The Changing Landscape of Arbitration Agreements in China: Has the SPC-Led Pro-Arbitration Move Gone Far Enough?

Abstract

The crucial statutory provision that governs the validity of arbitration agreements in China is Article 16 of the Arbitration Law (AL), which stipulates, “An arbitration agreement shall include arbitration clauses stipulated in the contract and agreement of submission to arbitration that are in writing before or after disputes arise.” Further, “[a]n arbitration agreement shall contain the following particulars: (1) an expression of intention to arbitrate; (2) matters for arbitration; and (3) a designated arbitration commission.”

It is clear from the first paragraph of Article 16 that parties’ agreement to arbitrate must be made in writing. The writing requirement tends to clarify the issue of whether parties have actually consented to arbitration.5 That said, however, the AL fails to define what forms might satisfy the provision’s writing requirement. With respect to this issue, an indirect answer may be found by referring to Article 11 of the Contract Law (the CL), which stipulates that “written contracts” refer to “contracts signed in written instruments such as letters and electrically or electronically transmitted documents.” The jurisprudence on this issue, however, has been restricted to “signature-based consent” without taking up the scenario in which the consent to arbitrate is manifested by other means. It is true that consent will be easily established if the arbitration agreement is signed by both parties. However, this may not always be the case in modern arbitration practice. According to a premier international arbitrator, Jingzhou Tao, the “written” requirement shall be stipulated dynamically in light of the rapid development of modern means of communications and for the convenience of transactions. Problematic situations often arise as to whether a non-signatory third party can be bound by the arbitration agreement, a situation that is seen frequently with the rising use of arbitration in China; in particular, to what extent the “written form” can be upheld in cases of contract assignment, agency relationship, etc. The AL is silent as to these particular issues and the vague regulation under Article 16(1) could be interpreted to deny the validity of arbitration agreements when the consent is given under a different capacity, until the practice is later resolved by the SPC through a series of judicial replies and opinions.