(1)(d).
(v) Given that the awards were decided under questionable circumstances and by
questionable characters, their enforcement would be objectionable as a matter of
China's “fundamental moral values and standards of justice” and therefore, in
violation of China's public policy.
In its enforcement ruling, the Chengdu Intermediate People's Court dismissed Sichuan
Pepsi and Sichuan Yun Lu's arguments of bias, and held that the fact that Wang had been
arrested on criminal charges would not qualify as a ground for refusing to recognize and
enforce the awards under Article V(1)(d) or the “public policy violation” ground under
Article V(2)(b) of the Convention. Further, the court held that allegations of the lack of
impartiality were not supported by evidence to justify refusal of recognition and
enforcement of the award. However, in a rather surprising end result, the court did refuse
recognition and enforcement of the two awards, but on the basis that the failure of
PepsiCo and PICL to comply with the pre-arbitral consultation requirements under the
P 845 respective arbitration clauses fell within the Article V(1)(d) ground for non-recognition
and enforcement. In its ruling, the court held that the evidence presented by PepsiCo and
PICL could not establish that they had issued any notice to resolve the dispute through
consultation, nor that consultation had been carried out for the requisite number of days.
It held that the awards must accordingly be refused enforcement because the arbitral
proceedings were not in accordance with the parties' agreement. Pursuant to the
Reporting Up Notice, this decision would of course have been endorsed by the SPC.
The court's refusal to allow enforcement on the basis of Article V(1)(d) (which deals with
procedural irregularities) is curious. Indeed, the key issue arising from whether any
precondition to arbitration is satisfied is whether the tribunal had rightly taken
jurisdiction, and not whether the arbitral procedures themselves were defective. As
discussed, in the TLC/CSA Arbitration, the tribunal had by its Decision on Jurisdiction
exercised its authority to rule on its own jurisdiction, and in the process made a decision
as to the admissibility of PICL and PepsiCo's claims. In the PICL Arbitration, Sichuan Yun

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 Lu had failed to raise any jurisdictional objection and the tribunal had assumed
jurisdiction accordingly.
The relevant question to ask is therefore this: even if the tribunal had been erroneous in
assuming jurisdiction, does it necessarily negate consent of the forum? In other words, is
the objection taking aim at the tribunal or at the claim? ( 30 ) In the authors' view, any
precondition to arbitration must be intended to be a limitation on the claim rather than
on the tribunal. It must be the parties' intention that the claim cannot yet be raised,
rather than the claim cannot be arbitrated by SCC arbitration but rather in some other
forum. On this analysis, even if the tribunal was wrong in admitting PICL and PepsiCo's
claims, the tribunal's decision is final and its jurisdiction should not be affected. ( 31 )
Morever, even if the SPC were right to classify any failure to meet pre-arbitration
conditions as an issue relating to “arbitral procedure,” in view of the fact that the court
had dismissed allegations of bias, it is unclear what prejudice was caused to Sichuan
Pepsi and Sichuan Yun Lu by reason of any failure to comply with the pre-arbitral
consultation requirements. In the circumstances, the court's decision to interfere with a
“procedural issue” that had already been ruled upon by the tribunal is curious. ( 32 ) In
any event, given that Sichuan Yun Lu's failed to raise any challenge in relation to the
tribunal's jurisdiction or to any “procedural irregularity” in the PICL Arbitration, Sichuan
Yun Lu must be held to have waived its rights to, and/or be estopped from, challenging
the recognition and enforcement of the award under Article V(1)(d) of the Convention.
P 846
The unconvincing reasoning of the court in the Sichuan PepsiCo cases has therefore done
little to allay concerns that the decisions may have been politically motivated to protect
the interests of state-owned entities.
3 Non-Enforcement for Violation of Chinese Public Policy
Another ground that is frequently invoked by parties seeking to resist enforcement of
foreign awards is the “public policy” violation ground under Article V(2)(b) of the
Convention. Rarely the only basis for objection, the “public policy” ground is rather relied
upon as a “catch-all,” with parties often attempting to elevate procedural objections to
the level of public policy. In the Sichuan PepsiCo enforcement cases, for example,
Sichuan Pepsi and Sichuan Yun Lu argued that it would be against Chinese public policy
to enforce an award that was procured through an unfair and biased process.
Until recently, all attempts to invoke the “public policy” objection under Article V(2)(b),
including in the Sichuan PepsiCo cases, had been rejected back by the SPC. Consistent
with the approach adopted by most jurisdictions, the SPC had noted that “public policy”
in the context of Article V(2)(b) must be narrowly construed. While no definitive guide has
been given as to what it takes to contravene “public policy,” the SPC has determined in a
number of cases that the breach of mandatory provisions of Chinese law does not equate
with a public policy violation so as to justify refusal of enforcement.
In Raw Sugar, ( 33 ) China National Sugar & Wines Group Corp. (“China Sugar”) and ED & F
Man (HK) Co., Ltd. (“ED & F”) had entered into a contract in late 1994 whereby ED & F
agreed to sell raw sugar to China Sugar. The contract provided for all disputes arising in
connection with the contract to be submitted to arbitration before the Sugar Association
of London. Pursuant to the contract, ED & F also opened an account with the New York
Mercantile Exchange for the purposes of using the 100,000 tonnes of raw sugar to
speculate in futures. China Sugar was aware of this and even participated in the futures
trading. When China Sugar subsequently failed to make payment, ED & F ceased delivery
of the goods and proceeded to terminate the contract. It then proceeded to commence
arbitration proceedings before the Sugar Association of London, alleging contractual
breach and demanding compensation from China Sugar. An award was delivered in favor
of ED & F, awarding it monetary compensation and costs. When ED & F applied for the
recognition and enforcement of the award, China Sugar resisted, arguing that the contract
was in violation of mandatory laws of China which prohibit Chinese companies from
engaging in futures trading overseas without the approval of Chinese authorities.
P 847
In its ruling, the SPC noted that the contract should indeed have been held invalid as it
was in breach of mandatory Chinese laws. Nonetheless, a breach of mandatory provisions
of Chinese law did not “completely equate with a breach of public policy” so as to justify
non-enforcement under Article V(2)(b) of the Convention. Accordingly, the court rejected
China Sugar's argument that the award should be refused recognition and enforcement in
China.
More recently, in Mitsui & Co., (Japan) (“Mitsui”) v. Hainan Province Textile Industry
Corporation (“Hainan Textile”), ( 34 ) the SPC reiterated its view that a violation of
mandatory provisions of administrative regulations and department rules, this time in
relation to foreign exchange restrictions, did not constitute a violation of public policy
for the purposes of Article V(2)(b) of the New York Convention. In this case, Hainan Textile
had entered into a loans repayment agreement with Mitsui pursuant to which Hainan
Textile reaffirmed an earlier undertaking (given in a separate agreement) to repay on
behalf of a third party certain foreign loans advanced by Mitsui to that third party.

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 Repayments were to be made in Japanese Yen. Hainan Textile subsequently failed to
honor its obligations and Mitsui brought arbitration proceedings before the SCC. An
award was issued in favor of Mitsui, but Hainan Textile resisted attempts to enforce the
award in China. It argued that the law governing the agreement was PRC law and in
accordance with the law at that time, the agreement was required to be submitted for
approval to the authority in charge of foreign exchange. Without such approval, the
agreement would not have become effective or would simply be invalid. Any debt
confirmed by such an agreement which had not been effectively established under the
applicable law (that is, PRC law) should not be recognized or enforced. The Hainan Higher
People's Court sought guidance from the SPC as to whether the award should be refused
enforcement, inter alia, on “public policy” grounds.
In its reply, the SPC noted that while it agreed with the Hainan Higher People's Court that
the assumption of foreign debt by Hainan Textile without proper approval violated
mandatory regulations regarding foreign debt approval and registration, as well as
foreign exchange policy, such violations did not necessarily constitute a violation of the
public policy of the PRC. On that basis, the application to refuse recognition and
enforcement was rejected. Notwithstanding that the scope of the “public policy”
exception to enforcement remained undefined, the Mitsui decision was seen to confirm a
prevailing view among many Chinese legal practitioners that the SPC is loath to permit
non-enforcement on this ground save in the most exceptional circumstances.
The significance of the Mitsui and Raw Sugar cases has somewhat been overshadowed by
a recent ruling in which the SPC did invoke the “public policy” exception under Article V(2)
(b) to refuse the recognition and enforcement of a foreign arbitral award. Indeed, the
recent case of Hemofarm D.D. et al. (“Hemofarm”) v. Jinan Yongning Pharmaceutical Co.
(“Jinan Yongning”) ( 35 ) is the first instance in which the People's Court has refused the
P 848 recognition and enforcement of a foreign arbitral award based on Article V(2)(b). In this
case, Hemofarm entered into a joint venture contract (“JV Contract”) with Jinan Yongning
to establish a joint venture company (“the Company”). The JV Contract provided that any
dispute in relation to the implementation of or in connection with the JV Contract be
submitted to the ICC in Paris for arbitration. Jinan Yongning commenced litigation
proceedings against the Company in the People's Court to recover rentals for land and
machinery leased to the Company (“Rental Dispute”). The Company challenged the
jurisdiction of the People's Court on the ground that there was an arbitration clause in the
JV Contract. The People's Court rejected the jurisdictional challenge of the Company,
holding that as the Company was not a party to the JV Contract, the proceedings before it
were properly instituted. It then proceeded to rule in favor of Jinan Yongning, and
allowed its application for “preservation” of the Company's properties (in effect, freezing
the Company's assets).
Subsequently, Hemofarm commenced ICC arbitration proceedings against Jinan Yongning
alleging that the latter had breached the JV Contract, inter alia, by mismanaging the
Company. Hemofarm also claimed that it was unable to continue with the JV Contract as a
result of the Chinese litigation proceedings which led to property preservation measures
being imposed upon the Company. Hemofarm sought compensation from Jinan Yongning
as well as a return of its investments in the Company.
The arbitral tribunal in the ICC proceedings ruled that the Chinese litigation proceedings
and the remedies awarded by the People's Court directly and materially prejudiced
Hemofarm's rights and benefits arising out of the JV Contract, leading to the cessation of
operation, and eventual closure of the Company. The tribunal held that Jinan Yongning's
action in having the property preservation measures imposed upon the Company was a
breach of the JV Contract and consequently, Hemofarm could pursue its claims for
damages against Jinan Yongning in the ICC arbitration proceedings. The tribunal also held
that Jinan Yongning was in breach of the JV Contract by bringing the claim before the
People's Court when the JV contract provided for ICC arbitration. The tribunal ultimately
ruled in favor of Hemofarm and awarded it, inter alia, compensation of over U.S.$6
million (“ICC Award”).
In refusing to recognize and enforce the ICC Award, the SPC held that the arbitration
clause in question only governed disputes in connection with the JV Contract between the
parties to the JV Contract and did not cover disputes between the Company (which was
not a party to the JV contract) and a joint venture party, which can only be properly
litigated before the People's Courts. The SPC held that the arbitral tribunal had exceeded
the scope of the arbitration agreement by “re-adjudicating” and subsequently issuing an
award in relation to the dispute that had been heard before the People's Court. More
importantly, it held that the tribunal had violated China's judicial sovereignty and the
jurisdiction of the Chinese courts by re-adjudicating upon the legality of the property
preservation measures awarded by the Chinese courts in favor of the respondent and the
issue of the Chinese court's jurisdiction over the dispute between the respondent and the
Company. Accordingly, the court refused the recognition and enforcement of the award
P 849 pursuant to Article V(1)(c) (by reason that the award decided on matters beyond the
scope of submission to arbitration), as well as Article V(2)(b) of the New York Convention.
In reaching this decision, the SPC observed that while it had had previous opportunities
to deal with the “public policy” exception, those instances did not qualify for non-
enforcement. It said that the Hemofarm case was distinguishable as it was the first

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© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 occasion that an arbitral award had violated China's judicial sovereignty and the
jurisdiction of the Chinese courts. Accordingly, the recognition and enforcement of such
an award would be contrary to China's public policy.
Although the SPC appears careful to downplay any suggestion that Hemofarm signals a
reversal of its pro-enforcement stance, the ruling may be viewed as setting a dangerous
precedent, particularly in relation to Chinese-foreign joint venture disputes. Although
joint venture contracts frequently provide for arbitration in a foreign venue, Chinese
parties, in an attempt to preserve their “home ground” advantage, sometimes circumvent
that agreement and seek to have a dispute resolved before the People's Court instead.
The usual tactic is to have both the joint venture partner and the joint venture company,
which is not a party to the arbitration agreement, named as parties to a proceeding filed
before the People's Court. The inclusion of a third party is, of course, aimed at persuading
the court that it is the appropriate forum to deal with the dispute since the third party is
not bound by the arbitration agreement. Given that the SPC has taken a restrictive
approach to issues of third-party joinder and intervention, it is likely that the court will
rule in favor of assuming jurisdiction over the entire dispute. ( 36 ) In view of Hemofarm, it
appears that any ruling by the People's Court relating to the rights and obligations
between the joint venture partners under the joint venture agreement would then
preclude a tribunal from rendering an enforceable award governing those rights and
obligations. From this perspective, Hemofarm may in fact have the unintended effect of
encouraging similar attempts to circumvent arbitration agreements.

D Summary
It is encouraging to note that since the adoption of the New York Convention, China has
made a number of legislative and judicial pronouncements aimed at implementing a
pro-enforcement regime. China's enforcement record also speaks volumes, with only a
handful of awards having been refused enforcement by the SPC since 2000. However, a
closer examination of a number of recently reported cases in which enforcement has
been refused suggests that the SPC's interpretation of Article V is not always consistent
with international practice and, at times even unconvincing. These decisions cast a
shadow over whether certain rulings, especially in politically charged cases like Sichuan
PepsiCo, may have been ex-post justifications of pre-determined outcomes.
P 850

II Hong Kong
A Accession and implementation
Until June 30, 1997, Hong Kong was a dependent territory of the United Kingdom, which
had ratified the New York Convention on September 24, 1975 and extended the
application of the Convention to its dependent territories on April 21, 1977. Consequently,
between April 21, 1977 and June 30, 1997, a party was able to apply for the recognition and
enforcement of most foreign arbitral awards in Hong Kong under the New York
Convention. ( 37 )
With Hong Kong reverting to Chinese sovereignty on July 1, 1997, Hong Kong could no longer
benefit from the New York Convention through the United Kingdom's membership.
However, China extended the application of the New York Convention to Hong Kong ( 38 )
so that foreign arbitral awards are now enforceable in Hong Kong by virtue of China's
membership of the Convention. ( 39 ) Since China's membership of the Convention is
subject to both the reciprocity and commerciality reservations, these reservations also
apply to Hong Kong's application of the Convention.
The New York Convention was incorporated into Hong Kong law by the adoption of Part IV
of the Arbitration Ordinance. ( 40 ) Specifically, sections 41 to 46 contained in Part IV of
the Arbitration Ordinance ( 41 ) govern the recognition and enforcement of Convention
awards in Hong Kong. The grounds set out in the Arbitration Ordinance for refusing
enforcement essentially mirror those enshrined in Article V of the New York Convention.
The procedure for applying for leave to enforce an award is in turn governed by Order 73,
rule 10 of the Rules of the High Court. ( 42 )

B Hong Kong courts' enforcement record ( 43 )

The enforcement record of the Hong Kong courts is to be applauded. Between 1997 and
P 851 2003, the courts heard 173 applications for the enforcement of foreign awards. In thirty-
eight out of those 173 cases, enforcement was opposed, representing twenty-one percent
of all cases. The Hong Kong courts, however, only refused enforcement in seven cases,
which means that ninety-six percent of all applications for enforcement were successful.
In the period between 2004 and 2007, there were sixty-one applications for enforcement.
In each of these cases, enforcement of the award was granted. Indeed, it is interesting to
note that enforcement was actually opposed in only four out of the sixty-one cases. This
represents a considerable decline in opposition towards the enforcement of awards,
namely a drop from twenty-one percent of total cases for the period 1997–2003 to six
percent for the period 2004–2007. What explains this decline? It may be due in large part

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© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 to the Hong Kong courts having established themselves firmly as being pro-enforcement,
rendering any insubstantial opposition futile.

C Case review
As a starting point, the Hong Kong courts have consistently held that they retain
discretion over whether an award should be refused enforcement. The courts have ruled
that the use of the words “may refuse” in section 44 of the Arbitration Ordinance and
Article V of the Convention enables the enforcing court to enforce an award,
notwithstanding that a ground for non-enforcement under section 44/Article V has been
established. ( 44 ) While this approach remains somewhat controversial in certain
countries ( 45 ) (including in China and Germany) the authors take the view that the Hong
Kong courts' interpretation of the Convention is consistent with the Convention's pro-
enforcement goal and legislative history.
In one of the landmark cases on enforcement of arbitral awards under the New York
Convention, Hebei Import & Export Corp. v. Polytek Engineering Co. Ltd. (“Polytek”), ( 46 )
which is discussed in greater detail below, the Court of Final Appeal laid down the
criteria for the courts' exercise of their discretion. First, it established that there is a
strong bias in favor of enforcing Convention awards. Specifically, the courts are to have
regard to the principles of finality and comity to the extent they are consistent with the
provisions of the Arbitration Ordinance and the Convention. Secondly, it held that the
refusal by the court of the supervisory jurisdiction to set aside an award did not preclude
the unsuccessful applicant from resisting enforcement of the award in the court of
enforcement.
P 852

1 Instances Where Enforcement was Refused

Notwithstanding the general pro-enforcement bias, there have been a number of
instances worth discussing where the Hong Kong courts have exercised their discretion to
refuse enforcement.
In Paklito Investment Ltd. v. Klockner East Asia Ltd., ( 47 ) the defendant opposed
enforcement on grounds of procedural irregularity and public policy. In this case, the
parties had entered into a sale and purchase contract, providing for CIETAC arbitration. A
dispute regarding the quality and quantity of the goods arose. The tribunal appointed an
expert to opine on these issues. The defendant objected to this decision. When the
defendant received a copy of the expert report, it informed CIETAC of its intention to
make submissions on the report. Nevertheless, before having received the defendant's
comments, the arbitral tribunal rendered its award in favor of the plaintiff. When the
plaintiff applied for enforcement of the award, the defendant opposed the application
on the basis of section 44(2)(c) of the Arbitration Ordinance, namely, that it had been
prevented from presenting its case to the tribunal. It also relied on the public policy
defense set forth in section 44(3). The court rejected the public policy defense, noting
that it should be construed narrowly and enforcement may be denied on this basis only
where such enforcement would violate the forum state's “most basic notions of morality
and justice.” However, it held that a serious procedural irregularity had indeed occurred
during the arbitral proceedings. The defendant had been prevented from presenting its
case and was thereby denied a fair and equal opportunity of being heard. Accordingly,
the defendant had satisfied the ground set forth in section 44(2)(c) and the court
exercised its discretion to refuse enforcement of the award.
In the subsequent case of Apex Tech Investment Ltd. v. Chuang's Development (China) Ltd.,
( 48 ) the defendant also opposed enforcement of the award based on section 44(2)(c). In
this case, the plaintiff had purchased a block of flats in China from the defendant. It was
a condition precedent that the plaintiff should have the right to on-sell the flats to Hong
Kong purchasers. The defendant had a “Certificate for the Use of State-Owned Land”
issued by a State-Owned Land Bureau, permitting use of land as “industrial estate by
foreign investors solely.” A dispute arose as to whether the certificate conferred the right
to sell abroad. The plaintiff had already paid two installments to the defendant and
refused to pay the third installment in view of the uncertainty surrounding the certificate
and whether it could therefore on-sell the land. It then filed for arbitration before CIETAC
to recover its monies. The CIETAC tribunal rendered an award in the plaintiff's favor.
When the plaintiff applied for the enforcement of the award, the defendant opposed the
application on the basis of section 44(2)(c). Specifically, it contended that there was
procedural irregularity by reason that the arbitral tribunal enquired with the Guangdong
Provincial Land Office as to the right to sell such flats and did not give the defendant
P 853 notice of the result of the enquiries or an opportunity to make further submissions and
call further evidence. The first instance judge agreed that the defendant had been unable
to present its case but exercised his discretion to order enforcement under section 44(2).
He examined the evidence, which the defendant said would have been available to the
tribunal had they been able to present it. The judge concluded that the result of the
arbitration “could” not have been different even if the opportunity to be heard had been
granted.
The issue before the Court of Appeal was whether the first instance judge erred in

8
© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 deciding that it was clear that if an opportunity to be heard further had been given to the
defendant, it could not have had an effect upon the tribunal's award. The Court of Appeal
emphasized that the court had to avoid considering the merits of the award. In this
regard, it held that the test laid down by the first instance judge, namely whether the
result of the award “could” (as opposed to “would”) have been different, was correct.
However, it concluded that the significance of the evidence before it was uncertain and
that it was, therefore, unable to say whether it could have affected the outcome of the
award. Accordingly, enforcement of the award was refused.
The decisions in both Paklito and Apex Tech appear to suggest that the Hong Kong courts
are prepared to exercise their discretion to refuse enforcement only in circumstances
where the procedural defects were sufficiently serious to call into question the fairness of
the arbitral process or the end result.
2 Instances Where the Courts have Exercised Their Discretion to Enforce Despite
Procedural Objections
By way of contrast, where the objections do not result in any injustice, the court has
exercised its discretion in favor of enforcement. In China Nanhai Oil Joint Service Corp.,
Shenzhen Branch v. Gee Tai Holdings Co. Ltd., ( 49 ) the Hong Kong court enforced an award
despite an Article V(1)(d) objection of an improperly constituted arbitral tribunal. The
defendant opposed enforcement on the ground set out in section 44(2)(e) of the
Arbitration Ordinance, namely that the composition of the arbitral tribunal was not in
accordance with the agreement of the parties. Although the arbitration clause provided
for disputes to be submitted to CIETAC in Beijing, the plaintiff had submitted the case to
arbitration before CIETAC in Shenzhen, which had a different panel of arbitrators. The
court held that the party resisting enforcement was estopped by way of conduct from
raising this point: it had already been aware of this ground during the arbitration yet had
failed to raise it with CIETAC or the tribunal at that time. While the court held that it did
not have to exercise its discretion since the defendant was estopped from relying on the
wrongly constituted tribunal as a defense, it went on to consider how it would have
exercised its discretion. The judge held that he was quite satisfied the defendant got
what it bargained for in the contract, namely three Chinese arbitrators under CIETAC
P 854 Rules, and said that “to exercise my discretion against enforcement … would be a
travesty of justice.”
Similarly, the courts have shown little sympathy where enforcement is opposed on the
basis of a technicality, for example, where the party or appointed arbitral body had
changed its name or the arbitral body's rules have been amended.
Thus, in Shenzhen Nan Da Industrial & Trade United Co. Ltd. v. FM Int'l Ltd., ( 50 ) the High
Court held that, given that the tribunal had already ruled in favor of assuming jurisdiction
notwithstanding that CIETAC had changed its name and amended its rules, the defendant
was therefore improperly seeking to appeal on the merits. ( 51 ) The court relied on the
fact that the defendant had taken no objection to the application of the new rules at the
commencement of the arbitration. In Zhejiang Province Garment Import & Export Co. v.
Siemssen & Co. (Hong Kong) Trading Ltd., ( 52 ) the court rejected a party's attempt to
resist enforcement holding, inter alia, that a change of name of one party to the
arbitration will not constitute a ground for refusing to enforce an award. In this case, the
defendant admitted that it had entered into the contract in dispute, but claimed that it
had never received a formal notice of the change of name of the plaintiff. It did not react
when it received notices from CIETAC regarding the arbitration because those notices
referred to the new, not the old, name of the plaintiff. The court held that the defendant
bore the burden of showing that the plaintiff was not a party to the arbitration
agreement. It held that this case involved a mere change of name situation and that the
defendant had therefore not discharged its burden.
Further, in J.J. Agro Industries (P) Ltd. v. Texuna Int'l Ltd., ( 53 ) the court confirmed its pro-
enforcement approach when it enforced a part of an arbitration award pending a final
determination on the enforcement of another part of the award which was subject to
challenge. In this case, leave to enforce the award had been granted on an ex parte basis.
Enforcement was then stayed pending the final disposal by the court of an application by
the defendant to have the ex parte leave set aside. While this application by the
defendant was still pending, the plaintiff applied to have a part of the award enforced
arguing that no specific defense had been raised to the part of the award for which leave
to enforce was sought. The defendant resisted enforcement of any part of the award,
arguing that the court was precluded from doing so by virtue of the earlier stay granted in
respect of the whole of the award and that the award was not severable. The court
rejected this argument and granted enforcement of the “good” part of the award holding
that the doctrine of severability was recognized by section 44(4) of the Arbitration
Ordinance and that the stay only applied to the “bad” part of the award that was the
subject of the challenge.
P 855

3 Non-Enforcement on “Public Policy” Ground

Another ground that is often invoked by parties seeking to resist enforcement of a foreign
award is the “public policy” violation ground under section 44(3) of the Arbitration

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© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 Ordinance. As noted in Paklito, ( 54 ) the court has favored a narrow construction of the
defense. The Polytek case clearly confirms this position. ( 55 ) In that case, the defendant
had sold defective equipment to the plaintiff, which it in turn had on-sold to end users.
Hebei, the plaintiff, referred the matter to CIETAC arbitration, claiming there had been a
fundamental breach of the contract. The defendant claimed that the equipment could be
modified. The arbitral tribunal appointed experts, who conducted an examination of the
equipment at the end user's factory to see whether it could be modified. The parties
were not invited to the inspection. The chief arbitrator was present during the inspection
in a supervisory role and received communications from the technicians at the end user's
factory. The defendant subsequently became aware of the communications but did not
raise any objection that it was improper for the chief arbitrator to receive the
communications in its absence. The arbitration tribunal, adopting the expert's finding,
found that the equipment was not capable of modification and made an award in the
plaintiff's favor. The defendant applied to the People's Court in Beijing to have the award
set aside but failed. The plaintiff was granted leave in Hong Kong to enforce the award.
The defendant applied to set aside the order to enforce, raising the ground under section
44(2)(c) that it was unable to present its case and contending that after delivery of the
report it was denied a hearing at which it could contest the report. The defendant's
application was refused and the defendant appealed the decision arguing that, pursuant
to section 44(3), it was contrary to public policy to enforce the award. It relied on two
arguments, namely the previous section 44(2)(c) objection but in the guise of a public
policy defense, and a new argument that the communications amounted to an apparent
bias. The Court of Final Appeal rejected both arguments. It held that a failure to raise the
public policy grounds in proceedings to set aside an award could not operate to preclude
a party from resisting the enforcement of the award on that ground in the enforcing court
of another jurisdiction because each jurisdiction has its own public policy. However,
enforcement was justified in this case because the defendant had failed to make a
prompt objection during the arbitration proceedings when the irregularity might have
been cured and instead “kept the point up its sleeve.” The effect of this decision seems to
be that unless an irregularity was objected to in a timely manner during the arbitral
proceedings, it cannot serve as a defense against enforcement. The court also drew a
distinction between apparent bias and actual bias. The party resisting enforcement on
public policy grounds would have to show actual bias. In this case, the defendant had
failed to do so. The court helpfully reiterated the standard for a public policy defense
under section 44(3) of the Arbitration Ordinance, namely that the enforcement of the
P 856 award must be contrary to “fundamental conceptions of morality and justice” in Hong
Kong. ( 56 ) In short, the Polytek case clearly confirms the courts' strong pro-enforcement
bias.

D Summary
A review of Hong Kong's enforcement record shows that the courts are very supportive of
the New York Convention and rarely refuse enforcement. The courts have adopted a
narrow interpretation of public policy; they will not consider mere technical grounds
when enforcing an award and will generally reject procedural grounds if these were
known during the arbitration but not raised by the party, who decided instead to keep it
“up its sleeve.”

III Conclusion
Hong Kong's enforcement record is to be commended. The Hong Kong courts have
adopted a narrow interpretation of the Convention grounds for refusing enforcement and,
accordingly, established Hong Kong as being pro-enforcement.
On the other hand, China's enforcement record has been the subject of some criticism
over the years. Following efforts to strengthen its enforcement framework, the SPC now
claims that Convention awards are refused enforcement in only a handful of instances.
However, a close review of recent decisions in which enforcement was refused suggests
that the SPC's interpretation of Article V is not always consistent with international
practice. These cases mar an otherwise commendable effort by the SPC to institutionalize
a pro-enforcement regime that is consistent with the Convention's purpose and
P 856 objectives.

References
*) Nadia Darwazeh and Friven Yeoh are Counsel of the International Arbitration Group at
O'Melveny & Myers LLP. Nadia is based in Shanghai, and Friven in Hong Kong. The
authors gratefully acknowledge the assistance of Desmond Ang and Michelle Graffum
in preparing this article.
1 ) Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10,
1958, 330 U.N.T.S. 3, 21 U.S.T. 2517, TIAS No. 6997.

10
© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 2 ) Notice of the Supreme People's Court on Implementing the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards Acceded to by China,
promulgated on and effective from April 10, 1987, available in Chinese at <www.law-
lib.com/law/law_view.asp?id=4225> [hereinafter “Convention Implementing Notice”].
3) Id. art. 2.
4) Id.
5) Civil Procedure Law of the People's Republic of China, promulgated by the National
People's Congress on and effective from April 9, 1991 [hereinafter “Civil Procedure
Law”].
6) Id. ch. XXVII.
7) Id. art. 215.
8) Promulgated on July 8, 1998 and effective from July 18, 1998.
9) Promulgated on September 1, 2002 and effective from September 2, 2004.
)
10 Promulgated on and effective from August 28, 1995.
)
11 See Mathew Bersani, Enforcement of Arbitration Awards in China: Foreigners Find the
System Sorely Lacking, 19 China Bus. Rev. 10 (1992); Swedish Arbitral Award Enforced in
Beijing, Int'l Com. Litig, June 1, 1998, at 31. (quoting one lawyer as saying that China
“might as well have not bothered signing” the New York Convention); Charles K. Harer,
Arbitration Fails to Reduce Foreign Investors' Risk in China, 8 Pac. Rim L. & Pol. J. 393,
414 (1999) (claiming that Chinese courts “do as they please” when it comes to
enforcement of arbitral awards); Alberto Mora, The Revpower Dispute: China's Breach of
the New York Convention?, in Dispute Resolution in the PRC: A Practical Guide to
Litigation and Arbitration in China 151–58 (1995).
)
12 Wang Shengchang, Enforcement of Foreign Arbitral Awards in the People's Republic of
China, in Improving the Efficiency of Arbitration and Awards: 40 Years of Application of
the New York Convention, ICCA Congress Series No. 9, 461, 498–99 (A.J. van den Berg
ed., 1999).
)
13 Remarks of Tang Houzhi at Academic Conference Celebrating the 50th Anniversary of
the New York Convention, Beijing, June 6, 2008 [hereinafter “Beijing Conference”], see
China Arbitration, available at <www.china-arbitration.com/readArticle.do?
id=ff8081811a709506011a7131e38f000e>.
)14 Id.
)
15 Remarks of Justice Wan E'Xiang, Vice President of the SPC, at Beijing Conference, supra
note 13.
)
16 PepsiCo Inc. v. Sichuan Pepsi-Cola Beverage Co. Ltd., (2005) Cheng Min Chu Zi No. 912
(civil ruling of the Chengdu City Intermediate People's Court, Sichuan Province, April
30, 2008); PepsiCo Investment (China) Ltd. v. Sichuan Province Yun Lu Industrial Co.
Ltd., (2006) Cheng Min Chu Zi No. 36 (civil ruling of the Chengdu City Intermediate
People's Court, Sichuan Province, April 30, 2008) [hereinafter collectively “Sichuan
PepsiCo cases”].
)
17 Hemofarm D.D. et al. v. Jinan Yongning Pharmaceutical Co., see People's Court Daily,
available at <http://rmfyb.chinacourt.org/public/detail.php?id=120776>.
)
18 On the history of the Convention, see A.J. van den Berg, The New York Arbitration
Convention of 1958 (1981).
)
19 D. Di Pietro & M. Platte, Enforcement of International Arbitration Awards: The New
York Convention of 1958, 29 (2001).
)
20 Civil Procedure Law, supra note 5, art. 258. Awards rendered in Hong Kong are for the
same reason subject to a different enforcement arrangement. See infra note 39.
)
21 (2004) Xi Min San Zhong Zi No. 1 (Wuxi Intermediate People's Court, July 19, 2006). For
further discussions on this case, see F. Yeoh & Y. Fu, The People's Courts and
Arbitration: A Snapshot of Recent Judicial Attitudes on Arbitrability and Enforcement, 24
J. Int'l Arb. 635 (2007).
)
22 Arbitration Law of the People's Republic of China, promulgated by the Standing
Committee of the National People's Congress on August 31, 1994, and effective from
September 1, 1995 [hereinafter “Arbitration Law”].
)
23 Arts. 11–15 of the Arbitration Law also set forth additional requirements for the
arbitration commission, lending further support to the view that foreign arbitral
institutions are not allowed to administer arbitrations in China.
)24 See Civil Procedure Law, supra note 5, arts. 213 and 258.
)
25 This is notwithstanding that an examination of the ICC Rules would have made it plain
that the ICC would be the administering arbitration institution: see ICC Rules, art. 1.
However, in the light of the recent Interpretations on Certain Issues Relating to the
Application of the PRC Arbitration Law, promulgated by the Judicial Committee of the
SPC on December 26, 2005, and effective as of September 8, 2006, which provide that
an arbitration clause shall not be invalid where it fails to specify an arbitration
institution but the arbitration institution can be identified from the agreed
arbitration rules, these cases would arguably have been decided differently today.
)
26 For further discussions of some of these cases, see Nadia Darwazeh & Michael J. Moser,
Arbitrations Inside China, in Managing Business Disputes in Today's China: Duelling with
Dragons 45, 68–69 (Michael J. Moser ed., 2007).
)
27 (2003) Min Si Ta Zi No. 23 (SPC, July 8, 2004), reproduced in 9 Guide on Foreign-Related
Commercial and Maritime Trials 36 (E'Xiang Wan ed., 2004).

11
© 2023 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 ) For reports in Chinese on Dr Wang's arrest and trial, see
28
<http://finance.people.com.cn/GB/1037/4325077.html> and
<http://law.icxo.com/htmlnews/2006/04/24/843081_1.htm>. On July 7, 2008, Dr Wang
was sentenced to five years' imprisonment: see <www.mirror.gov.cn/detail.asp?
id=4231&sjb=sixkind>.
)29 Supra note 16.
)
30 See also Jan Paulsson, Jurisdiction and Admissibility, in Global Reflections on
International Law, Commerce and Dispute Resolution: Liber Amicorum in Honour of
Robert Briner 601 (G. Aksen et al. eds., 2005).
)
31 This position finds support in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964),
which concerned a dispute over whether a mandatory two-step negotiating process
had been completed as a precondition to arbitration. In that case, the court decided
that the issue should be left to the arbitrators and there was no room for the court to
interfere.
)
32 See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002). In that case, the question
was raised as to whether a claimant could invoke the arbitration provisions of the
National Association of Securities Dealers Code, which enabled customers to seek
arbitration within six years of the event giving rise to the dispute. The court said that
“procedural questions which grow out of the dispute and bear on its final disposition
are presumptively not for the judge, but for an arbitrator to decide” and held that it
did not believe that the parties had intended to have such questions decided by the
courts rather than the arbitral tribunal.
)
33 (2003) Min Si Ta Zi No. 3 (SPC, July 1, 2003), reproduced in 1 Guide on Foreign-Related
Commercial and Maritime Trials 7 (E'Xiang Wan ed., 2004). For further discussions on
this case, see F. Yeoh, Enforcement of Dispute Outcomes, in Managing Business Disputes
in Today's China: Duelling with Dragons, supra note 26, at 259, 270–71.
)
34 (2001) Min Si Ta Zi No. 12 (SPC, July 13, 2005), reproduced in 2 Guide on Foreign-Related
Commercial and Maritime Trials 11 (E'Xiang Wan ed., 2005).
)35 Supra note 17.
)
36 See, e.g., Yangbo Bao v. Chongqing Shangqiao Industries Co. et al., (2002) Min Si Ta Zi
No. 39 (SPC ruling, May 27, 2003), reproduced in 5 Guide on Foreign-Related
Commercial and Maritime Trials 30–42 (E'Xiang Wan ed., 2003). For further discussions
on this case, see Yeoh & Fu, supra note 21, at 642–43.
)
37 Between the time when China became a party to the Convention in 1987 and June 30,
1997, arbitral awards made in Hong Kong and mainland China were also mutually
enforceable under the New York Convention.
)
38 China filed an instrument extending the application of the Convention to Hong Kong
with the Secretary-General of the United Nations on June 6, 1997. It states that “[the
New York Convention], to which the Government of the People's Republic of China
acceded on 22 January 1987, will apply to the Hong Kong Special Administrative
Region with effect from 1 July 1997.” See
<www.cisg.law.pace.edu/cisg/countries/cntries-China.html>.
)
39 When Hong Kong reverted to China, the New York Convention was no longer applicable
to the enforcement of arbitral awards as between Hong Kong and China because these
awards were no longer considered “foreign” awards made in another member state.
These awards are instead enforced under a separate mutual enforcement
arrangement entered into between China and the Hong Kong SAR: see Arrangement
Concerning the Mutual Enforcement of Arbitral Awards Between the Mainland and the
Hong Kong Special Administrative Region, signed on June 21, 1999. The Arrangement
became effective in Hong Kong on February 1, 2002 by virtue of the Arbitration
(Amendment) Ordinance 2000.
)40 M.J. Moser & T. Cheng, Hong Kong Arbitration: A User's Guide 83 (2004).
)
41 (1963) Cap. 341.
)
42 Order 73, Rule 1, available at <www.hklii.org.hk/legis/reg/4A/s73.html>.
)
43 The statistical information is available on the HKIAC's website and is based on
information provided by the Hong Kong judiciary. See
<www.hkiac.org/HKIAC/HKIAC_English/main.html>.
)
44 China Nanhai Oil Joint Service Corp., Shenzhen Branch v. Gee Tai Holdings Co. Ltd., 20
Y.B. Com. Arb. 671 (1995). In this case, the High Court held that although a ground for
refusal of enforcement (constitution of the arbitral tribunal) had been established
under the Arbitration Ordinance, the court retained the discretion to enforce the
award under the New York Convention. See also Hebei Import & Export Corp. v.
Polytek Engineering Co. Ltd., [1999] 1 H.K.L.R.D. 665, which adopted the China Nanhai
Oil reasoning.
)
45 See P. Schlosser, Das Recht der Internationalen Provatem Schiedsgerichtsbarkeit 128
(2 ed. 1989) for the position under German law; and Wang Shengchang, Enforcement of
Foreign Arbitral Awards in the PRC, in Improving the Efficiency of Arbitration
Agreements and Awards: 40 Years of Application of the New York Convention, ICCA
Congress Series No. 9, 470–72 (A.J. van den Berg ed., 1999) for the position under PRC
law. Cf., e.g., Jan Paulsson, Enforcing Arbitral Awards Notwithstanding a Local Standard
Annulment (LSA), 9 ICC Bull. 17 (No. 1, 1998) who argues in favor of the courts having a
discretionary power.
)46 [1999] 1 H.K.L.R.D. 665.
)
47 [1993] 2 H.K.L.R. 39.
)
48 [1996] 2 H.K.L.R. 155.

12
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 )49 Supra note 44.
) [1992] H.K.L.Y. 51.
50
) See also Tai Hing (Asia) Promotion Co. Ltd. v. Trinity (China) Supplies Ltd., [1989]
51
H.K.L.Y. 57.
)52 [1993] A.D.R.L.J. 183.
)
53 [1992] 2 H.K.L.R. 391.
)
54 Supra note 47.
)
55 Supra note 46.
)
56 Id. at 667.

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